The Marcellus shale is about to become the most productive natural gas field in the United States, according to new data from energy industry analysts and the federal government.
Although serious drilling began only five years ago, the volume of Marcellus production suggests that in some ways there's no going back, even as New York debates whether to allow drilling in its portion of the shale, which also lies under large parts of Pennsylvania, West Virginia and Ohio.
The top spot for the Marcellus shale “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?”
Apt said that much of the bounty could end up being shipped to Canada, the Gulf Coast or overseas.
In 2008, Marcellus shale production barely registered on national energy reports. In July, the combined output from Pennsylvania and West Virginia wells was about 7.4 billion cubic feet per day, according to Kyle Martinez, an analyst at Bentek Energy. That's more than double the 3.6 billion cubic feet from April and represents more than 25 percent of national shale gas production.
That's neck-and-neck with production from the Haynesville region in Arkansas and Texas, but new drilling permits there have declined sharply.
The Powell Shale Digest, an industry newsletter based in Fort Worth, concluded that a recent report from the U.S. Energy Information Agency means “it is reasonable to assume” that the Marcellus shale has or soon will pass Haynesville as the top natural gas producer.
The Marcellus shale is a gas-rich formation of rock thousands of feet below ground. Advances in drilling technology made the shale accessible, which led to a boom in production, jobs and profits as well as a drop in natural gas prices for consumers. But there are concerns about pollution and impacts to roads and other public services.
The wholesale price of natural gas is about $3 here but $12 or more in Europe and Japan.
“It's clear people will want to export” the Marcellus shale gas, Apt said, adding that such an outcome could lead to what economists call “the resource curse,” which is when the general population hardly benefits, while a few get very rich.
But Apt sees hopeful signs, such as the Shell Oil Co. plan to build a $2 billion petrochemical plant in Beaver County to turn Marcellus shale gas into consumer and industrial products, including plastics. It's widely believed that if Shell moves ahead with the plant, other small industries will follow.
For now, it appears the Marcellus region will be in the top production spot for several years, analysts say. While drilling has slowed, 288 permits for new wells were issued in May, and more than 1,200 for the first five months of the year, according to data from LCI Energy Insight, an El Paso firm that tracks national energy trends.
Martinez noted that several major Marcellus region pipeline expansions are scheduled for completion this fall, which should increase production even more and make it easier to ship natural gas to other parts of the Northeast.
That could boost wholesale prices, he said, and keep energy companies focused on the region.
