EIA: Marcellus accounts for 40% of US shale gas production

Natural gas production from the Marcellus shale has surpassed 15 bcfd through July and now represents 40% of US shale gas production, making it the largest producing shale gas basin in the country, according to the US Energy Information Administration’s Drilling Productivity Report.

While the region’s rig count has leveled off at around 100 rigs over the past 10 months, improvements in drilling productivity have enabled operators to more efficiently support new wells.

EIA expects wells coming online in August to add more than 600 MMcfd to existing production, more than offsetting a drop in production due to existing well decline rates, thus increasing the production rate by 247 MMcfd.

Marcellus production in recent years has shot up to record levels after accounting for just 2 bcfd in 2010, resulting in record gas storage injections, multiple pipeline expansion projects to remedy bottlenecks, and stabilized or decreased prices (OGJ Online, Apr. 25, 2014).

EIA points out that gas prices in the US Northeast, such as the Dominion South trading point in southwestern Pennsylvania, have increasingly been below the Henry Hub price, in part because of more access to Marcellus gas.

According to a report released by Moody’s in April, however, Marcellus producers are expected to benefit more than producers elsewhere in the US, even if prices were to decline to 2012 levels, because of rapid technological advancements, large producing wells in the northeast section conveniently located near major markets, and increased capital poured into the NGL-rich southwestern section (OGJ Online, Apr. 1, 2014).

Production in the region is now on pace to be enough to meet the combined winter demand of Pennsylvania, West Virginia, New York, New Jersey, Delaware, Maryland, and Virginia, EIA says.