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Efficiency gains buoy Marcellus gas output

  • Märkte: Natural gas
  • 15.10.14

Natural gas output from the Marcellus shale, the top US gas-producing field by volume, has surged in recent months as producers there continue to coax more gas from each new well.

Output from the Marcellus shale region, mostly in Pennsylvania and West Virginia, rose in September to 15.6 Bcf/d (442mn m³/d), up by 1.2pc from August and by 29pc from a year earlier, according to the US Energy Information Administration's (EIA) monthly Drilling Productivity Report. That production figure includes gas from shale wells and conventional wells.

Production from each rig working in the Marcellus shale has steadily increased as operators trimmed drilling times and improved well completion techniques. Those efficiency gains are buoying output and driving down the cost of production — making Marcellus wells more lucrative at low prices.

Spot prices at receipt points for Marcellus gas are among the lowest in the US thanks to a flood of new supplies and a lack of pipeline takeaway capacity. Spot prices on Tennessee Gas pipeline's zone 4 Marcellus in northeast Pennsylvania so far this month have averaged just $1.74/mmBtu, down from $1.86/mmBtu from a year earlier. That location in October averaged a $2.18/mmBtu discount to the US benchmark, expanding from $1.80/mmBtu during the same period in October 2013.

Spot gas on Transcontinental Gas pipeline's Leidy Line in Pennsylvania has maintained a steep discount to the US benchmark of at least $1/mmBtu since early May. That discount was at its widest this year on 10 February, expanding to $4.45/mmBtu against the Henry Hub.

The rig count in the Marcellus shale in September averaged 99, up by just two rigs from a year earlier, the EIA said. At the same time, production from each working rig rose to about 7.9mn cf/d, up by 10pc from a year earlier.

Baker Hughes reported this week that the well count in the Marcellus shale during the third quarter dropped to 525, down by about 5pc from a year earlier and down by three wells from the 2014 second quarter.

jw/dcb

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