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Marcellus Production Outlook

Marcellus Production Outlook thumbnail
Has Well Productivity Peaked in the Nation’s Largest Shale Gas Play?
The Marcellus shale gas play of Pennsylvania and West Virginia came onto the scene in 2007 in a big way and has grown to become the nation’s largest. It has accounted for much of the growth of U.S. shale gas production, and made up for declines in former shale gas giants like the Haynesville and Barnett plays of Louisiana and eastern Texas. Companies have scrambled to build pipeline infrastructure to connect the Marcellus to consumers in the U.S. northeast. Canadians, once supplied by gas from western Canada, are also looking to the Marcellus (and the much smaller Utica play in Ohio) for future supply; the pipelines that delivered gas to the east might be converted to instead deliver bitumen from the western tar sands. Companies in both the northeastern U.S. and eastern Canada are looking to build LNG terminals to export the shale gas bounty, and the first LNG export terminal on the Gulf coast will open later this year.
The prognosis for the Marcellus is therefore very important, as it is being counted on to supply abundant cheap gas to the northeast and elsewhere for decades to come. One of the big problems in figuring out what is happening with the Marcellus is the tardiness with which the states provide production data to the general public and to data vendors such as Drillinginfo, which I utilize extensively to analyze shale plays. West Virginia provides data in one-year chunks, and won’t release what happened in 2014 until mid-2015. Pennsylvania is somewhat better, releasing data in six-month chunks. In the absence of recent accurate production data, there has been much speculation on Marcellus production using proxies such as pipeline receipts and algorithms to estimate what production might be. Pennsylvania’s recent release of data from the last half of 2014, however, provides an opportunity to take an updated look at the Marcellus, considering that Pennsylvania comprises 85% of Marcellus production.
In my recent Drilling Deeper report, I looked at Marcellus data through mid-2014 with a view to determining what future production might look like. Critical observations included:
  • Field decline averages 32% per year without drilling, requiring about 1000 wells per year in Pennsylvania and West Virginia to offset.
  • Core counties occupy a relatively small proportion of the total play area and are the current focus of drilling.
  • Average well productivity in most counties is increasing as operators apply better technology and focus drilling on sweet spots.
  • Production in the “most likely” drilling rate case is likely to peak by 2018 at 25% above the levels in mid-2014 and will cumulatively produce about what the Energy Information Administration (EIA) projected through 2040. However, production levels will be higher in early years and lower in later years than the EIA projected, which is critical information for ongoing infrastructure development plans.
The following analysis provides updates using all available production data for 2014 and reveals:
  • The EIA overestimates Marcellus production by between 6% and 18%, for its “Natural Gas Weekly” and “Drilling Productivity” reports, respectively.
  • Five out of more than 70 counties account for two-thirds of production. Eighty-five percent of production is from Pennsylvania, 15% from West Virginia and very small amounts from Ohio and New York. (The EIA has published maps of the depth, thickness and distribution of the Marcellus shale, which are helpful in understanding the variability of the play.)
  • The increase in well productivity over time reported in Drilling Deeper has now peaked in several of the top counties and is declining. This means that better technology is no longer increasing average well productivity in these counties, a result of either drilling in poorer locations and/or well interference resulting in one well cannibilizing another well’s recoverable gas. This declining well productivity is significant, yet expected, as top counties become saturated with wells, and will degrade the economics which have allowed operators to sell into Appalachian gas hubs at a significant discount to Henry hub gas prices.
  • The backlog of wells awaiting completion (aka “fracklog”) was reduced from nearly a thousand wells in early 2012 to very few in mid-2013, but has increased to more than 500 in late 2014. This means there is a cushion of wells waiting on completion which can maintain or increase overall play production as they are connected, even if the rig count drops further.
  • Current drilling rates are sufficient to keep Marcellus production growing on track for its projected 2018 peak (“most likely” case in Drilling Deeper).
Production
Figure 1 illustrates production from the Marcellus through December 2014 compared to estimates from the EIA. Total production was about 13.7 billion cubic feet per day (bcf/d). Estimates from the EIA for December are 14.5 and 16.1 bcf/d for its “Natural Gas Weekly” and “Drilling Productivity” reports, respectively. The Utica play of Ohio and western Pennsylvania also added an estimated 1.9 bcf/d to northeast supply in December, for a total of 15.6 bcf/d. This compares to claims of more than 19 bcf/d by some analysts, an overestimate of 22%.
Marcellus Production Figure01
