Wood Mackenzie: Marcellus could hold another $90 billion in value



The Marcellus Shale is currently the “largest shale gas play in the world,” and a study from Wood Mackenzie predicts that growth won’t stop any time soon because the formation holds more than $90 billion in remaining value.

“Although rig counts have fallen across the Marcellus since early 2012, we can see that improved efficiency and a renewed focus on the play's core sub-plays have led to ongoing growth,” Wood Mackenzie analysts said in a report.

“Well results are improving, with estimated ultimate recovery (EURs) in the top areas increasing by approximately 10 percent since 2013, thanks to the use of longer laterals and high-volume completions,” the firm said.

The consultancy expects the top 20 operators in the northeastern shale gas play to drill 25,000 natural gas wells through 2035 at a cost of nearly $110 billion.

Meanwhile, data released earlier this month by the U.S. Energy Information Administration also points to continued growth from the northeastern shale play. 

EIA data revealed that natural gas production clocked in at more than 15 billion cubic feet per day through July, and accounts for almost 40 percent of U.S. shale gas production.

Drilling and completion costs typically range from $6 million to $9 million per well across the Marcellus formation, Wood Mackenzie noted. However, the firm said that a closer look at well costs shows that drillers are using more water and sand, key components to hydraulic fracturing.

Operators have gone from using 4 million gallons of water and 1 million pounds of sand per well, to about 10 million gallons of water and 13 million pounds of sand over the last four years. Proppant usage, which is used to hold open fractures in shale to allow natural gas to flow, usage increased by 58 percent between 2012 and 2013 alone, according to Wood Mackenzie data.

“This relatively recent practice, coupled with efficiency gains. have led to flat or increasing well costs,” analysts said.

The firm predicts most near-term growth in the Marcellus formation will come from the liquids-rich areas of southwest Pennsylvania and West Virginia, where other valuable natural gas liquids, including ethane and propane, are found in addition to methane.

Stephanie Ritenbaugh: sritenbaugh@post-gazette.com or 412-263-4910

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