Not quite two years before the Civil War started, an out-of-work railway conductor named Edwin Drake brought in America’s first oil well in western Pennsylvania. Drake, who had risked every cent he had to help fund the venture, hit oil at 69 feet. Not only was his 1859 discovery just in time to help fuel the Union’s successful war effort, but it also laid the groundwork for what was to become the drilling industry as we know it.
Others followed Drake’s drilling lead and ushered in the first authentic American oil rush in the middle Appalachian Mountains. Other states along with Pennsylvania (West Virginia, western New York State and extreme eastern Ohio) became the country’s major producers of what was at the time called “rock oil.” By the end of the Civil War in 1865, drillers had honed their skills so well that they were drilling as deep as 1,100 feet.
While technically speaking Drake’s well near Titusville was the country’s first true oil well, natural gas had been produced from shallow wells in New York State for some 30 years. The gas was used mainly for small-town street lighting. In 1828, a natural gas line was laid to fuel a lighthouse on Lake Erie and promptly became a major tourist attraction.
Appalachia’s oil production peaked before the turn of the 20th Century. Thereafter, with the shallow fields depleted, companies used the new technology of reflection seismology to find promising oil-bearing structures as deep as 7,000 feet. But, drilling in Appalachia required an additional skill – one that often meant the difference between success and failure, sometimes between life and death.
Situated above promising oil-bearing units was a zone that – once penetrated – abruptly disgorged immense quantities of high-pressure natural gas. Crews sometimes had little warning to abandon rig and let the well “degas,” which often took several days. Indeed, a stray spark could cause an explosion and lead to disaster at the wellhead. Predicting when the drill bit would enter the nuisance zone was often just a seasoned rig operator’s best guess.
What drillers didn’t then know (and what petroleum geologists would later find) is that the nuisance zone is actually the largest repository of natural gas in the United States – and second largest in the world. In time, the zone would be named the Marcellus shale (or Marcellus formation) and be found to underlie an area of more than 100,000 square miles. Its name derives from small Marcellus, N.Y., where the shale crops out nearby.
The Marcellus shares several commonalities with the Bakken. First, it is a tight, shale formation that – in the days of vertical drilling – was largely overlooked. Second, it was laid down at roughly the same point in geologic time as the Bakken. And it responds well to horizontal drilling and hydraulic fracturing and holds great promise in helping the nation gain energy self-sufficiency.
The Marcellus shale was deposited between 384 and 393 million years ago in a quiet sea. (The Bakken’s age is about 360 million years.) At that time, North America straddled the Equator with that shallow sea lying in the Southern Hemisphere – at about the same latitude as present day Darwin, Australia. Rivers and streams draining mountains to the east (along what is now America’s Atlantic coast) washed in the black clays that would form the Marcellus. Those highlands had been recently created when a small continent slammed into eastern North America and – combined with molten bodies from deep within the earth’s crust – pushed upward. Land plants were just starting to arise and prehistoric fish were at the top of the food chain.
The shale underlies parts of nine states – New York, Pennsylvania, West Virginia, Ohio, plus small areas of Virginia, New Jersey, Maryland, Kentucky, Tennessee and southern Ontario, Canada. Unlike the Bakken, the Marcellus’ depth varies greatly – from being exposed at the surface in central New York to over 9,000 feet deep in eastern Pennsylvania. Its thickness ranges from a few feet in Ohio to more than 900 feet near the Pennsylvania-New Jersey state line.
Expanding market share
The most striking difference, however, between the Marcellus and the Bakken is that the Marcellus produces very little crude oil. It is nearly singularly a natural gas reservoir (See sidebar). It might be said that the Marcellus is to natural gas what the Bakken is to oil. According to the U.S. Energy Information Administration (EIA) the Marcellus now produces about 18 percent of the country’s natural gas.
Ft. Worth, Texas-based Range Resources started the present interest in the Marcellus shale in 2003 when the company drilled a well in central Pennsylvania using the same horizontal drilling and hydraulic fracking technology it was successfully employing in Texas’ Barnett shale. Heightened interest by other companies began in 2005 with a marked increase in leasing. By 2008, drillers were applying Bakken-like technology with extremely high initial natural gas production rates. Range Resources continues to be a major player in the Marcellus play, which also includes Chesapeake Energy, Anadarko Petroleum, XTO Energy, EOG Resources, Cabot Oil & Gas and others.
How much natural gas is present in the Marcellus? Estimates are wide ranging, but everyone agrees that the shale gas reserves here are huge. In 2002, the U.S. Geological Survey (USGS) estimated the Marcellus could ultimately produce two trillion cubic feet (Tcf) of natural gas. By way of comparison, annual United States production is about 30 Tcf.
In August 2011, the USGS significantly increased its Marcellus shale estimate to 84 Tcf of technically recoverable natural gas and 3.4 billion barrels of recoverable natural gas liquids (propane, butane, and other liquid hydrocarbons removed from natural gas at processing plants). Last year, the USGS estimated the Bakken to contain 6.7 trillion cubic feet of recoverable natural gas.
According to EIA, 2013 Marcellus shale natural gas production reached 3.9 Tcf. Pennsylvania accounted for 3.2 Tcf and is now the second leading natural gas producing state behind Texas. West Virginia and Ohio accounted for nearly all of the remainder of Marcellus natural gas production. In mid-February 2014, 82 rigs were operating in the Marcellus play compared to 174 in the Bakken. Driller interest is highest in central and northeast Pennsylvania where the shale is deepest and thickest. Pennsylvania accounts for six of every 10 wells now drilled into the shale.
Changing industry dynamics
The rapid development of the Marcellus play is changing long-standing dynamics in the natural gas industry. Since the end of World War II, transmission of natural gas to the densely populated, energy-parched Northeast has been from the Gulf Coast, and more recently from western Canada. However, with the Marcellus literally right next door, a major is shift is underway, which is reducing the role of Gulf oil.
In early February 2014, the Federal Energy Regulatory Commission (FERC) approved three desperately needed pipeline projects that will enhance delivery from the Marcellus play eastward and help relieve current capacity constraints. The three new pipelines – Texas Eastern’s TEAM 2014 Project; Williams’ Constitution Pipeline; and Iroquois Pipeline’s Wright Interconnect Project – have in-service dates in 2015-16. The TEAM 2014 Project will allow for bidirectional flow, which will enable shipping companies to ship gas southward and westward as well as eastward.
Unlike the Bakken play, development of the Marcellus is being vigorously challenged by well organized groups opposed to hydraulic fracking. Their primary concern is degradation of water resources and air quality. One study contends that the introduction of thousands of drilling sites will amount to a paved area equal to the size of Delaware. Most active protest is taking place in Pennsylvania and Ohio, however, communities across the Marcellus play have banned fracking within the city limits. New York instituted a statewide moratorium on fracking in 2008. Industry analysts believe Governor Cuomo will wait until after the November 2014 election to decide whether to allow fracking to proceed.
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