Figure 1 – Production from the Marcellus based on well production data through December, 2014, for Pennsylvania, and well production data through December, 2013, for West Virginia (2014 WV production is estimated assuming the continuation of growth rates observed in the latter half of 2013). Also shown for comparison are EIA estimates from its “Natural Gas Weekly” and “Drilling Productivity” reports, and the number of producing wells.
Marcellus gas production is highly concentrated in a few counties out of the more than 70 counties that have some production, as illustrated in Figure 2. Three counties account for nearly half of the play’s production, five counties account for two-thirds, and 12 counties account for 90%. Drilling is concentrated in the top counties which have the greatest economic payback; the cheapest gas is being produced, now leaving the expensive gas for later.
Marcellus Production Figure02
Figure 2 – Production by county for the top 15 counties in the Marcellus play illustrating the highly concentrated nature of production in sweet spots. The total number of counties with at least some Marcellus production is more than 70.
New maps published by the EIA (reproduced in Figure 3) illustrate two key Marcellus play parameters: elevation (from which one can determine depth) and thickness (an indicator of potential reservoir volume and gas concentration per unit area). These maps show the variability over the play’s extent and why it is not surprising that production is concentrated in relatively small core areas. Other parameters which factor into productivity include organic matter content, thermal maturity, presence of natural fractures, sediment composition in terms of its ability to propagate fractures, pressure, gas saturation, permeability and porosity.
Sweet spots have the most favorable combination of these parameters and are clearly concentrated in northeast Pennsylvania, northern West Virginia southwest Pennsylvania, as illustrated in Figure 4. The play’s future production trajectory depends on drilling rates and trends in well productivity as sweet spots become saturated with wells and drilling moves into lower-quality rock.
Marcellus Production Figure03
Figure 3 – Elevation (top) and thickness (bottom) of the Marcellus shale. The thickness controls the volume of the potential reservoir and potential gas distribution and the elevation determines reservoir depth which controls pressure and other critical parameters. From EIA, April, 2015.
 Marcellus Production Figure04
Figure 4 – Distribution of wells in Marcellus play as of mid-2014, illustrating highest one-month gas production (fromDrilling Deeper Figure 3-80).
Drilling Rates
Drilling rates and well productivity are key factors in offsetting the unceasing decline of existing wells (field decline), which in the Marcellus amounts to 32% of the play’s production that needs to replaced each year through more drilling. At the time of publication of Drilling Deeper, offsetting field decline in the Marcellus as a whole required 1,003 new wells per year, and in Pennsylvania 899 wells per year. Production is now about 10% higher but the productivity of wells has also increased on average such that the number of wells needed to offset field decline in Pennsylvania is still just over 900 per year.
Figure 5 illustrates the drilling rate in Pennsylvania and the average amount of gas added to the play’s production for each new well drilled. The current rate of about 1,050 wells per year is sufficient, should it continue, to see production rise overall until it is 15% above current levels.
Marcellus Production Figure05
Figure 5 – Annual number of producing wells added and Marcellus play production added per new well from 2007 through December 2014 in Pennsylvania.
Another important factor is wells that have been drilled but not completed, or wells waiting on a pipeline connection. A major issue in the Marcellus has been the lack of takeaway capacity as gathering pipelines must be constructed to new wells and larger pipelines constructed to markets. Another strategy, purportedly widely used, is to drill wells without completing them, putting them in abeyance until prices are higher; as the cost of hydraulic fracturing is half or more of the total cost of a well, this practice allows producers to get a head start while rig costs are low due to the number of rigs looking for work as a result of the drop in oil prices.
Figure 6 illustrates a comparison of the rate at which wells are spudded (based on well permits) and the rate at which new producing wells are added to the play. From this it is apparent that a large backlog of drilled but not connected wells was worked off in late 2012 through 2013; the backlog has since grown again, however, with 550 more wells drilled than connected in the 12 months prior to December, 2014. The current rig count in the Marcellus is down 50% from its highs in early 2012, so even with improved rig efficiency and the ability to drill more wells per unit of time, falling rig count will ultimately limit drilling rates and impact play production.
Marcellus Production Figure06
Figure 6 – Comparison of the annual rate of wells spudded to producing wells added each year to the Marcellus in Pennsylvania, illustrating the backlog of wells waiting to be connected to production infrastructure.
Well Productivity
Well productivity is key to maintaining and growing Marcellus production, which is a function of new well productivity times drilling rate minus field decline, and to the economics of drilling the wells. We were told the following at this year’s Ceraweek conference by a Marcellus operator:
