In less than a decade, the Marcellus Shale formation has grown from being just 2% of the nation’s natural gas production to nearly ten times this amount. This has contributed significantly to a shift in how this shale formation is viewed. As Mark P. Hanson, CFA recently wrote an article titled, “The Marcellus Shale: A Game-Change for the Domestic Energy Industry (and the Bane of Forecaster Everywhere).” Throughout his article Mark notes that “upstream firms and infrastructure operations – have also tended to underestimate (at times badly) the extent to which domestic shale gas volumes could grow.” He goes on to note, “Gas importers have been forced to completely reinvent their business model given the declining (and, today, nearly nonexistent) demand for liquefied natural gas.”
The success of the Marcellus Shale formation cannot be simply accounted for as a fluke, but rather, advances in technology and changes in drilling techniques have contributed to some of the success, helping to keep costs in check and continuing to fuel additional drilling and production, despite periods of low gas prices.
So the question remains, how long can the good news last? Mark Hanson notes that many producers expect another 10 to 30 years of drilling, and analysts have projected anywhere from 30 to 75 years of production potential from the Marcellus. Needless to say, we will all be talking about this formation for a long time to come, and it will continue to potentially bedevil analysts and forecasters (in a good way) for years to come.
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