Oil and gas activity in the U.S. Midwest and Rockies declined during in the third quarter, marking its seventh consecutive quarterly drop, according to survey results released on Friday by Federal Reserve Bank of Kansas City.
The survey, conducted in mid-September, covers companies drilling in Kansas, Colorado, Nebraska, Oklahoma and the northern half of New Mexico.
Activity in the region is not expected to rebound in the coming months, said Chad Wilkerson, senior vice president of the Federal Reserve Bank of Kansas.
In the last survey released by the Kansas Fed, Wilkerson had predicted activity would rebound over the next six months.
Several survey respondents noted that low natural gas prices have hurt their businesses. Natural gas needs to average $3.43 per million British thermal units (mmBtu) for drilling to be profitable in their areas of operation, and $4.24 per mmBtu for a substantial increase in activity.
Henry Hub natural gas futures were trading around $2.65 per mmBtu on Friday. They have not climbed above $4 per mmBtu since early 2023.
“The easiest barrels have been produced,” said one unnamed survey participant. “Natural gas needs to be close to $4.00 for profitable development other than associated gas in the Permian.”
(Reporting by Liz Hampton in Denver; editing by Diane Craft and Bill Berkrot)