Marcellus Shale Nat Gas Production Higher Than Anticipated

[Master Shake]

PITTSBURGH — Natural gas production from the Marcellus Shale region is growing faster than expected, according to a new federal report issued Tuesday.

Marcellus production has now reached 12 billion cubic feet a day, the Energy Information Administration report found. That's the energy equivalent of about 2 million barrels of oil a day, and more than six times the 2009 production rate.
For perspective, if the Marcellus Shale region were a country, its natural gas production would rank eighth in the world.

The Marcellus now produces more natural gas than Saudi Arabia, and that glut has led to wholesale prices here that are about one-quarter of those in Japan, for example.

The vast majority of the Marcellus gas is coming from Pennsylvania and West Virginia. The shale also lies under other states, but most of the wells in Ohio produce oil, and New York has placed a moratorium on shale gas drilling.
Federal energy experts are surprised by the rapid Marcellus growth, since the number of drilling rigs has fallen over the past two years.

"A year ago, we were not expecting the Marcellus to be at 12 billion cubic feet," said Sam Gorgen of the EIA, which is a part of the Department of Energy.

The current Marcellus production is even higher than the predictions of Terry Engelder, a Penn State University geologist who has drawn praise and criticism for his estimates of how much gas the region holds. Engelder had predicted that the Marcellus wouldn't reach the 12 billion cubic foot rate until 2015, and some critics said that was overly optimistic.

http://online.wsj.com/article/AP2e11...6e6ad4e24.html

[gwynedd1]

Re: Marcellus Shale Nat Gas Production Higher Than Anticipated

PITTSBURGH — Natural gas production from the Marcellus Shale region is growing faster than expected, according to a new federal report issued Tuesday.

Marcellus production has now reached 12 billion cubic feet a day, the Energy Information Administration report found. That's the energy equivalent of about 2 million barrels of oil a day, and more than six times the 2009 production rate.
For perspective, if the Marcellus Shale region were a country, its natural gas production would rank eighth in the world.

The Marcellus now produces more natural gas than Saudi Arabia, and that glut has led to wholesale prices here that are about one-quarter of those in Japan, for example.

The vast majority of the Marcellus gas is coming from Pennsylvania and West Virginia. The shale also lies under other states, but most of the wells in Ohio produce oil, and New York has placed a moratorium on shale gas drilling.
Federal energy experts are surprised by the rapid Marcellus growth, since the number of drilling rigs has fallen over the past two years.

"A year ago, we were not expecting the Marcellus to be at 12 billion cubic feet," said Sam Gorgen of the EIA, which is a part of the Department of Energy.

The current Marcellus production is even higher than the predictions of Terry Engelder, a Penn State University geologist who has drawn praise and criticism for his estimates of how much gas the region holds. Engelder had predicted that the Marcellus wouldn't reach the 12 billion cubic foot rate until 2015, and some critics said that was overly optimistic.

http://online.wsj.com/article/AP2e11...6e6ad4e24.html

This will really help the poor in those areas, just like in Africa.

[cbr]

Re: Marcellus Shale Nat Gas Production Higher Than Anticipated

uhhhh.... most of those 'poor' own land, and are taking royalties... and who do you think is working that play? mostly locals for many tasks. some poor ranchers got thousands of dollars per acre just for the lease bonuses. the marcellus shale is a once in an era economic boon for local residents, frustrated only by obstructionist government preventing appropriate export infrastructure from allowing us to sell that gas overseas at 7x profits.

[GRG55]

Re: Marcellus Shale Nat Gas Production Higher Than Anticipated

This will really help the poor in those areas, just like in Africa.

So given that gas resource, exactly how would you deal with it to help the poor?

- Leave it in the ground because of the negative local environmental effects of developing it?

-Regulate the rate at which money can be invested so the development is not so boom and bust, and the play takes many decades to reach maturity? And if so what parameters will be used to determine just the right pace of development?

-Nationalize the resource so only State or Federal government entities can develop it and earn the profits for the public good?

-Develop it with private capital but regulate the maximum rate of return that capital can earn (essentially treat it as a utility) and tax away all of the rest in the public interest?