Not only are we drilling longer wells, not only are we drilling them more cheaply, but we’re getting more recovery. Today, we’re drilling the best wells we’ve ever drilled. Some of it is advances in technology. Some of it is advances in our ability, and some of it is geology — we’re in areas where we have the ability to drill longer laterals. So you can see the problem. As gas prices come off… we continue to do better and better at drilling wells.
Is this really true? The answer varies depending on where an operator’s land holdings lie and the maturity of their development. Figure 7 illustrates daily well productivity over the highest month, first 6 months, first 12 months and first 24 months for all producing wells drilled in the Marcellus in Pennsylvania from January 2010 to December 2014. It is certainly true that productivity has increased markedly over this period up to early 2014 but has decreased since, suggesting the tide has turned in the inexorable battle between technology and geology.
Marcellus Production Figure07
Figure 7 – Average daily production for all wells drilled in the Marcellus play between 2010 and December 2014. Dots indicate production over each well’s highest month (red), first 6 months (yellow), first 12 months (green), and first 24 months (blue). Lines indicate average daily production for all wells at these same points in time of well life (polynomial best-fit trend lines).
Figure 8 accentuates trends in well productivity in the Marcellus by fitting a moving average to the data. This figure indicates that:
  • Well productivity increased by 70% between early 2012 and early 2014. This is a testament to both better technology and focusing on sweet spots.
  • Productivity peaked in mid-2014 and has fallen in the last half of 2014.
  • Highest month productivity is a key indicator of productivity over the longer term, as it is reflected in 6 month-, 12 month- and 24 month-average production.
Marcellus Production Figure08
Figure 8 – Average daily production for all wells drilled in the Marcellus play between 2011 and December 2014. Data have been fitted with a trailing 150-well moving average to make the trends more apparent. Dots indicate production over each well’s highest month (red), first 6 months (yellow), first 12 months (green), and first 24 months (blue). Lines indicate average daily production for all wells at these same points in time of well life (polynomial best-fit trend lines).
It is instructive to examine comparable data for the most productive and densely drilled counties, as these will be the first to experience saturation of available drilling locations (the top four counties are analyzed below).
Susquehanna County
Susquehanna is the top producing county and also has the highest average well productivity. It is second only to Bradford County in terms of the number of wells drilled. Figure 9 illustrates average daily well production in Susquehanna County over various periods. This figure indicates that:
  • Well productivity nearly doubled from early 2012 until late 2013 but has declined by nearly 20% during 2014. Susquehanna wells are still the top producers in the play.
  • The fall-off in well productivity is likely due to the density of current drilling (resulting in early signs of well interference) and to drilling more marginal parts of the county.
  • Geology appears to be trumping technology in Susquehanna County, which is the most productive of the play. Well density was 1.48 wells per square mile in mid-2014 (see Table 3-5 in Drilling Deeper) with the assumption that 4.3 wells per square mile could be drilled; this may be overly optimistic.
Marcellus Production Figure09
Figure 9 – Average daily production for all wells drilled in Susquehanna County between 2011 and December 2014. Data have been fitted with a trailing 50-well moving average to make the trends more apparent. Dots indicate production over each well’s highest month (red), first 6 months (yellow), first 12 months (green), and first 24 months (blue). Lines indicate average daily production for all wells at these same points in time of well life (polynomial best-fit trend lines).
Bradford County
Figure 10 illustrates average daily well production in Bradford County over various periods. This figure indicates that:
  • Well productivity increased by 50% from early 2012 until early 2014 but has declined by more than 10% since then. Bradford County has the most producing wells in the play.
  • The fall-off in well productivity is likely due to the density of current drilling, resulting in early signs of well interference, and to drilling more marginal parts of the county.
  • Geology appears to be trumping technology in Bradford County. Well density was 1.22 wells per square mile in mid-2014 with the assumption that 4.3 wells per square mile could be drilled; this may be overly optimistic.
Marcellus Production Figure10
Figure 10 – Average daily production for all wells drilled in Bradford County between 2011 and December 2014. Data have been fitted with a trailing 50-well moving average to make the trends more apparent. Dots indicate production over each well’s highest month (red), first 6 months (yellow), first 12 months (green), and first 24 months (blue). Lines indicate average daily production for all wells at these same points in time of well life (polynomial best-fit trend lines).
Lycoming County
Figure 11 illustrates average daily well production in Lycoming County over various periods. This figure indicates that:
