Natural Gas Intelligence
BENTEK: Marcellus Dry Gas Producers Hit the Brakes

Monday, February 27, 2012

Drillers in northeastern Pennsylvania -- the dry gas area of the Marcellus Shale -- in the months ahead will stomp on the brakes with both feet and jam the dry gas freight train into reverse, according to an analysis by Bentek Energy LLC. Even if they do, a bulging gas surplus will fester behind pipeline capacity constraints for years to come, the firm said.

"...Northeast supply growth has outpaced capacity additions and local demand growth and led to a huge backlog of non-producing wells, exacerbating the potential for supply congestion and price weakness," Bentek said in a recent Market Alert. "In response, producers have announced a 14% decline in total northeastern Pennsylvania (dry gas) rig activity."

Drilling cuts are expected to be limited to northeastern Pennsylvania, which is where the play's dry gas comes from. "The southwestern Marcellus and Utica are expected to see increased drilling," Bentek said.

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