Report: Marcellus growth not peaking any time soon

HOUSTON — Natural gas from the booming Marcellus Shale will represent nearly a quarter of U.S. production by 2015, according to a new report published Monday by investment analyst Morningstar.

The report estimates that the Marcellus Shale, which traverses the Northeast from New York to West Virginia, will be the biggest driver of domestic dry gas production growth in the coming years, adding 3 billion cubic feet per day this year and another 2 billion cubic feed per day in 2015.

Morningstar projects 14 to 20 billion cubic feet per day in gross production from Marcellus by the end of 2015. At that point, the report says, Marcellus gas will account for nearly a quarter of the country’s gas production, up from about 20 percent today.

“In short,” the Morningstar report says, “the growth of the Marcellus over the next several years is likely to be nothing short of astounding.”

 No peak anytime soon

According to the Energy Information Administration, dry gas production in the Marcellus Shale averaged 10.4 billion cubic feet per day in 2013 — a 61 percent increase from 2012.

Pad drilling: New technologies require new math for rig counts

The report says the strong growth — which forecasts historically have underestimated  forecasters — is due largely to efficiency improvements like a shift towards pad drilling and 24-hour operations.

“For a variety of reasons — including the high initial production rates and relatively shallow declines of wells, the ongoing application of new technologies, and a continued focus on more productive areas of the play — we don’t believe Marcellus natural gas production will reverse course anytime soon,” the report says.

1,600 wells

The report indicated at least 1,000 wells will need to be completed annually to hold production in the formation flat. But the Morningstar forecasters estimate 1,600 wells will be completed each year, with the extra production more than compensating for declines from older wells.

The play has 30 to 75 years of resource potential at current production rates, according to the study. While growth is likely to slow down, the play is so large — it covers nearly 100,000 square miles — that even slight growth will be significant.

The report was based on an analysis of nearly 4,500 wells in Pennsylvania and 1,000 wells in West Virginia, according to Morningstar. Researchers examined their initial production rates, production declines and drilling and completion activity to conduct their analysis.