Marcellus strategy paying off for gas producers

HOUSTON — The Marcellus Shale is starting to prove that, given time, its proximity to the East Coast can make it profitable for those who got in early, according to a Moody’s report issued Tuesday.

“Marcellus’ size and geographic location near the high-demand U.S. Northeast and Midwest markets give gas producers there a distinct advantage over their competitors elsewhere in the US,” Moody’s wrote.

The Marcellus is believed to hold more than 100 trillion cubic feet of natural gas and produces nearly 20 percent of U.S. natural gas, according to the U.S. Energy Information Administration.

The investments made years ago in the shale play, which stretches from West Virginia to New York, are finally paying off for Chesapeake Energy, Anadarko Petroleum and Southwestern Energy, Moody’s wrote. They were the first operators into the Marcellus and stayed put, even as natural gas prices slumped and other operators flocked to coveted oil and liquids-rich products in the Eagle Ford and other plays.

Report: Marcellus growth not peaking any time soon

As a result, the three companies have benefited from prime locations in a huge shale play that can access the East Coast, an advantage that has helped them weather low natural gas prices, Moody’s said.

Operators in the Marcellus also have benefited from greater demand for natural gas on the East Coast for power and heating, as well as the demand for natural gas liquids. New technologies, such as pad drilling, also have helped operators make these wells more productive, further adding to their profitability, Moody’s wrote.

The potential export of liquefied natural gas will further improve the benefits of investing in the Marcellus, which is expected to be one of the main suppliers for export terminals on the East and Gulf coasts.