A Houston-based energy company will stop drilling in the Gulf of Mexico during the next year to focus on developing its natural gas holdings in Pennsylvania. With the purchase of 50,000 acres from EOG Resources, Newfield Exploration has doubled the number of acres it will use to tap the state’s gas-rich Marcellus Shale formation.
Andrew Byrne is an analyst with IHS Herald, a research firm for the oil and gas industry. Byrne said it makes sense for companies such as Newfield to pull up stakes in the Gulf of Mexico in order to tap Pennsylvania’s natural gas resources.
“They’re not getting the approvals of what they were trying to do this year, so you add that to the uncertainties as to ….if there was a spill what your liabilities might be,” he said.
Newfield had already purchased land in Wayne County last year, but the current drilling moratorium imposed by the Delaware River Basin Commission prevents it from doing anything but exploratory work. The $405 million deal gives Newfield the opportunity to drill in Bradford County, where no moratorium exists.
“In regards to Wayne County we continue to work with the DRBC with regard to regulations in the future,” said Keith Schmidy, a spokesman for Newfield. “But we find that the step out into Bradford County is an excellent area to develop and we look forward to entering that particular area with this acquisition of assets.”
Schmidt said the proximity of Pennsylvania’s Marcellus Shale gas reserves to the east coast market makes it a lucrative investment.