Marcellus to Top Shale Gas Production

Brian Hicks

Written By Brian Hicks

Posted August 7, 2012

The Powell Shale Digest, a Texan energy industry newsletter, stated that after considering a recent U.S. Energy Information Agency report, we can expect the Marcellus Shale to become the top producer among national gas fields.

Real drilling operations commenced on the Marcellus Shale just five years ago. However, given the massive reserves it harbors, the Marcellus Shale has a formidable momentum.

It wasn’t always that way, though. Back in 2008, its production caused little national impact. However, in July, the Pennsylvania and West Virginia wells were pumping around 7.4 billion cubic feet a day, up from a mere 3.6 billion cubic feet in April. That’s more than a quarter of the nation’s total shale gas production.

The sheer pace set by the Marcellus Shale has caused flurried debates in New York on whether, and how, to get going with drilling operations on whatever portion of the shale lies within state limits.

From the Associated Press:

The top spot for the Marcellus “doesn’t surprise me,” said Jay Apt, a professor of technology at Carnegie Mellon University. “But will it lead to industries that spring up to use that gas?” he asked, adding that much of the bounty could end up being shipped to Canada, the Gulf Coast, or overseas.

While the current pace puts Marcellus production on par with production out of the Haynesville area in Arkansas and Texas, approval rates for new drilling operations there have declined, which puts the Marcellus Shale at a clear advantage.

Currently, investors and analysts are waiting to see how Shell Oil’s plan to develop a petrochemical plant in order to convert gas from Marcellus into consumables and industrial products proceeds. It is expected that a success for Shell, a subsidiary of Royal Dutch Shell (NYSE: RDS.A), in this venture will usher in more industries and developers to really harness the explosive Marcellus growth, the Associated Press reports.

In May alone, almost 300 new drilling permits were approved. Several planned pipeline expansions will be completed this fall as well, which will ramp up production further.

As far as the shale growth goes, it looks like the Marcellus will be safely at the top for the next few years.

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