-Something else?

You are the Governor of West Virginia, or Pennsylvania. Tell us what you would do.

[ProdigyofZen]

Re: Marcellus Shale Nat Gas Production Higher Than Anticipated

uhhhh.... most of those 'poor' own land, and are taking royalties... and who do you think is working that play? mostly locals for many tasks. some poor ranchers got thousands of dollars per acre just for the lease bonuses. the marcellus shale is a once in an era economic boon for local residents, frustrated only by obstructionist government preventing appropriate export infrastructure from allowing us to sell that gas overseas at 7x profits.

CBR, please don't let your political leanings get in the way of facts: http://bakerinstitute.org/media/file...al_Aug12-1.pdf

[lektrode]

Re: Marcellus Shale Nat Gas Production Higher Than Anticipated

-Develop it with private capital but regulate the maximum rate of return that capital can earn (essentially treat it as a utility) and tax away all of the rest in the public interest?

-Something else?

You are the Governor of West Virginia, or Pennsylvania. Tell us what you would do.

if not regulate/limit the return, tax off the blowoff tops, ie: 'windfall profits'

[Master Shake]

Re: Marcellus Shale Nat Gas Production Higher Than Anticipated

So given that gas resource, exactly how would you deal with it to help the poor?

- Leave it in the ground because of the negative local environmental effects of developing it?

-Regulate the rate at which money can be invested so the development is not so boom and bust, and the play takes many decades to reach maturity? And if so what parameters will be used to determine just the right pace of development?

-Nationalize the resource so only State or Federal government entities can develop it and earn the profits for the public good?

-Develop it with private capital but regulate the maximum rate of return that capital can earn (essentially treat it as a utility) and tax away all of the rest in the public interest?

-Something else?

You are the Governor of West Virginia, or Pennsylvania. Tell us what you would do.

I didn't expect this to turn into political spitballing. I posted it because of its implications to EJs GAGFO hypothesis. What are your thoughts on what this and the Bakken formation's natural gas reserves mean for the US energy situation?

[GRG55]

Re: Marcellus Shale Nat Gas Production Higher Than Anticipated

I didn't expect this to turn into political spitballing. I posted it because of its implications to EJs GAGFO hypothesis. What are your thoughts on what this and the Bakken formation's natural gas reserves mean for the US energy situation?

Didn't intend for it to come across as political spitballing

As most here know I have spent most of my working life in oil and gas. Nobody thinks the industry and the way it works is "perfect". So my question was serious. Fine, let's accept that the "poor" people (however that is defined) don't benefit, or don't benefit enough. So how should we do it differently to fix that problem?

BTW, none of my co-workers or employees in any of the companies I have ever worked in get away with complaining to me about a problem...I only take them seriously if they also propose some constructive solutions for how to deal with it. For one thing it shows they have taken some time to think seriously about the subject (and usually leads to a bigger raise in pay).

Coming to your question, I think the "unconventional" resource extraction going on in the USA right now is probably going a long way to keeping GDP from going to zero, or negative, and unemployment from being worse...much worse.

I also think it is shifting the current account balance in the right direction...something that the US-China M.A.D. relationship skewed too far for too long. Not a fix, not the whole solution, but a significant influence at a time when it is badly needed to deal with the outrageous imbalances that official policy has promoted.

The costs are coming down as is normal in the oil industry...technology keeps improving and price and performance keep going up as the best producers and service sector companies R&D the costs out of F&D. Will the improvements keep coming fast enough to keep the money flowing in and the game going for many more years, or just another one or two. That's the BIG question.

[EJ]

Re: Marcellus Shale Nat Gas Production Higher Than Anticipated

I didn't expect this to turn into political spitballing. I posted it because of its implications to EJs GAGFO hypothesis. What are your thoughts on what this and the Bakken formation's natural gas reserves mean for the US energy situation?

The week of June 23, 2010 U.S. total crude oil imports peaked at 10,597,000 barrels per week. As of Oct. 18, 2013 weekly imports were 6,949,000 barrels, a 34% decline. However, the total cost of those imports has only declined 6% to a $39 billion annual rate from $42 billion. The reason is the price, $110 versus $78.