  • Well productivity increased by 100% from early 2011 through 2014 but appears to be decreasing as of late 2014. Lycoming County is now second only to Susquehanna in average well productivity and third overall in production.
  • It is too early to say if growth in well productivity in Lycoming County has stalled out but it appears likely. Well density was 1.35 wells per square mile in mid-2014.
Marcellus Production Figure11
Figure 11 – Average daily production for all wells drilled in Lycoming County between 2011 and December 2014. Data have been fitted with a trailing 30-well moving average to make the trends more apparent. Dots indicate production over each well’s highest month (red), first 6 months (yellow), first 12 months (green), and first 24 months (blue). Lines indicate average daily production for all wells at these same points in time of well life (polynomial best-fit trend lines).
Washington County
Figure 12 illustrates average daily well production in Washington County over various periods. This figure indicates that:
  • Well productivity increased by 100% from late 2012 until early 2014 but has declined by about 10% since then. Washington County produces wet gas and most of the liquids in the Marcellus. It has generally lower well productivity than the top three counties but the liquids production has bolstered the economics.
  • The fall off in well productivity is likely due to the density of current drilling, resulting in early signs of well interference, and to drilling more marginal parts of the county.
  • Geology appears to be trumping technology in Washington County. Well density was 1.28 wells per square mile in mid-2014 with the assumption that 4.3 wells per square mile could be drilled; this may be overly optimistic.
Marcellus Production Figure12
Figure 12 – Average daily production for all wells drilled in Washington County between 2011 and December 2014. Data have been fitted with a trailing 50-well moving average to make the trends more apparent. Dots indicate production over each well’s highest month (red), first 6 months (yellow), first 12 months (green), and first 24 months (blue). Lines indicate average daily production for all wells at these same points in time of well life (polynomial best-fit trend lines).
Future Production
At this point there is little reason to change the “most likely” production trajectory for the Marcellus published in Drilling Deeper (reproduced in Figure 13), other than to say it may be a bit too optimistic as drilling rates including West Virginia have fallen below the 1320 wells per year assumed (although not by much). If drilling rates fall significantly from current levels the play will peak sooner and declines will lessen after peak. Also, the observed decline in well productivity in top counties suggests that drilling densities of 4.3 wells per square mile may be too optimistic which, if so, would serve to further reduce ultimate recovery, result in more rapid declines in well productivity than assumed, and further lower production rates after peak.
Marcellus Production Figure13
Figure 13 – Projection of future Marcellus production (“most likely” case from Drilling Deeper Figure 3-99). Cumulative recovery through 2040 is estimated at 129 tcf, which is more than 10 times the 12.6 tcf recovered to date.
Summary and Implications
Central points from this analysis include:
  • The northeastern U.S. and eastern Canada are counting on abundant cheap gas from the Marcellus and Utica plays for the foreseeable future, based in part on rosy projections from the EIA that expects production to grow well into the next decade. Large investments are being made in infrastructure to transport and use this gas, including pipelines, processing plants, LNG export terminals, gas-fired generation and other residential, commercial and industrial uses. Like other shale gas plays, Marcellus wells exhibit steep production declines and the play has a field decline of 32% per year that must be offset by continuous drilling. In Pennsylvania this amounts to more than 900 wells per year simply to maintain production at current levels.
  • The Marcellus play, although very large, has two-thirds of its production concentrated in 5 of 70+ counties. Although top counties have generally seen impressive increases in new well productivity over the past three years due to improved technology, most have exhibited declines in well productivity in 2014, with the top county, Susquehanna, down 20%. This is likely a result of well interference and/or moving to poorer quality locations within these counties, which suggests the assumption of a final well density of 4.3 wells per square mile may be too optimistic.
  • Although production will likely grow over the next two years, barring a radical reduction in drilling rates from current levels, projections of a peak in 2018 appear on track, followed by a terminal decline (which assumes gradual increases in price; sudden major increases in price could temporarily check this decline if reflected in significantly increased drilling rates). The backlog of wells waiting on connection to infrastructure will shield production from falling for some months should there be a large drop in rig count.
  • Industry invariably drills its best prospects first, hence the cheapest gas is being exploited now. Infinite faith in technology cannot make up for the realities of geology. These realities are showing up now in the most productive counties.
  • As for the massive investments in infrastructure on the assumption of cheap and abundant gas for the foreseeable future – CAVEAT EMPTOR.

