What Makes Wet Gas Wet?

Kim Payn­ter / WHYY

A drill site looms above a cow pas­ture in north cen­tral Pennsylvania.

There’s been a lot of con­ver­sa­tion lately about “wet gas” and “dry gas,” and the grow­ing price dis­par­ity between the two.

What’s the dif­fer­ence? Mike Knapp of Knapp Acqui­si­tions And Pro­duc­tion explains in an infor­ma­tive blog post:

First of all, we have to define “nat­ural gas”  Nat­ural gas is a gas com­prised of mul­ti­ple hydro­car­bons, the most preva­lent being methane.  The higher the methane con­cen­tra­tion, the “drier” or “colder” the gas is.  Other con­stituents of nat­ural gas are evap­o­rated liq­uids like ethane and butane, pen­tane, etc.  We refer to these col­lec­tively as nat­ural gas liq­uids (NGLs), or “con­den­sates”.   The higher the per­cent­age of NGL’s, the “hot­ter” or “wet­ter” the gas is. NGL’s must be stripped out of the gas before it can be put in a pipeline and used.   Ethane, which is preva­lent in West­ern PA wet gas, is the feed­stock for Eth­yl­ene, which is what we use to make plastics.

…Whether you are in a wet gas or dry gas area is going to have a huge impact on the value of your lease.  Right now, the NGL’s are worth con­sid­er­ably more than dry gas.  In some areas, the value of the gas is more than dou­bled because of the NGL’s.   Right now, the com­mod­ity price for nat­ural gas is very low due to an over­sup­ply sit­u­a­tion.  Com­pa­nies in dry gas areas are LOSING money because of this, while com­pa­nies in areas with large amounts of NGLs are doing much bet­ter.   Dry gas areas are dead as a door­nail right now for leas­ing, but wet gas areas are see­ing nice offers.  With the impres­sive (read: jaw-dropping) results com­pa­nies have been hav­ing in the Utica in Ohio with oil pro­duc­tion (which is far more prof­itable than wet or dry gas) dry gas areas have been reduced to a dis­tant third tier.   Dry gas areas will not be in high demand for a long time, pos­si­bly decades.  That is not to say that they will not be drilled.  There is a boat­load of gas there, but com­pa­nies will not be com­pet­ing and landown­ers shouldn’t expect to see the huge up front bonuses (that they did a few years ago) again any time soon.  With the low price of gas, it’s sim­ply not eco­nom­i­cal to pay out thou­sands of dol­lars per acre just to be able to pull a rig on the prop­erty to spend mil­lions to drill a well that will barely make a profit at these prices.