Why Marcellus and Eagle Ford shales are key for US oil and gas


Oct. 21 2014, Updated 4:00 p.m. ET

Marcellus Shale

According to the U.S. Energy Information Administration (or EIA), the Marcellus Shale is the largest producing shale gas basin in the United States. The Marcellus Shale runs through western Pennsylvania, eastern Ohio, and West Virginia. The resource play has a mix of oil and gas reserves.

Currently, it accounts for ~40% of U.S. shale gas production.Marcellus shale gas production

Oil production in the Marcellus Shale increased from ~1.14 billion cubic feet per day (Bcf/d) in January 2007 to 15.64 Bcf/d in September 2014. This marks an increase of ~13 times in seven and a half years.

According to Baker Hughes, there are currently ~81 rigs operating in the Marcellus, all of which are gas-targeted. In comparison, there were ~134 natural gas rigs in September 2011.

Natural gas prices in the northeast U.S. have increasingly been below the Henry Hub price. This is primarily because of this region’s increased access to the Marcellus shale.

The EIA expects Marcellus natural gas production to continue to increase by 39,000 cubic feet per day in November compared to October.

Eagle Ford Shale

Eagle Ford gas Production

Rig efficiency improves

According to the EIA, natural gas production in the Eagle Ford Shale in Texas increased ~328% in the past seven years. In September 2014, the region produced ~6.8 Bcf/d, compared to ~1.6 Bcf/d in January 2007.Eagle Ford Efficiency

As noted in the chart above, rig efficiency has improved significantly in the Eagle Ford Shale, particularly in regard to natural gas production.

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From 2011 to 2014, rig counts in the Eagle Ford Shale have not changed significantly. There were ~218 in operation in October 2011 and there are currently ~210 rigs. However, there has been a shift from predominantly natural gas-directed rigs to liquids directed rigs. Natural gas rigs’ share was 43% in 2011. It is only ~4% now.

Read our articles on the Eagle Ford Shale oil production in Why the shale boom transformed US energy markets.

Key stocks and exchange-traded funds (or ETFs)

Major oil and gas producers in the Marcellus and Eagle Ford Shale include Anadarko Petroleum (APC), Cabot Oil & Gas (COG), Range Resources (RRC), and CONSOL Energy (CNX).

Many of these producers are also part of energy ETFs like the Energy Select SPDR ETF (or XLE) and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).

In the next part of the series, we’ll discuss crude oil production estimates for OPEC and non-OPEC countries.


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