The Marcellus Shale play in Pennsylvania has garnered a great deal of attention locally and nationally. In just a few years, the Marcellus Shale has come to be recognized as one of the top natural gas resource plays in the world. The following data, obtained from the Pennsylvania Department of Environmental Protection, highlights the increase in Marcellus Shale drilling activity in Pennsylvania:
Year # of Marcellus Shale Wells Drilled
January 2011 through April 2011 (4 months) 515
The Pennsylvania Department of Community & Economic Development estimates that Marcellus Shale drilling will be active in Pennsylvania for the next 20 to 40 years. Others claim that drilling in the Marcellus Shale could last up to 100 years.
What is interesting for Pennsylvanians and investors nationwide is the development of another shale gas formation called the Utica Shale. In terms of size, the Utica Shale is believed to be twice as large as the Marcellus Shale formation. The Utica Shale generally lies beneath the Marcellus Shale. It requires deeper drilling and production techniques that differ from those currently utilized in extracting natural gas from the Marcellus Shale. Due to the greater capital commitments required for removal, the Utica Shale is in the early, experimental stage of development with only a few companies having wells in Pennsylvania. Range Resources drilled what it believes to be the first commercial Utica Shale well during 2010 in Butler County, Pennsylvania. Consol Energy recently drilled a discovery well into the Utica Shale and has plans to expand its exploration of the Utica Shale in 2011.
Many in the industry; however, believe that the greater costs associated with the increased drilling depth of the Utica Shale can be reduced by the using the existing infrastructure built to extract natural gas from the Marcellus Shale (drilling pads, roads, permits, leases, pipelines, etc.).
Time will tell; however, Pennsylvanians and investors should closely monitor the Utica Shale activity, since it has the potential to be the next great natural resource play in North America.
© 2011 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.
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.