Post Carbon Institute



33 Comments on "Marcellus Production Outlook"

  1. buddavis on Wed, 29th Apr 2015 8:49 am 

    Read it and I assume their numbers are correct, but this statement caught my eye

    “Geology appears to be trumping technology in Washington County”

    In producing oil and gas, geology ALWAYS trumps technology.

  2. nony on Wed, 29th Apr 2015 9:34 am 

    The delta with eia dpr is wet gas versus dry.

    Takeaway is the key constraint. Hughes misses a key insight which is current marcellus l prices of 1.20 at transco leidy. Takeaway will also affect the posited fast up fast down hypotheses by hughes.

  3. nony on Wed, 29th Apr 2015 9:36 am 

    Also wonder if the best month turndown has a math explanation. For example recent wells lack time to show their best month

  4. shortonoil on Wed, 29th Apr 2015 10:18 am 

    The US has 487,000 producing NG wells that are declining by 24% per year. In 2014 the US NG industry produced 31.84 trillion cubic feet of gas which at the present price of $2.578 MM is worth $81.98 billion. Replacing 24% of 487,000 wells will cost much more that $82 billion. The US NG industry is not presently generating enough revenue to replace the decline of it existing fields.

    The NG industry is in the same situation as the the world’s petroleum producers; increasing production costs, and declining affordability. This is resulting from the ongoing depletion of the world’s fossil fuel resources. To compensate for the decline in the US NG supply prices would have to rise to $17.30 per MM. The economic consequences would most likely be fatal for the economy.

    http://www.thehillsgroup.org

  5. shortonoil on Wed, 29th Apr 2015 10:21 am 

    http://www.eia.gov/dnav/ng/ng_prod_sum_dcu_NUS_a.htm

  6. Plantagenet on Wed, 29th Apr 2015 10:34 am 

    The real test will come when the US starts exporting NG. Will that increase in demand trigger an increase in supply from the Marcellus and other shale reservoirs?

  7. Nony on Wed, 29th Apr 2015 1:36 pm 

    Short: There is always a need to replace declines, to find another Marcellus, Iraq, North Sea, Saudi Arabia, etc. etc. Have been hearing this truism since literally the 1970s.

    Plantagenet: Probably the increase comes out of the Haynesville first, until the Marcellus gets more take-away. Price driven of course. however, look into the Haynesville. It is holding steady after a lot of Berman peaker types called it terminal decline. HAs a lot of gas left, but because of depth, it is more expensive to get.

  8. rockman on Wed, 29th Apr 2015 1:51 pm 

    For what it MAY be worth, another analysis of the MS:

    http://www.marcellus-shale.us/Marcellus-production.htm

    Seems like the biggest take-away (if accurate): ultimate recovery from the MS is now 84 tcf vs the original 410 tcf from the DOE. This appears to be based upon a documented commercial life of only 7.5 years.

    “Potential gas production and actual gas production from Marcellus Shale wells became a hot topic during the summer of 2011. To wit, an SEC investigation. Financial investors need to know how accurate the predictions are of Marcellus Shale gas reserves, and the true productive life of Marcellus wells.

