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What is going on in the Marcellus?

While Pennsylvania Governor Tom Wolf is trying with all hit might to hang on to his proposed budget plan and the state’s economic future in natural gas, it is hard to ignore rumors about natural gas selling for only 60 cents per thousand cubic feet (MCF).

According to Penn State Marcellus Center for Outreach and Researcher Director Tom Murphy, there is really no specific price at which operators in the Marcellus Shale formation, or any other shale in the U.S., would stop drilling.  Typically, conversations regarding the price of natural gas revolve around it still being viable below $2.00 per MCF.  While the sale of natural gas at 60 cents per MCF has never happened, and certainly isn’t a reality in Pennsylvania, natural gas selling at $1.25 per MCF is and has been for several months.

Murphy commented on the current status of companies drilling in the Marcellus and the market:

Most companies that are drilling in Marcellus right now, if not all companies, would tell you that the price environment that they are experiencing is a very difficult market for them to be operating right now.

Like several others, Murphy has watched the number of rigs operating in Pennsylvania decline.  He did note that despite the falling rig count, production has still risen year-over-year, which can be credited to new drilling technologies and techniques.  Murphy also credited the production growth to better qualified people in the oilfields and the high flow rates of the Utica Shale formation.

As reported by 90.5 WESA, “Marcellus Shale wells are expected to produce gas for 25 to 50 years but about half of that gas comes out of the wellhead in the first two to three years, creating a parabolic production curve that slowly tapers to nothing according to Murphy.”

As more pipelines are constructed across Pennsylvania, natural gas production will continue to increase.  The pipelines will allow “drillers to more easily get their gas to market.”  In Pennsylvania, a lot of the new pipeline projects focus on the midstream sector, which is responsible for transporting natural gas, along with “ancillary industries including water treatment facilities.”

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