IHS: Marcellus shale producing more than 7 bcfd

Recent pipeline expansions have helped the Marcellus shale play reach a production rate of more than 7 bcfd to become the largest US gas-producing play, according to a new IHS Herold Marcellus Shale Company Play Analysis.

Bryan McNamara, principal energy analyst at IHS and author of the report, noted that with gas prices averaging $2.75/Mcf during 2012, the number of gas-directed rigs running in the Marcellus fell by nearly one-third throughout last year to about 80 rigs.

The rig count dip resulted in a drop in the number of wells drilled, which declined to 1,365 during 2012, 30% fewer than the record set the previous year.

Interestingly, the number of Marcellus permits issued in 2012 only fell 5% from 2011 numbers, which suggests a robust inventory of future drill sites. Despite a decrease in activity due to weak natural gas pricing, according to the IHS report, returns in the play remain relatively strong.

Despite the overall decline in activity, the Marcellus still has more gas-directed rigs running than any other US play. Activity has remained strong in five Pennsylvania counties—Bradford, Lycoming, Susquehanna, Tioga, and Washington.

Except for Washington County, the other four counties are in the dry gas window in the northeast section of the state.

In a separate report last year, Fitch Ratings said anticipated growth in Marcellus gas production likely will mean more long-term business for US midstream companies, Fitch analysts forecast Marcellus production during the next 5 years will grow to more than 10 bcfd (OGJ Online, July 10, 2012).

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