Businesses, workers feel lull of natural gas glut

07 22, 2012 by Shreveport Times

The pace of things is a little slower in Mansfield these days.

The drive across town feels a little shorter, the line at the gas station takes a little less time and the parking lots are less crowded every day.

“It’s really been a tremendous change since February,” said Shelby Spurlock, co-owner of Café 171 in Mansfield. “It’s gotten to the point where we wonder if we can keep the doors open or not.”

Café 171 opened in September 2010 when Spurlock and her business partner Rebecca McDaniel started serving country cooking aimed at the droves of oil and natural gas workers meeting the booming demand on the Haynesville Shale.
And for almost two years that eatery just inside the DeSoto Parish city's limits had a house packed with roughnecks, surveyors, supervisors and anyone else working the nearby rigs.

“I just don’t know how long we can hold on,” Spurlock said. “The way things are falling, every day we get closer to nothing.”

The price of natural gas has fallen to dramatic lows over the past six months.

Since 2009, the words “glut” and “overproduction” have been floating around the oil and natural gas industry, said Ragan Dickens, north Louisiana director for the Louisiana Oil and Gas Association. When things really turned sour is a matter of whom you ask, he said.

In 2008, 82 percent of U.S. rigs were producing natural gas while prices ranged between $8 and $12 per million British thermal units (MMBtu), according to Louisiana Oil and Gas Association President Don Briggs. Now only 27 percent of rigs are producing natural gas and prices are near $2.70 per MMBtu. Those prices will need to return to at least $4.50 per MMBtu before serious activity is expected to return to the Haynesville Shale, Briggs said.

“Companies can’t drill for natural gas at these prices. But it’s important to understand the Haynesville Shale will continue to be a major supplier of natural gas for our country for at least another 10 to 15 years. It’s still the largest discovery in the United States.”

Meantime, Briggs said, oil and natural gas companies will be seeking more lucrative activity on liquid-rich plays, particularly the Eagleford Shale in Texas. And they’re taking their workers with them.

That’s the way things go, said Mansfield’s B-N-L Tire and Auto Service owner Greg Dyess. “I’ve been here 16 years, and I’m used to the ups and downs. That’s business, but we’re still going to be around.”

For about four years Dyess said his business saw a boost from outfitting trucks, trailers and other vehicles working the Haynesville Shale. He’s seen a significant drop in business recently but said local customers always have been his foundation.

“I figure it’ll be back up again eventually. Once the prices get up, it’ll be back again.”

In Bossier City, Key Energy district manager Buddy Terry said there’s hardly enough work hauling fracking water to go around. “The only thing that’s going to help anyone is the price of natural gas going back up.

“We had to make a change. Our yard wasn’t making the kind of profit we need to stay in business.”

And while there were no layoffs, Terry said, several supervisors were offered positions as truck drivers while business is slow. They left for other companies, he said.

Other trucking and supply companies have packed up and moved on. The reduction in competition has helped, Terry said, but things still are slow.

And the impact goes beyond those directly employed in the oil and natural gas industry.

From a peak of 60, the number of residents at Davidson RV Park in Mansfield has fallen to 12, owner Robert Davidson said. About 90 percent of that loss pulled out over one week in March, he said.

Since opening in 1978, Davidson said, his park has never been so empty as without the oil and gas workers. “With what I’ve got, I’m not making much at all.

“I’m not griping, though, because the past few years have been so good. I didn’t blow all my money, put it that way.”

Chesapeake Energy Corp. employee Tim Farrington has watched as many of his co-workers and competition moved on from Mansfield to more active oil and natural gas plays. “It’s kind of sad now. It’s slowed down quite a bit, and nobody saw that coming. You see it all over town from traffic to housing.

“Everything was coming here for a long while,” he added. “But we still have the basis for production, so it’ll be easy for it come back.”

Farrington has eaten at Café 171 at least twice a week for almost two years. At its peak, Spurlock said, the restaurant was feeding 160 to 250 people a day. Now a majority of the tables remain empty even through the lunch hour.

“I can’t say if we’ll have enough support just from the locals,” she said. “We’ll either have layoffs or we’ll close the doors. We’re just trying to hold out until (natural) gas prices go back up.”