uploads///Marcellus

Marcellus Shale Natural Gas Production Up 16% over June 2014

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Jul. 23 2015, Updated 7:05 a.m. ET

Marcellus Shale natural gas production

In its Drilling Productivity Report on July 13, 2015, the EIA (U.S. Energy Information Administration) estimated that Marcellus Shale natural gas production totaled 16.5 bcf (billion cubic feet) per day in June. That’s nearly the same as May’s production level and 15.8% greater than production a year ago.

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Natural gas production per rig

The number of active rigs in the Marcellus Shale decreased from 78 in May to 76 in June. A year ago, there were 97 drilling rigs in the region.

In June, the Marcellus Shale produced 8.2 million cubic feet per day per rig, nearly a 10% gain in production per rig since June 2014.

What it means for energy companies

Muted natural gas production growth at the Marcellus Shale may negatively affect major oil and gas producers in the region. Producers in this region include EQT Corporation (EQT), Anadarko Petroleum (APC), and Consol Energy (CNX). EQT makes up 0.82% of the Energy Select Sector SPDR ETF (XLE). CNX forms 0.02% of the SPDR S&P 500 ETF (SPY).

Onshore OFS (oilfield service) companies provide various land-based drilling-related services and technologies. Lower natural gas production will hurt OFS companies like Schlumberger (SLB), Carbo Ceramics (CRR), Newpark Resources (NR), and Weatherford International (WFT).

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Importance of the Marcellus Shale

Natural gas production at the Marcellus Shale increased from 1.2 bcf per day in June 2007 to 16.54 bcf per day in June 2015. That’s 12.6 times the production in eight years. Currently, the Marcellus Shale accounts for 36% of total natural gas production at the seven major 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 drilling efficiency at the Eagle Ford Shale.

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