Marcellus Shale drilling activity robust despite low natural gas prices
Rick Stouffer can be reached via e-mail or at 412-320-7853.
The number of natural gas wells permitted and drilled in the Marcellus Shale formation, including Western Pennsylvania, continues to climb despite the lowest natural gas prices in seven years, officials said.
Companies and industry experts say the close proximity of the Marcellus region to the huge East Coast natural gas market and lower drilling costs due to a recession-caused slowdown nationwide combine to keep activity humming here.
"We anticipated we would issue 700 Marcellus Shale drilling permits for the year, but we surpassed that figure before midyear," said state Department of Environmental Protection spokesman Tom Rathbun.
Through Aug. 21, the DEP issued 1,067 Marcellus Shale drilling permits. That compares to 476 drilling permits issued for all of last year. The number of Marcellus Shale wells drilled through Aug. 21 totaled 283, up 45 percent from 2008's 195 total.
Low natural gas prices have yet to slow Marcellus drilling activity, though some companies working here are retrenching in other areas of the country. Even a possible shortage of natural gas storage may not slow Marcellus activity, experts said.
"The production costs for shale plays in the Rocky Mountains probably are $1 or $2 more per thousand cubic feet of natural gas compared to the Marcellus," said Mary Novak, managing director of Energy Services for IHS Energy Insight, of Lexington, Mass.
"The market right now is bad in terms of prices, but operators in the Marcellus have an advantage in that they garner high prices due to their location in relation to the East markets," said Rick Gordon, an independent oil and natural gas consultant based in Overland Park, Kan.
The Marcellus is a level of shale deep under about 65,000 square miles of territory in portions of New York, Pennsylvania, West Virginia, Ohio and Virginia. Latest estimates indicate it may hold enough natural gas to meet the country's needs for more than a decade.
Today, about 51 companies have staked a claim in the formation, including 20 of the country's top 100 operators and two of the top three.
Independent exploration-production companies such as Range Resources Corp. of Fort Worth, EOG Resources Inc. of Houston, Anadarko Exploration & Production Co. LP, of The Woodlands, Texas, and Ultra Resources Inc. of Englewood, Colo., are paying $3 million to $4 million per well to tap the Marcellus.
The Energy Information Administration reported last week that the amount of natural gas in storage hit 3.26 trillion cubic feet, the highest amount on record for August, enough to meet the country's natural gas needs for 54 days.
Storage capacity nationwide is thought to be about 4 trillion cubic feet, but that's an estimate because the industry never has reached that figure.
No comments:
Post a Comment