    While predicting gas reserves remains just a prediction, we have tracked 190 wells at over three dozen drilling locations with actual Marcellus gas well production numbers, to clearly show how much gas has been produced, and more importantly, how much gas production has declined over the first years of shale gas production.

    The figures will surprise you. It has been shown that the average productive life of a Barnett Shale well is 7.5 years. From these early production results it looks as though these Marcellus wells may share that same short lifespan. The trend points to a 65-percent drop in production over the first 3 years, with further declines of 8 percent per year after that. Using that model, a Marcellus well’s average productive life would be 8 years. Gas liquids (alternately listed as either condensate or oil) production drops just as fast, if not faster, than the methane production.

  9. buddavis on Wed, 29th Apr 2015 2:11 pm 

    Nony

    The Hayesville will be hard pressed to increase its production significantly. The bigger companies appear to be selling off positions and the core area (Northern Desoto and NOrthern Red River and Southern Bossier Parishes is what has been getting drilled the last 3 years with 5 and 6 wells per unit. There is a company with old Encana hands that are refracking old wells, but those results are not moving the needle, despite a nice ROI.

    The declines I have seen, even the very best wells in the play, are just too great, and after running 100 rigs, it will be tough to increase back to that with fewer quality locations and smaller operators.

  10. Nony on Wed, 29th Apr 2015 2:22 pm 

    Deborah Rogers is not reputable, Rock. She bills herself as a shale expert but in fact is a goat farmer and good looking lady who came to prominence in the PA anti-fracking kerfuffle of 2009. She and Berman made a bunch of comments about Marcellus not going anywhere, back in 2009, based on Barnett data. And they have been drastically wrong.

    84 TCF is not bad (16 years supply at current production). But you should know ITG (very good methodology and real experts) came up with 330. Standard and Poors also came up with more than the Feds did. So did the PGC. It’s interesting how old that Fed estimate is. Look what happened when they redid the Bakken–doubled.

    http://www.prnewswire.com/news-releases/itg-investment-research-us-energy-reserves-more-than-double-official-estimates-173100801.html

    P.s. 84 TCF is 17 years of current production. And the 84 is not definitive either. Engelder still says ~400 (and he’s a DAMNED good Ph.D. geologist who has specialized in the Marcellus).

  11. Nony on Wed, 29th Apr 2015 2:37 pm 

    Buddavis:

    The Haynesville took a dip, but the last year or so has held steady. Not terminal decline. Watch out for people like Berman. They love to point at the drop, but then they won’t give credit for the last year of holding steady. That is not classic Hubbert peak–it’s price changing.

    There is a lot of resource left. And they have improved completion techniques. But it won’t come out at sub-$3. Wells are too deep. But if that holds the H up, it just means that some other play (presumably the MArcellus-Utica) got to market. My impression is those pipelines are not reversing fast enough and the Marcellus which is already somewhat stranded will get even worse. In that case, supply from LA to GC will make a lot of sense (in that export driven higher price regime).

    See:

  12. Nony on Wed, 29th Apr 2015 2:40 pm 

    Look at gas production for the last 15 months from the H. Interesting…

    http://www.eia.gov/petroleum/drilling/pdf/haynesville.pdf

  13. buddavis on Wed, 29th Apr 2015 3:13 pm 

    Nony

    I am in the exploration end of the business in LA. I know local companies who have WI and RI with Chesapeake, Encana, Exco and Samson. I know what they have been doing and a good idea of what they are going to do from conversations with them.

    the wells are good and they have done wonders on the cost side, but the guys I know are not participating in wells at this price and most of their best locations are drilled.

    Encana is looking at selling and SWEPI and Chesapeake are looking at selling.
    I do not think the Haynesville will ever get back to 10 BCF/day. Guarantee it at these prices. If they do it would not be the first time I was wrong but I feel like I have a good handle on what is going on in that area.

  14. Nony on Wed, 29th Apr 2015 3:51 pm 

    I agree it won’t at these prices. But it sure seems to be hanging in there better than a classic Hubbert curve. Look at the last 15 months:

    http://www.eia.gov/petroleum/drilling/pdf/haynesville.pdf

    Notice how it is holding steady, vice continued decline?

