The U.S. Energy Information Administration says the country’s natural gas reserves are at the highest level in 40 years, with shale gas production driving the numbers.
The EIA issued a report earlier this month that said “The development of shale gas plays has become a ‘game changer’ for the U.S. natural gas market,” with new plays helping increase shale gas production to 4.87 trillion cubic feet in 2010. The EIA said shale gas reserves were at 60.6 TCF at the end of 2009 and comprised about 21 percent of U.S. natural gas reserves.
And those numbers are predicted to increase. The EIA said “shale gas is the largest contributor to the projected growth in production” and estimated that shale gas production would account for 46 percent of U.S. natural gas production by 2035.
EIA, in its Annual Energy Outlook 2011, looked at 48 shale gas basins in 32 countries.The agency noted how drilling advances have made shale gas more attainable than ever and said adding identified global shale gas resources to other gas resources increases technically recoverable global gas supplies by more than 40 percent, to 22,600 trillion cubic feet.
The report comes at the same time gas analysts are touting the potential of two plays around the Marcellus Shale that could yield far more resources than previously thought.
Drillers in the Marcellus have found two more geologic formations – one above the Marcellus and one below it – that they say could be as prolific as the Marcellus.
“What we’ve got is Marcellus times two,” Terry Engelder, a Penn State University geosciences professor, told the Philadelphia Inquirer. “The implications of this are just amazing.”
It was Engelder who in 2008 brought the Marcellus into prominence when he issued a report detailing his production estimates based on drilling in the region. Engelder estimated Marcellus contained 363 TCF of recoverable reserves – enough to supply U.S. consumption for 14 years – but he also noted the entire formation (which covers parts of seven states including Pennsylvania and New York) could contain as much as 4,400 TCF of gas, with perhaps 1,300 TCF recoverable. Other estimates have put the recoverable number around 500 TCF.
The new formations – known as the Utica and Upper Devonian Shales – have companies drilling in the region expanding their forecasts for gas recovery.
Range Resources, active in the Marcellus since 2004, and other companies have ramped up exploration in the area.
“The Utica and Upper Devonian could combine to equal the Marcellus,” Range spokesman Matt Pitzarella told the Inquirer.
Range holds leases across 700,000 acres in the Marcellus, and all three plays fall into its area.
Companies drilling in the region have been touting their finds to investors. Consol Energy, better known as a coal company before putting resources into natural gas last year, on Feb. 28 said one of its wells drilled in 2010 in the Utica in eastern Ohio produced 1.5 million cubic feet of gas.
Brandon Elliott, Consol’s vice president for investor relations, said the Utica well was more than 8,400 feet below the surface and did not require hydraulic fracturing, a technique in which fluids are injected into the ground to crack the shale and free the gas. Elliott told investors the production from the Utica well “actually would be greater than any of our other vertical wells that we drilled in the Marcellus.”
Gulfport Energy Corp. in February acquired interests in the Utica; the company’s stock price has gained nearly $20 in the past year and $10 per share in the past two months.
The state of Pennsylvania, where much of the Marcellus lies, is at the heart of a debate pitting the economic benefits of drilling against environmental concerns. State regulators recently asked Western Pennsylvania water companies to expand their tests for contaminants in areas near drilling activity.
Legislators, meanwhile, continue to debate a severance tax on drilling operations that would bring money back to communities most affected by drilling. Gov. Tom Corbett, who established a Marcellus Shale Advisory Commission to study the effects of drilling in the state, has said his office is against a tax.
New York State continues with a moratorium on Marcellus drilling, and similar measures are being considered in Maryland and West Virginia.
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