Has Well Productivity Peaked in the Nation’s Largest Shale Gas Play?
The Marcellus shale gas play of Pennsylvania and West Virginia came onto the scene in 2007 in a big way and has grown to become the nation’s largest. It has accounted for much of the growth of U.S. shale gas production, and made up for declines in former shale gas giants like the Haynesville and Barnett plays of Louisiana and eastern Texas. Companies have scrambled to build pipeline infrastructure to connect the Marcellus to consumers in the U.S. northeast. Canadians, once supplied by gas from western Canada, are also looking to the Marcellus (and the much smaller Utica play in Ohio) for future supply; the pipelines that delivered gas to the east might be converted to instead deliver bitumen from the western tar sands. Companies in both the northeastern U.S. and eastern Canada are looking to build LNG terminals to export the shale gas bounty, and the first LNG export terminal on the Gulf coast will open later this year.
The prognosis for the Marcellus is therefore very important, as it is being counted on to supply abundant cheap gas to the northeast and elsewhere for decades to come. One of the big problems in figuring out what is happening with the Marcellus is the tardiness with which the states provide production data to the general public and to data vendors such as Drillinginfo, which I utilize extensively to analyze shale plays. West Virginia provides data in one-year chunks, and won’t release what happened in 2014 until mid-2015. Pennsylvania is somewhat better, releasing data in six-month chunks. In the absence of recent accurate production data, there has been much speculation on Marcellus production using proxies such as pipeline receipts and algorithms to estimate what production might be. Pennsylvania’s recent release of data from the last half of 2014, however, provides an opportunity to take an updated look at the Marcellus, considering that Pennsylvania comprises 85% of Marcellus production.