Marcellus Natural Gas Production Is 16.5% Higher than a Year Ago



Marcellus shale natural gas production

According to the Drilling Productivity Report (or DPR) released on April 13, 2015, the U.S. Energy Information Administration (or EIA) estimates Marcellus natural gas production in March to be 16.6 billion cubic feet per day (or Bcf/d). That’s 1% more than February’s production and 16.5% higher than a year ago.

Major oil and gas producers in the Marcellus shale could benefit from higher natural gas production in March. These producers include Cabot Oil & Gas Corporation (COG), Anadarko Petroleum Corporation (APC), and Antero Resources Corporation (AR). COG and AR are 2.8% of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). APC is 2.7% of the iShares U.S. Energy ETF (IYE).

Article continues below advertisement

Gas production per rig

The number of rigs in the Marcellus decreased to 81 in March, from 87 in February. A year ago, there were 93 drilling rigs in the region.

As noted in the graph above, drilling efficiency in the Marcellus started to accelerate in the past year. By March, Marcellus produced ~8 million cubic feet per day per rig, a 24% gain in production per rig since March 2014.

Importance of the Marcellus shale

Natural gas production in the Marcellus shale increased from ~1.16 Bcf/d in March 2007 to 16.63 Bcf/d in March 2015. That’s 13.3 times more production in eight years. Currently, the Marcellus shale accounts for 36% of total natural gas production in the key seven US shales.

Largest shale gas basin

According to the 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.

In the next part of this series, we’ll look at the Eagle Ford shale’s drill efficiency.


More From Market Realist