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Are Conventional Producers Really Losing Influence?

Are Conventional Producers Really Losing Influence?

While it’s shale that catches…

Extreme Volatility In U.S. Natural Gas Market Is Here To Stay

Extreme Volatility In U.S. Natural Gas Market Is Here To Stay

Despite some bearish forecasts, natural…

Marcellus Output Not Slowing Down

The Marcellus Shale will continue to be the country’s biggest driver in the growth of natural gas production, according to a new report from Morningstar. The report, “Shale Shock,” concludes that despite years of phenomenal shale gas production, the Marcellus Shale is not slowing down. “The emergence of the Marcellus Shale—the vast gas-bearing rock formation in the northeastern United States—is a game-changer for the U.S. energy industry,” Mark Hanson, Morningstar’s strategist for energy equity research, said.

The Marcellus has been at the heart of the shale gas “revolution.” Far from fizzling out, Marcellus output continues to climb. Production increased by 61% in 2013 from the year earlier. And by the end of next year, the Marcellus will account for nearly one-quarter of U.S. natural gas production, up from 20% currently. The region will be churning out 14 to 20 billion cubic feet per day in 2015.

Related Article: How to Profit From a Rise in Natural Gas Prices

While shale plays are often characterized by rapid initial decline rates, the gas industry in the Marcellus has been able to stem the tide through greater efficiency. Companies have been able to boost production on a per rig basis, and have also moved to 24-hour operations. At current production rates, the Marcellus could last between 30 and 75 years, according to the report.

Still, shale plays do decline quickly, and drillers will have to drill 1,000 new wells each year just to keep production flat. Morningstar projects the industry will be able to achieve that rate of drilling, with an expectation of 1,600 new wells drilled each year going forward.

The report estimates that total natural gas production in the United States will increase 2% this year and next. Also, prices could find a longer-term equilibrium between $5 and $6 per thousand cubic feet.

By Charles Kennedy of Oilprice.com



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  • Bob Magyar on March 26 2014 said:
    Per the latest EIA production reports, the indicated change in production comparing April 2013 with March 2014 shows an increase in production of 288 million cubic feet per day in the Marcellus. This consists of 630 million cubic feet per day in production from new wells along with a 342 million cubic feet per day production loss from legacy wells, read as existing wells.

    So more than half of the production gains from new wells was wiped out by production losses from existing wells.

    If this is not a clear sign of what rapid and aggressive production depletion rates, then I am not sure what that looks like.

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