Marcellus Shale Increases its Profile Nationally

The recently released U.S. Crude Oil, Natural Gas, Natural Gas Liquids Proved Reserve 2010 report detailed statistics on the changes in the nation’s proven reserves for natural gas. The report noted that the accelerating growth of the proven reserves in recent years was a result of “expanding exploration and development activity in several of the nation’s shale formations.” Shale gas continues to grow to be a larger part of the 318 Tcf of the nation’s total proven reserves. The report also noted that shale gas is almost 30% of the total reserves, compared to less than 10% in 2007.

According to the report “Pennsylvania’s proved natural gas reserves more than doubled in 2010, contributing to about one-fifth of the overall increase. Expanding shale gas developments in these and other areas, perhaps most notable Pennsylvania’s portion of the Appalachian Basic in the Marcellus play, drove overall increases in 2009 and 2010.”

The Marcellus Shale formation’s proven reserves increased by 7.1 Tcf in 2010 alone. While Pennsylvania is still far behind the nation’s leading state, Texas, the report ranked Pennsylvania in the top 6 in the nation, an honor that Pennsylvania did not earn as recently as a 2008. As recent as 2008, the government estimated that the reserves were approximately 102 Bcf, and by 2010, reserves were estimated to be 13.199 Tcf. The report cited that Pennsylvania may again see substantial growth in its proved reserves as further drilling and development continues.

The report also noted that the sustained declines in the price for natural gas has caused many operators to focus on formations of wet gas, which the Marcellus is rich in the southwestern region of Pennsylvania.

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This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.

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