Standard & Poor's: Marcellus transforming U.S. energy industry

Oct 22, 2012

According to a report issued last week by Standard & Poor's:

  • natural gas production in the Marcellus Shale will outpace production in the rest of the U.S. because of its proximity to Northeastern markets.
  • pipelines carrying natural gas from the West and Canada to cities in the Northeast will eventually be replaced by pipelines carrying gas in the opposite direction.
  • in about a year, when natural gas prices have risen to around $3.50, producers will return to the Marcellus first. The rate of return for "wet" gas produced in the Marcellus will be almost three-times higher than its closest competitor.

The S&P report - "How the Marcellus Shale is Changing the Dynamic of the U.S. Energy Industry" - is notable because it's a reminder how dominant the  Marcellus is becoming, and that the low price of natural gas won't change that. From the report:

For example, the Pennsylvania Department of Environmental Production (DEP) says natural gas production from the state's portion of the Marcellus shale increased to 4.4 billion cubic feet per day (bcf/d) in the first half of 2012 from less than 0.5 bcf/d in 2009.

S&P expects that trend to continue, mainly because it is so much cheaper to send gas to Philadelphia or Boston or New York City or anywhere else in the cold, crowded Northeast from the Marcellus than it is to send gas there from Texas or Colorado or Louisiana.