USGS boosts Marcellus gas estimates

A new assessment of the Marcellus Shale says the Northeastern U.S. formation may contain 84 trillion cubic feet of undiscovered, recoverable natural gas, far more than believed less than a decade ago.

The new assessment by the U.S. Geological Survey updates a 2002 study of the gas-rich formation that stretches though New York, Pennsylvania, Ohio and West Virginia, which concluded the region had about 2 trillion cubic feet of recoverable gas.

The growth in the USGS estimate takes into account advances in how drilling and completion techniques – namely horizontal drilling and hydraulic fracturing – that have made more formations accessible.

The agency also estimates there are about 3.4 billion barrels of undiscovered, recoverable natural gas liquids in the Marcellus, products that currently fetch higher prices than natural gas.

The full report is here.

The assessment is purely a geological one and doesn’t take into account factors such as the price of natural gas, the infrastructure to produce and transport the gas or the regulatory and environmental concerns, said Brenda Pierce, the USGS’s Energy Resources Program Director.

The USGS purchased production data from the Marcellus and tapped a wide range of geological information on the formation to reach the new assessment figures. The USGS also worked with a number of state geological survey groups, academics and industry officials on the assessment.

Pierce said the agency doesn’t take into account what exploration and production firms believe their future production will be from wells – a topic that appears to be part of inquiries directed at a handful of E&P firms by the Securities and Exchange Commission and the New York State Attorney General.

“We look issues like the drainage area each well has to reach, look at the cell size, how many wells are typically drilled in each area,” Pierce said.

Since the 1930s oil and gas drillers have noted natural gas when they passed through the Marcellus while targeting other formations. It was largely considered a source rock, however, not a potential reservoir rock that could be tapped for production.

The successful combination of horizontal drilling and hydraulic fracturing were used widely by the industry shortly after the 2002 assessment, leading to a boom in gas exploration in the Marcellus and other shales throughout the country.

Hydraulic fracturing – the process of pumping millions of gallons of water, sand and chemicals into the shale formations to break them apart and release the gas – has drawn concern from many environmental groups, homeowners and some lawmakers because of reports of drinking water contamination near drilling site.

Industry has argued there are no incidents of so-called frac jobs contaminating drinking water because the process usually occurs many thousands of feet below aquifers. A number of homeowners have sued companies saying the drilling has led to natural gas and chemicals in their water.

A report issued by Energy Secretary Steven Chu’s Shale Gas Advisory Board earlier this month concluded that water contamination was more likely due to poor well construction than fracking, but that there are reasonable concerns over air emissions surrounding natural gas drilling and production.  The board recommended a wide range of data collection and measurement efforts for industry.

The 84 TCF figure is the mean of a range of possible gas volumes. For example on the low end of the range there’s a 95 percent chance the formation has 43 TCF of gas and on the high end a 5 percent chance the resource includes up to 144.1 TCF.

For natural gas liquids, the range runs from a 95 percent change of 1.5 billion barrels to a 5 percent chance of 6.1 billion barrels.

There are large variations in how much gas is available in different parts of the Marcellus, Pierce said, so the results can’t be applied to all the acreage.

The natural gas liquids potential is mainly in what is known as the Interior Marcellus assessment unit which runs from the north of West Virginia through central Pennsylvania and into southwest New York.