    If we get the exports and the Marcellus takeaway is still lagging, that gas has to come from somewhere. There is still a lot of resource in N LA and if the price rises enough, it will get delivered. And if the price doesn’t, then I guess someone else supplied the gas instead.

  15. Nony on Wed, 29th Apr 2015 3:53 pm 

    Bud: appreciate your background and participation.

  16. shortonoil on Wed, 29th Apr 2015 4:20 pm 

    But it sure seems to be hanging in there better than a classic Hubbert curve.

    That statement makes absolutely no sense at all! Hubbert was studying conventional oil wells , which are water drive. Gas wells are pressure drive. There is no reason that they should be anywhere similar in their behavior. There is a completely difference set of physical laws governing them.

  17. apneaman on Wed, 29th Apr 2015 4:37 pm 

    “Over the last 30 years, the average grade of Australian ore bodies being mined has halved while the waste removed to access the minerals has more than doubled. This trend is repeated worldwide and is driving massive increases in energy consumption by the mining sector. In the last decade Australian mines incurred a 60% rise in energy use, and a 40% decline in productivity over the same period. At the same time, growing constraints on energy, water and carbon have seen costs rise dramatically.”

    http://www.crcore.org.au/ind-challenge.html

  18. Nony on Wed, 29th Apr 2015 4:50 pm 

    Short: Hubbert used the same methods for looking at oil, coal and natural gas. See his 1956 paper, figure 22 for his natgas prediction.

    http://www.hubbertpeak.com/hubbert/1956/1956.pdf

  19. Nony on Wed, 29th Apr 2015 4:52 pm 

    This is clearly wrong on the natgas front as we’ve already produced about 30% more than the total natgas that Hubbert predicted we ever would. And rate still increasing.

    http://oilprice.com/Energy/Natural-Gas/No-Peak-Natural-Gas-Anytime-Soon.html

  20. Nony on Wed, 29th Apr 2015 4:54 pm 

    [Apologies]

    Meant to link this in post above:

    http://stevemaley.com/2012/01/26/whats-wrong-with-peak-oil-theory-consider-peak-gas/

  21. Nony on Wed, 29th Apr 2015 5:44 pm 

    In 2010, Art Berman wrote an article and gave presentations with the title,

    “Shale Gas—Abundance or Mirage? Why The Marcellus Shale Will Disappoint Expectations”

    http://www.theoildrum.com/node/7075

    First the article had almost no rational explanation of why his comments on the Barnett, Haynesville or financing applied to the Marcellus.

    Secondly, how has the Marcellus disappointed in the last 5 years?

    Grown from less than 2 BCF/d to over 16 BCF/d. A rate of increase of almost 3 BCF/d/year, sustained for 5 years.

    And it’s done it under HH prices averaging under $4/MCF. (Currently at 2.50, with an outlook of average 2.75 for the next 12 months, and not getting to sustained 4, for the next 20 years.) Marcellus prices have been even WORSE. Right now around 1.20.

    CAN ANYONE REASONABLY SAY THE MARCELLUS DISSAPPOINTED OVER THE LAST 5 YEARS?

  22. Nony on Wed, 29th Apr 2015 5:46 pm 

    See bottom right for the growth of the Marcellus from 2010 to 2015. How did the last 5 years work out, Berman???

    http://www.eia.gov/petroleum/drilling/pdf/marcellus.pdf

  23. GregT on Wed, 29th Apr 2015 7:37 pm 

    Natural gas is also a finite resource Nony. The faster it is exploited, the sooner it runs out.

    You act like you believe that this is a good thing.

    Got a plan B Nony?

  24. Nony on Wed, 29th Apr 2015 8:29 pm 

    Just let events unfold. If we start running out of resource, the price will go up, taking into effect future demand. This is a basic concept (the Hotelling rule). Rare things sell for more money and this includes the future demand.

    Right now, natural gas is incredibly plentiful and WAY more than the peakers of the early 2000s predicted. Volume is up 50% and price is down to 2.50 (and the futures market expects it to stay sub 4 for the next 20 years, excepting spikes…but on a sustained basis).

  25. GregT on Wed, 29th Apr 2015 8:37 pm 

    Events are already unfolding Nony. Whether you choose to be ignorant of them or not. The price will go up long before we start running out, but will only go up as high as the economy can afford.

