As Marcellus Shale volumes increase, new infrastructure is being constructed

In terms of acreage, the Marcellus Shale is the largest major shale play east of the Mississippi River. It runs through parts of five states, including New York, Pennsylvania, Ohio, Maryland, and West Virginia.
Aug. 1, 2011
3 min read

In terms of acreage, the Marcellus Shale is the largest major shale play east of the Mississippi River. It runs through parts of five states, including New York, Pennsylvania, Ohio, Maryland, and West Virginia. However, the vast majority of drilling and production is in just two – Pennsylvania and West Virginia.

As with the Eagle Ford Shale in South Texas and the Granite Wash and Anadarko plays in western Oklahoma and the Texas panhandle, the Marcellus Shale contains shale oil, natural gas, and natural gas liquids. The current high prices for energy-rich liquids make all of these plays highly desirable for investors and producers.

Another positive feature of the Marcellus that many of the western shale plays don't have is that it is close to large metropolitan areas along the US East Coast. Being close to markets saves on transportation costs. In addition, many parts of the Marcellus benefit from being close to existing infrastructure. This is one of the oldest oil-producing regions of the United States. However, as with the Eagle Ford, additional pipelines, gathering lines, and processing plants will have to be built to accommodate the larger volumes coming from Marcellus wells.

One of the first operators in the Marcellus was Fort Worth, Tex.-based Range Resources, which began applying some of the drilling and completion technology it used in the Barnett Shale in Texas to the Marcellus Shale. The company drilled its first vertical well in the Marcellus in 2004, and a short time later began drilling horizontal wells and using multi-stage fracturing to complete the wells. A Range Resources spokesman says the results to date have proved equal to or better than its results in the Barnett.

Among the top producers in the Marcellus shale are Chevron Corp., ExxonMobil, Chesapeake Energy, Shell, Anadarko Petroleum, Newfield Exploration, EQT, PennVirginia Corp., Magnum Hunter Resources, Cabot Oil & Gas, Gastar Exploration, Carrizo Oil & Gas, Seneca Resources, EXCO Resources, Antero Resources, Westmont Resources, Endeavour International, Rex Energy, and Enerplus.

Compressor station in Lycoming County, PA
Photo courtesy of Chief Oil and Gas

One issue that is almost unique to the liquids-rich window of the Marcellus shale formation is ethane disposition. BENTEK Energy's Rusty Braziel commented, "In most natural gas producing regions, ethane is a highly-valued byproduct of natural gas production, sold as an important feedstock for the petrochemical industry. But in the rapidly growing Marcellus producing region of the Appalachian basin, ethane is viewed by some natural gas producers as a contaminant that could threaten development plans in the area."

As Marcellus volumes continue to ramp up, said Braziel, a serious problem is emerging for producers of high-BTU (British Thermal Unit), or "rich" gas. Before this gas can be delivered to pipelines for transportation to market, natural gas liquids (NGLs) must be extracted from the gas. Of the hydrocarbons that make up NGLs in this region, ethane is by far the largest by volume.

Unlike the Gulf Coast region, there are essentially no markets for ethane in the Northeast US. However, in the past two months, Shell unveiled plans to build a world-class ethylene cracker in the region to process ethane from Marcellus wells, and Houston-based PetroLogistics said it is acquiring property in West Virginia to construct an ethylene plant to handle ethane from Marcellus production. After these plants go on line, ethane disposition will no longer be a problem; it will become a marketable product.

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