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EIA Expects US Shale Production to Fall More by February

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Part 4
EIA Expects US Shale Production to Fall More by February PART 4 OF 9

Natural Gas Production in Marcellus Shale Fell in December

Marcellus Shale natural gas production

In its Drilling Productivity Report on January 11, 2016, the EIA (U.S. Energy Information Administration) estimated that the Marcellus Shale’s natural gas production totaled ~15.6 Bcf (billion cubic feet) per day in December 2015. That’s a ~1% decrease over November 2015’s production level. It’s also 1% lower than production a year ago.

Month-over-month, the natural gas production growth rate in the Marcellus Shale has gradually fallen in the past six months.

Natural Gas Production in Marcellus Shale Fell in December

Over a longer period, natural gas production growth at the Marcellus Shale has been outstanding. Natural gas production rose from ~1.3 Bcf per day in December 2007 to 15.6 Bcf per day in December 2015.

Active rigs

The number of active rigs in the Marcellus Shale fell from 44 in November 2015 to 42 in December 2015. A year ago, there were 85 drilling rigs in the region.

The EIA calculates that the average Marcellus Shale rig added production of 8.8 million cubic feet of natural gas in December 2015, a 13% gain since December 2014. In the past eight years, the shale has seen a ~15x gain.

What it means for OFS companies

Lower Marcellus Shale rig count in the past year hurt oilfield equipment and service (or OFS) providers like Weatherford International (WFT), National Oilwell Varco (NOV), Cameron International (CAM), and FMC Technologies (FTI). However, higher production and drilling productivity have benefited the OFS companies. NOV makes up ~1% of the Vanguard Energy ETF (VDE). VDE is an ETF tracking an index of large, mid-size, and small US companies within the energy sector.

The largest shale gas basin

According to the EIA, the Marcellus Shale is the largest natural-gas-producing shale in the United States. Currently, the Marcellus Shale accounts for 35% of the total natural gas production at the seven major US shales. The Marcellus Shale is in Western Pennsylvania, Eastern Ohio, and West Virginia.

In the next part of this series, we’ll look at drilling efficiency in the Eagle Ford Shale.

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