    Just like what we are already experiencing with oil. It is only a matter of time.

    Got a plan B Nony? Cause plan A is not sustainable.

  26. Davy on Wed, 29th Apr 2015 9:00 pm 

    NOo, have you ever tried baloney? Greg, that will be the NOo’s plan B.

  27. Nony on Wed, 29th Apr 2015 9:16 pm 

    https://www.youtube.com/watch?v=xZbKHDPPrrc

    Just for you, Davy.

  28. Davy on Wed, 29th Apr 2015 9:31 pm 

    NOo, that was sweet. Is that the NOo corny theme song?

  29. Nony on Wed, 29th Apr 2015 9:37 pm 

    Of course not. That was just my reply to the “what will the grasshopper do in winter” question.

    This is the conrnie theme song.

    http://www.myvideo.de/watch/2894170/PRINCE_1999

  30. GregT on Wed, 29th Apr 2015 10:29 pm 

    The Grasshopper and the Ant.

    I could not think of a better parallel to describe your foolishness Nony.

  31. apneaman on Thu, 30th Apr 2015 4:50 am 

    Here I submit another head shaking example of the lengths a person will go to avoid the anxiety of cognitive dissonance.

    “The idea that there’s a very sharp stagnation in business services is really very odd,” said David Kern, chief economist at the British Chambers of Commerce. “I don’t actually believe it.”

    See that? when confronted with the reality of overshoot the chief Econ-O-Priest simply refuses to believe it. To admit it is to admit his entire worldview is wrong – every belief he held so dearly is wrong. A life time of sunken costs – meaningless, wasted. No way can he or nony or anyone else who put all their faith in this system admit that it’s over. la la la I’m not listening…………………..

    http://www.bloomberg.com/news/articles/2015-04-28/unbelievable-u-k-business-slump-puzzles-analysts

  32. rockman on Thu, 30th Apr 2015 7:12 pm 

    Looks like there’s more support for a decline in drilling activity (at least temporarily)in the Marcellus: if operators are selling all the NG they have available there’s a great incentive to back off drilling just as we are seeing in the oil shales:

    Reuters – Williams Cos Inc said on Thursday a couple of gas producers in the Marcellus shale in the U.S. Northeast will curtail production due to low prices.

    “We’re seeing decisions to shut in production because of extremely low prices. This is going to dampen some of the expected growth from our Northeast volumes,” Armstrong said.

    Last week, Cabot Oil & Gas Corp, one of the biggest producers in the Marcellus, said it would curtail production during the second quarter due to low gas prices. Prices at the Dominion South Hub in southwest Pennsylvania, one of the primary Marcellus hubs, fell to $2.05 per million British thermal units during the first three months of 2015 from $4.95 during the same time in 2014 and a five-year average of $4.14.

    Cabot produced on average over 2 billion cubic feet per day in the Marcellus during the first quarter but said it would cut volumes by about 23 percent to between 1.55 and 1.6 bcfd.

    Armstrong said the production cuts would likely be “short-lived,” possibly lasting into the third quarter. “We continue to feel very strong about the overall health of the business” he added.

    And in case some folks are confused and think NY state has banned frac’ng because it’s environmentally unsound the politicians don’t have any problem with frac’ng done in PA. The ban allows the to use up PA’s resources first. And when those eventually run out I have no doubt NY will drop the ban in order to supply the needs of its citizens:

    “Separately, Williams said it expects a decision from New York environmental regulators a couple months that will allow the company to build its proposed Constitution pipeline from Pennsylvania to New York. It will allow Cabot and other producers to sell more Marcellus gas to U.S. Northeast markets.”

  33. Nony on Thu, 30th Apr 2015 8:07 pm 

    The NE PENN is at 1.20. I have been hearing this backing off on Marcellus drilling articles for last month or two. We just don’t have the take away. Even EIA shows it. Last month, they actually had the Haynesville growing faster than the Marcellus. Marcellus gas is effectively stranded, above 17 bcf/d. They just don’t have the pipes to take it out of area.

    You might think 2.75 is low, but at least Haynesville can get that and has a national market. Marcellus gas is stuck until they get some of those projects done.

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