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A U.S. natural gas boom? Better believe it, and it'll begin in just a year. Look for rapid development of monumental-size natural gas deposits trapped in mile-deep shale formations that zigzag beneath New York, Pennsylvania, Ohio and West Virginia.
The Marcellus Play contains as much as 1000 trillion cubic feet of gas. If it all pans out and can be mined, the gas would be enough to meet U.S. needs for 40 years at current usage levels. The odds for doing this are boosted by the development of technologies that let producers gather small pockets of gas into huge underground reservoirs and drills that can be steered up, down and sideways. Such tech advances are sparking interest in these huge fields being tapped after decades of oil and gas industry officials scratching their heads about how anyone could do so profitably.
Big-time natural gas production is about to get under way with a gaggle of companies staking large claims via leases with landowners and hundreds of millions of dollars being plowed into drilling equipment, pipelines and storage facilities. Range Resources Corp. is among the leaders. It has invested $700 million in Marcellus projects since 2004 and has around 1.4 million acres under lease -- 200,000 acres added in just the first half of this year. Range should produce about 30 million cubic feet (MMcf) of natural gas a day by December of this year from land in western Pennsylvania.
MarkWest Energy Partners is spending $200 million on facilities to process gas extracted from the Marcellus Play in western Pennsylvania. Range, working with MarkWest, will rev up natural gas production to as much as 100 MMcf by December 2009. Among the other firms involved: Atlas Energy Resources, producing about 25 MMcf of natural gas a day, with holdings of 555,000 acres, most in southwestern Pennsylvania; Carrizo Oil & Gas and joint venture partner Avista Capital Partners are spending $300 million to extract gas from the 155,000 acres that they control.
Full-tilt production is at least five years off, mainly due to the need to build out the vast amount of infrastructure required to process the gas to separate other fossil fuels, such as propane and butane, and pipelines to transport these fuels hundreds of miles to wholesalers' facilities.
The natural gas bonanza should slow the rise in prices -- at least for a while. Gas produced from these new reserves will be piped mainly to New England and the Mid-Atlantic states. That will free up fuel now piped from the Midwest and Southeast, increasing supplies for these regions and helping to tamp down natural gas prices for homeowners, manufacturers, electric utilities, commercial and office buildings. They've all taken a wallop on energy costs, as natural gas prices have soared 400% since 2000.
However, the price relief may be short-lived. Demand for gas will soar when Congress imposes emission limits on carbon dioxide, a greenhouse gas linked to global warming. That will mean a greater reliance on gas-fired generators and boilers.
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POSTED BY: Nomen (November 22, 2008 05:58 PM)
This is great news but I noticed a lot of possible complications were left out. Where will they get the large water quantities needed for the high pressure injections? What hazard does this underground gas release pose to area ground water supplies? While this part of the country has a low level of seismic activity,earthquakes with fatalities have historically occurred there. What is the probability of lubricating a fault with high pressure rock fracturing and making it active? Will insurance rates go up for buildings not designed for even minor tremors? Hopefully, all the hazards are being considered and risks will be minor but I am always suspicious of news releases that stir up unrealistic optimism while neglecting the possible consequences.
POSTED BY: Bob (November 24, 2008 11:51 AM)
When this story first broke,they claimed that it was enough gas to supply the U.S. for 14 years rather than 40. Have they found more? I too have reservations about widespread water contamination. Since we need air,water,food and energy in that order,there seems to be something fundamentally wrong with trading energy with anything above it on that list.
Also on a side note. The price of gas in the KC area has now fallen to $1.37-$1.67/gal. and the national average is down to $1.90. Many people have been predicting this would happen to break the back of alternative energy programs. The price of oil would then shoot back up. Do you have any insights or predictions?
POSTED BY: Phil in Texas (December 15, 2008 10:57 PM)
To Nomen: The high pressure injections of water, aka fracture proceedure or "frac" for short, is usually available near the site of the drilling location, either from ground water or other sources. The water can also be hauled in "frac" tanks. The frac is performed only in the subject formation. I've never heard of a producing formation, such as the Bakken, Woodford, Marcellus, Haynesville or Barnett shales being seismically active or a frac creating an earthquake. The frac simply breaks open and increases porosity of the gas shale or sandstone, etc. The hole is cased during the initial drilling process to protect usable ground water. In Texas, it is 1500 ft. Ground water in deeper formations, such as where natural gas and oil is found, us usually unusable by humans due to salinity issues. Salt water that is produced with oil and gas is usually reinjected into non-producing formations deep underground. Such activity is regulated by the oil and gas commissions of the subject state. To Bob: I feel that the price of oil is in a temporary lull. This country didn't learn its lesson from the Arab oil embargo back in the 1970s. Alternative energy programs WILL NOT be going away after what we just experienced. Oil is priced on supply and demand, not to break the back of alternative energy programs. Enjoy the current price of gasoline. Oil will certainly to go back up. It may even go lower from this point, but I don't think $80 to $100 oil is out of the question. Just my opinion.
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