Even with the astounding increase in domestic production over the past few years the U.S. is merely treading water with respect to managing its oil import trade deficit. The implications for the GAGFO value of the USD is that if output does not prove sustainable that its oil import bill will start to rise again and with it the USD price of gold held by foreign central banks to hedge the declining value of the USD for oil trade.

[sunjeep]

Re: Marcellus Shale Nat Gas Production Higher Than Anticipated

uhhhh.... most of those 'poor' own land, and are taking royalties... and who do you think is working that play? mostly locals for many tasks. some poor ranchers got thousands of dollars per acre just for the lease bonuses. the marcellus shale is a once in an era economic boon for local residents, frustrated only by obstructionist government preventing appropriate export infrastructure from allowing us to sell that gas overseas at 7x profits.

CBR, please don't let your political leanings get in the way of facts: http://bakerinstitute.org/media/file...al_Aug12-1.pdf

For a more personal perspective, I grew up in one of the hottest areas of the Marcellus (south of Pittsburgh). I still have family in the area, visit regularly, and know people who have gas wells on their land. Let me further say I'm all for fracking, all for developing American resources and the benefit they provide. However, it is hardly a boon for the locals, in fact I would suggest it has been a major negative. The majority of people in that area do not own enough land to get rich on this. In fact, many of them were convinced to sell their mineral rights before they knew the real value of them. There is only a small fraction of them who own enough land and were smart enough to negotiate what their land was worth (granted I understand the idea of buyer and seller beware). It gets even more interesting on occasion. Range Resources drilled a pipeline across some of my relatives land "by mistake". I won't say anything more about that.

The effect on the local economy is noticeable, but the real skill/high wage jobs go to the field workers, none of whom are local. Again, I'm not faulting anyone here, its just the way of things. There is some trickle down to the locals but they mostly get another waffle house and another texas roadhouse, and a large amount of ill conceived infrastructure as the zoning and political structure lags the boom by alot. They also get the privilege of living next to a well that is being flared for 3 weeks that sounds like a jet engine, makes the night sky like noon, and they watch the fracking fluid and water trucks barrel down a barely 2 lane road at 50+ mph 24 hours a day.

Anyway, there is no substance to my post, just observations. This resource is important to our country, it should be developed, and it should benefit both the company and the people, but its certainly not been a boon for the people living there. And I further see the makings of the hard landing that hits all of these oil and gas areas. Just a bit harder to watch when its your home.

[ProdigyofZen]

Re: Marcellus Shale Nat Gas Production Higher Than Anticipated

For a more personal perspective, I grew up in one of the hottest areas of the Marcellus (south of Pittsburgh). I still have family in the area, visit regularly, and know people who have gas wells on their land. Let me further say I'm all for fracking, all for developing American resources and the benefit they provide. However, it is hardly a boon for the locals, in fact I would suggest it has been a major negative. The majority of people in that area do not own enough land to get rich on this. In fact, many of them were convinced to sell their mineral rights before they knew the real value of them. There is only a small fraction of them who own enough land and were smart enough to negotiate what their land was worth (granted I understand the idea of buyer and seller beware). It gets even more interesting on occasion. Range Resources drilled a pipeline across some of my relatives land "by mistake". I won't say anything more about that.

The effect on the local economy is noticeable, but the real skill/high wage jobs go to the field workers, none of whom are local. Again, I'm not faulting anyone here, its just the way of things. There is some trickle down to the locals but they mostly get another waffle house and another texas roadhouse, and a large amount of ill conceived infrastructure as the zoning and political structure lags the boom by alot. They also get the privilege of living next to a well that is being flared for 3 weeks that sounds like a jet engine, makes the night sky like noon, and they watch the fracking fluid and water trucks barrel down a barely 2 lane road at 50+ mph 24 hours a day.

Anyway, there is no substance to my post, just observations. This resource is important to our country, it should be developed, and it should benefit both the company and the people, but its certainly not been a boon for the people living there. And I further see the makings of the hard landing that hits all of these oil and gas areas. Just a bit harder to watch when its your home.

