Why the Marcellus Shale is important for US oil and gas

US shale natural gas production

In the previous part of this series, we discussed crude oil production in the US shale formations. We also discussed why the Bakken features among one of the highest crude oil-producing regions in the United States. In this article, we’ll discuss natural gas production in the Marcellus Shale.

Why the Marcellus Shale is important for US oil and gas

Before going into the depth of Marcellus, you should know that in September 2014, total natural gas production in the United States was 2,154.3 billion cubic feet. On average, natural gas production in the unconventional shales was ~59% of total US production. They also accounted for all domestic natural gas production growth during 2011–2013.

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, the Marcellus Shale accounts for ~ 37% of U.S. shale gas production.

Why the Marcellus Shale is important for US oil and gas

Marcellus Shale oil production

Oil production in the Marcellus Shale increased from ~1.14 million cubic feet per day (or MMcf/d) in January 2007 to 15.88 MMcf/d in November 2014. This marks an increase of ~13 times in almost eight years.

There are currently ~101 rigs operating in the Marcellus Shale, most of which are gas-targeted. In comparison, there were ~48 natural gas rigs in January 2007.

Natural gas prices in the Northeast United States have increasingly been below the Henry Hub price. This is primarily because of this region’s increased access to the Marcellus gas.

The EIA expects Marcellus natural gas production to increase further by 40,000 cubic feet per day in January 2015 compared to December 2014.

Major oil and gas producers in the Marcellus Shale 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 such as the Energy Select SPDR ETF (XLE) and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).