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Tuesday, July 22, 2014

Production and profits on the rise in Marcellus, Utica shales

A new report by ICF International, a provider of consulting and technology services to government and private industry, projects huge increases in natural gas production from the Marcellus and Utica shales. That production is already at record-setting levels in Pennsylvania.
ICF’s report finds that gas production for the Marcellus and Utica shale plays is projected to grow by 36%, from 25 bcf per day in the first quarter of this year to 34 billion cubic feet per day by 2035. Production growth from the Utica wells has been much greater than anticipated and more growth is expected, ICF says.

The reason for this huge growth is improvements in drilling and hydraulic fracturing technology. Longer horizontal laterals, more fracture stages, closer later spacing, and increases in wells drilled per rig continue to increase estimated ultimate recovery per well, which is up 19% in the last quarter alone in the Marcellus and 32% in the Utica.

Exploration and production companies that extract natural gas from the Marcellus Shale will benefit more than natural gas producers elsewhere in North America, even if gas prices weaken, Moody's Investors Services said in a recent report.
The low-cost, highly productive wells of the Marcellus will continue to be economic, said Moody's associate analyst Michael Sabella, author of the study. "Technological advancements since the early 2000s have allowed US natural gas producers to reshape the industry largely through the development of the Marcellus," he said. "The Marcellus has emerged as one of the most profitable regions in the US for producing natural gas," he said, noting that "even if prices return to the weak levels of 2012, producers there will be rewarded."
…As takeaway capacity constraints ease, the performance of the producers should improve…"Pipeline reversals and exports of liquefied natural gas will create additional investment opportunities for Marcellus producers, even while offering only marginal benefits for gas producers outside the region," Sabella said. "Marcellus producers will remain competitive in the fledgling US LNG industry, and production growth will receive another boost once these projects come online."
Drilling support companies are doing pretty well, too

And still, Pennsylvania has no severance tax, and aims low on regulation and economic growth.

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