That is correct most of the labor flowing into the Marcellus shale is not from PA or WV. We have stories here in Dallas of guys going there to provide the labor. An acquintance in my Brazilian Jiu JitSu class just came back from PA after working in the O&G fields there for the last 10 months. I have yet to ask him why he left the decent paying job there.

My step-mother is from Shinston, WV where her family owns a farm that her grandfather built the house on. She asked me 2 years ago about allowing O&G companies to drill on her land for Natgas/oil. I advised to wait to obtain the highest value for the drilling rights. It might be time to revisit this issue.

[Master Shake]

Re: Marcellus Shale Nat Gas Production Higher Than Anticipated

Didn't intend for it to come across as political spitballing

Didn't mean you, but the posters before you beginning with gwynned who threw the first one.

[cbr]

Re: Marcellus Shale Nat Gas Production Higher Than Anticipated

I dont know why you would think you could glimpse anything about my political leaning from posting facts. Comparing nigeria where the minerals are owned by corrupt government officials to the us, where minerals are owned by private people is so ignorant it is just absurd. Of course nothing is perfect and some uneducated people get fleeced by more sophisticated ones. That sucks but knowledge is power and within reason smart motivated people should be able to glean an advantage as long as no fraud is involved.

So in nigeria you bribe a prince and a warlord and try to duck the fcpa if you are american. You brng in foreign workers and put them in a compound. In ohio, you hire local truckers. Mobile home cos, restaurants,hotels, construction workers and anyone else smart enough to learn oilfield work. You pay the people who own the land for rights of way and surface use. You pay the people who own the minerals bonus and royalties. You take all the risks and if you hit a good well the person who owns the minerals becomes independently wealthy, the surface owner has a few tens of thousands in mailbox money and all their cousins get upper end laborer jobs. Boy thats terrible!

[Master Shake]

Re: Marcellus Shale Nat Gas Production Higher Than Anticipated

I dont know why you would think you could glimpse anything about my political leaning from posting facts. Comparing nigeria where the minerals are owned by corrupt government officials to the us, where minerals are owned by private people is so ignorant it is just absurd. Of course nothing is perfect and some uneducated people get fleeced by more sophisticated ones. That sucks but knowledge is power and within reason smart motivated people should be able to glean an advantage as long as no fraud is involved.

So in nigeria you bribe a prince and a warlord and try to duck the fcpa if you are american. You brng in foreign workers and put them in a compound. In ohio, you hire local truckers. Mobile home cos, restaurants,hotels, construction workers and anyone else smart enough to learn oilfield work. You pay the people who own the land for rights of way and surface use. You pay the people who own the minerals bonus and royalties. You take all the risks and if you hit a good well the person who owns the minerals becomes independently wealthy, the surface owner has a few tens of thousands in mailbox money and all their cousins get upper end laborer jobs. Boy thats terrible!

(sigh)

[don]

Re: Marcellus Shale Nat Gas Production Higher Than Anticipated

The week of June 23, 2010 U.S. total crude oil imports peaked at 10,597,000 barrels per week. As of Oct. 18, 2013 weekly imports were 6,949,000 barrels, a 34% decline. However, the total cost of those imports has only declined 6% to a $39 billion annual rate from $42 billion. The reason is the price, $110 versus $78.

Even with the astounding increase in domestic production over the past few years the U.S. is merely treading water with respect to managing its oil import trade deficit. The implications for the GAGFO value of the USD is that if output does not prove sustainable that its oil import bill will start to rise again and with it the USD price of gold held by foreign central banks to hedge the declining value of the USD for oil trade.

Interesting info, as usual, boss. I assume the $110 barrel price is both lucrative in itself and encourages the more expensive extraction techniques, while the more accessible crude remains on hold in most of the US intervention "states" - Iraq, Libya, Syria, etc. Enforced instability having both negated local nationalism - think prior to 9/11 ME nationalism - while acting as an effective stopgap storage policy. Engelhardt 's piece just posted sees destabilization as a failed military intervention policy. Not necessarily.