US Marcellus Shale could hold up to 1,100 tcf of gas

The gas potential of the Marcellus Shale may be as high as 1,100 tcf, well above the 50 tcf previously forecast, the US's top academic authority on the play said.
"There's something really big in the Marcellus," Pennsylvania State University professor Terry Engelder told an audience of oil and gas executives at Platts' Appalachian Gas conference in Pittsburgh. "The Marcellus is much bigger than the Barnett," Engelder said, adding that he based his projection on early reports from Range Resources and Chesapeake Energy's initial wells in the play. Engelder earlier estimated that the shale contained about 50 tcf of recoverable gas.

While he called Chesapeake's numbers "mildly optimistic," Engelder said Range's numbers buttress his new forecast of more than 1 tcf of recoverable gas from the shale play which extends from New York south through Pennsylvania and into West Virginia.
"It's bigger than the Barnett, Fayetteville, and Woodford shales combined," he said.
Getting that gas to market is another problem, Engelder said.
"The cost of land is going to scale to the price of gas," he said.

Already, Pennsylvania landowners are reporting lower priced leasing deals from exploration and production companies as the price of gas has fallen nearly by half since June. And overlapping regulatory agencies present a further problem for E&P companies, Tudor Pickering Holt Managing Director David Pursell said.
"There are guys who aren't entering this play because of regulation," he said.

The biggest regulatory uncertainty is the Susquehanna River Basin Commission, a federal agency that controls water use in much of eastern Pennsylvania, Pursell said. The commission only meets quarterly, and Pursell said that isn't often enough to keep pace with the gas rush that's occurring in the state.
"Ultimately, the Marcellus will be developed, the economics are just too large to ignore," Pursell said.

He said the cost to buy that gas in the ground was about $ 4/mm cf and with the forward strip calling for gas at $ 10/mm cf, the profit potential of the Marcellus is just too large for E&P companies to ignore.
"The Marcellus has all the economies of shale plays," he added. "Easy to find, hard to produce." He said Tudor Pickering Holt is forecasting 2.6 bn cfpd of production from the play by 2023.