Tuesday, August 23, 2011

USGS Revises Estimate of Marcellus Gas by +42X

PHILADELPHIA -- "The U.S. Geological Survey (USGS) on Tuesday dramatically increased its estimate of the natural gas contained in the Marcellus Shale, the deep deposit that has triggered a drilling frenzy in Pennsylvania. The USGS now estimates that the shale contains about 84 trillion cubic feet of undiscovered, technically recoverable natural gas and 3.4 billion barrels of undiscovered, technically recoverable natural gas liquids.

The agency's latest numbers are 42 times greater than its 2002 assessment, which said the shale contained about two trillion cubic feet of gas (see chart above). The Marcellus lies under Pennsylvania and seven other Appalachian states. The USGS attributed the increase to new geologic information from shale-drilling operations, which have ramped up in recent years because of new developments in extraction technology.

The Marcellus Shale Coalition, the industry trade group, did not miss the opportunity to tweak skeptics who have expressed doubts about the longevity of the reserves.

"While some critics continue to question the viability of responsible domestic shale gas development, it is abundantly clear - as laid out by this new data - that the Marcellus Shale will continue to lead the way in meeting Americans' energy needs for years to come," Kathryn Z. Klaber, the coalition's president, said in a statement."

11 Comments:

At 8/23/2011 10:20 PM, Blogger juandos said...

Well there goes vangIV oil agenda for awhile...

 
At 8/23/2011 11:22 PM, Blogger VangelV said...

"While some critics continue to question the viability of responsible domestic shale gas development, it is abundantly clear - as laid out by this new data - that the Marcellus Shale will continue to lead the way in meeting Americans' energy needs for years to come," Kathryn Z. Klaber, the coalition's president, said in a statement.

The producers are not making money as a group because they need the price to be double the current level.

 
At 8/23/2011 11:38 PM, Blogger NC said...

Global Warming parish wrapping head with duct tape.

 
At 8/24/2011 11:17 AM, Blogger cruiser said...

Not only that, but underlying the Marcellus Shale is another layer called the Utica Shale that is "... thicker than the Marcellus, it is more geographically extensive and it has already proven its ability to support commercial production." We have in this country what can only be called an embrassment of petroleum resources if the govt. would just get out of the road.

 
At 8/24/2011 11:18 AM, Blogger juandos said...

"The producers are not making money as a group because they need the price to be double the current level"...

Once this current clown is out of office and there is actually a 'for real' free market President in the White House and more in the Congress it might not need to be a doubling of the price to become profitable...

Federal regulations are also driving prices...

 
At 8/24/2011 11:48 AM, Blogger VangelV said...

Once this current clown is out of office and there is actually a 'for real' free market President in the White House and more in the Congress it might not need to be a doubling of the price to become profitable...

But they could not make a profit even under the Bush rules. The problem comes down to the return on the energy invested. While some of the sweet spots are very profitable the average shale formation is a net loser. I recall arguing with people about shale gas. A few years later the shale gas players are busy trying to transition to shale oil because they can't make a profit at prices that are less than double the current level.

 
At 8/24/2011 2:03 PM, Blogger Bruce Hall said...

It won't matter what the price of natural gas is because the EPA will find a way to 1) block the development of additional wells or 2) create additional costly regulations to keep development unprofitable.

 
At 8/24/2011 2:27 PM, Blogger juandos said...

"But they could not make a profit even under the Bush rules"...

vangIV, I said a 'for real' free market President, not a R.I.N.O....:-)

BTW you might want to take a 2nd look at the Bush presidency and his apparent love of regulations...

Think 'mecury charged mini flouro' lights for instance...

 
At 8/24/2011 3:42 PM, Blogger VangelV said...

vangIV, I said a 'for real' free market President, not a R.I.N.O....:-)

BTW you might want to take a 2nd look at the Bush presidency and his apparent love of regulations...

Think 'mecury charged mini flouro' lights for instance...


I agree that Bush was an idiot who also favoured high regulations. But that having been said, it was not Bush who prevented the shale gas players from being profitable. Shale gas had too many issues with the energy return on the energy invested that were ignored by the markets. The only way to make money was to be in a sweet spot of a formation and to hedge by selling forward at a time when prices were high and drilling costs were low.

The problem for the optimists is the math. A high depletion rate means that a growing production rate will demand a huge number of drill crews. That will drive up the cost for services even as the extra production puts pressure on prices. If the energy content that went into the drilling prices has not been written off the producers will have to pay the actual cost. This is why Chesapeake and other companies that were hyping gas are now on the shale oil promotion tour.

 
At 8/25/2011 3:03 AM, Blogger QualityPoint said...

If you feel that fuel cost is emptying your wallet then your option should be fuel additives , are touted as great products that help you get more mileage out of your tank of gas.

 
At 8/25/2011 3:08 PM, Blogger VangelV said...

The U.S. Geological Survey (USGS) on Tuesday dramatically increased its estimate of the natural gas contained in the Marcellus Shale, the deep deposit that has triggered a drilling frenzy in Pennsylvania. The USGS now estimates that the shale contains about 84 trillion cubic feet of undiscovered, technically recoverable natural gas and 3.4 billion barrels of undiscovered, technically recoverable natural gas liquids.

Let us go over this again. What Mark quotes is commentary that draws a very misleading conclusion. We are expected to believe that the USGS is upgrading previous estimates by quoting a figure from 2002, when the USGS was not thinking much about shale. But the two trillion cubic feet of gas estimate is not what the USGS was reporting just a few months ago and was being hyped up by the shale industry.

The previous estimate came from the 2009 estimate, which claimed that the Marcellus Shale had 262 trillion cubic feet of recoverable gas. In effect the USGS has DOWNGRADED its estimates by two thirds.

Keep in mind that not all that long ago Mark had people on this site hyping the Jack Field discovery in the Gulf and that we were talking about the claimed PEMEX discovery that was finally downgraded by 95% and is now largely considered immaterial.

What Mark has managed to do is to take a large downgrade in reserves and make it look as if is a positive development. Prudent investors need to stay away from the hype and start looking at the cash flows and production data of the producers. It is important to note that the producers that are most familiar with the shale formations are divesting their holdings and selling themselves off to larger players who can take advantage of the accounting and reporting rules that allow them to hide reserve declines.

 

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