MARCELLUS PRODUCTION DISPLACES GULF COAST PRODUCTION INCLUDING HAYNESVILLE
Marcellus natural gas production rises fast
Penn., W. Va. output up about 50 percent
Written by Kevin Begos Associated Press
PITTSBURGH— Marcellus Shale natural gas production is rising even faster this year than energy experts had predicted, and that’s having a national effect on energy.
Bentek, a Colorado company that analyzes energy trends, said 2013 production in Pennsylvania and West Virginia is up about 50 percent compared with last year. Figures for the pipelines that take gas out of the shale show that in the first six months of the year, Pennsylvania produced about 1.5 trillion cubic feet of gas, with projections for a year-end total of about 3.2 trillion cubic feet.
That yearly number translates into the equivalent of about 550 million barrels of oil.
The official mid-2013 production figures for Pennsylvania and West Virginia haven’t been released by those states, but Bentek’s figures are considered very reliable by government and industry sources.
Marcellus production this year “has definitely outpaced our expectations,” said Diana Oswald, a Bentek energy analyst, and it’s changing long-established national energy trends.
Marcellus gas is “actually starting to displace” production from the Gulf of Mexico in places, Oswald said. For example, when serious shale drilling started in Pennsylvania in 2008, output barely registered on a national level, and most of the Northeast relied on natural gas that was being pumped from the Gulf of Mexico or from Canada through a network of pipelines.
Now, Marcellus gas is supplying the Pennsylvania and Northeast markets, and it’s grown to be the nation’s most productive gas field. Bentek expects a surplus will soon start flowing to the South and Midwest.
Tom Murphy, a director of the Penn State University Marcellus Center for Research & Outreach, said that while the number of drilling rigs operating in Pennsylvania has declined, companies have learned to drill more efficiently, “so fewer rigs are drilling more wells.”
The Marcellus Shale is a gas-rich formation deep underground that extends across Pennsylvania, West Virginia, New York, Ohio and Maryland. Most production is in Pennsylvania and West Virginia.
Production from West Virginia also is on track to increase by about 50 percent this year, according to Bentek. Ohio shale gas production is in its beginning stages but is expected to grow substantially in 2014 and 2015.
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Replies to This Discussion
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Permalink Reply by Skip Peel - Mineral Consultant on
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Permalink Reply by 1kw6x71km1v37 on
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CHK spent a fortune on leaseholds in the Louisiana Austin Chalk play in the late '90s. Most of it went down a rathole. CHK rarely got a decent well unless someone else was the operator. They did leave a hint of what was to come, however. They called the Austin Chalk acreage their "Tuscaloosa Play." Uh-huh. Perhaps soon to see how right they were.
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Permalink Reply by Skip Peel - Mineral Consultant on
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cs, the LA AC miscalculation by CHK is often mentioned here on GHS but there have been many more. Not long ago CHK dumped a lot of Ohio acreage that didn't look so good after taking the drill bit to it. CHK, and all other energy companies, experience investments that just don't pan out. No matter the technical capabilities and experience of modern E&P companies they will win some and lose some. Every instance where an energy company acquires acreage and then sells it at a profit should be balanced by the times they get nothing or a huge discount to the investment such as DVN's TMS sale to GDP.
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Permalink Reply by tc on
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People forget that DVN sold 1/3 of their TMS acreage to SinoPec as part of a 5 field package deal for $5,000/acre so they didn't really lose money on their TMS acreage.
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Platt's had an article Friday that said the backlog of wells in PA waiting on completion or pipelines increased 8% in the first half of 2013 (over the 2H of 2012) and is now up to 1546.
http://www.platts.com/latest-news/natural-gas/washington/marcellus-...
And the sister site GoMarcellus tracks the Ohio numbers and in OH, the gap between drilled/drilling and producing has gone for around 150 wells at the beginning of the year to 380 in mid-August.
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Permalink Reply by Skip Peel - Mineral Consultant on
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Interesting. Thanks, joe. As of August 1 the LA Office of Conservations reports 124 Haynesville Shale wells Waiting On Completion. That's almost 2100 wells waiting to be connected to sales in the two major shale gas plays plus the Utica. I feel sure the Fayetteville and Barnett plays have significant backlogs of WOC wells also. As Jay likes to remind us, "Too Much Gas Out There!"
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Ninety per cent of the chemical industry is on the Gulf Coast, with 50 per cent of that located in and around Lake Charles-Sulphur. Not to mention Orange, Beaumont, Port Arthur and Houston NG markets. Assuming processing requires a lot of natural gas for energy, that should bode well for the Haynesville Shale insofar as compression cost savings over more distant fields affect selling price.
Unfortunately, some producers may have to settle for losing millions instead of billions.
It's sort of like the old take-or-pay scheme from the days of regulation, but in reverse.
Provide on the cheap, or don't sell us anything.
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Permalink Reply by Steve P on -
My "unlearned" (is there such a word?) view is that there is too much gloom and doom here. Utilities are switching, or are going to be switching to NG like nobody's business over the next 5 years. There is a steady move by the trucking industry and the truck-stop industry to convert trucks to NG from diesel. And, despite all of the protests to the contrary, the Obama Administration is committed, perhaps reluctantly, to the development of US NG resources, even if it requires fracking.
So, while the short term prospects aren't good, the 3 to 5 year outlook is very good for NG overall. Of course, all of my marbles are in the Haynesville Shale game, so the prospects for those of us tied to NW La. resources are not as good as those with wet gas. But dry gas is still gas. And we happen to be the closest to Lake Charles and the MS corridor, so let's stop wringing our hands.
I plan on retiring in 3 years. Six years ago who would have known that I would have reaped hundreds of thousands of $$ from leases and production from my La properties, which I had previously viewed as minor assets. I have trouble with those grumbling with their perceived "losses" because while they won a mid-jackpot, they didn't hit the mega-jackpot. And for those who passed up the mid-jackpot because they would only accept the mega, well, perhaps there is a life lesson for you in all this.
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"So, while the short term prospects aren't good, the 3 to 5 year outlook is very good for NG overall"
IMHO a mistake bulls make is that they assume that since demand for NG will go up so will prices and that is not necessary true. Prices are mostly determined by supply and unfortunately the O&G industry has shown the world that in a relatively short time they can produce a lot of extra NG and overwhelm demand. This knowledge will keep NG prices low even as demand rises, since who will pay $6+ for future NG if they know more supply (even sub $4 hasn't decreased NG supply) will hit the market soon and drive the prices back down.
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Permalink Reply by Skip Peel - Mineral Consultant on
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Steve P, IMO not doom and gloom but a reality check. And a comprehensive view of the evolving domestic and global natural gas markets.
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