Oil and gas activity in the U.S. Midwest and Rockies declined during the second quarter, but is expected to rebound over the next six months, the Federal Reserve Bank of Kansas City said on Friday in a quarterly energy survey.
The survey covers companies drilling in Kansas, Colorado, Nebraska, Oklahoma and the northern half of New Mexico.
Oil firms operating in those regions on average make a profit at $64 a barrel oil, according to the survey, but need prices to rise to $91 a barrel to substantially increase drilling.
Benchmark West Texas Intermediate futures are currently trading around $82.50 a barrel.
Gas prices need to be $3.47 per million British thermal units to drill profitably and $4.68 per million Btu to increase activity, participants said. Henry Hub futures are currently around $2.334 per mmBtu.
“Gas prices in the Rockies are so low, we’re shutting in production,” said one unnamed survey respondent.
Another said their firm was also planning to reduce output due to historically low natural gas prices.
Some 43% of respondents said increased regulations posed the greatest risk to their businesses over the next year, while 29% said slowing economic activity would be the biggest threat. Another 25% said decisions by OPEC+ on production were the greatest risk.
(Reporting by Liz Hampton in Denver; editing by Diane Craft)