The Patriot News
Gas prices, rules make Pa. major Marcellus player

Sunday, June 03, 2012

Like a runner who's gotten a big head start in a race, Pennsylvania might be set to dominate natural gas production in the Marcellus Shale region for many years, experts say.

With billions of dollars already invested in leases, wells and related infrastructure, the state is a cost-effective place to do business.

And a plunge in wholesale prices has made being thrifty a must for some companies, dealing a potential blow to would-be upstart New York.

A new report from Bentek Energy, which examines national industry trends, estimates that even if companies stopped drilling new wells in northeast Pennsylvania, production could grow by 31 percent over the next 16 months as the partly drilled wells get hooked up.

Bentek also found that in April, Pennsylvania's Marcellus production hit about 5.3 billion cubic feet of gas per day, with another 1.5 billion coming from West Virginia. That's about seven times the rate of just three years ago, and the boom has led to a steep drop in wholesale natural gas prices. "In order for the industry to really breathe easier, you need $4 gas. Anything below that is survival mode," Gheit said, noting the current price is about $2.70 per wholesale unit.

"In order for the industry to really breathe easier, you need $4 gas. Anything below that is survival mode." FADEL GHEIT, an oil and gas analyst with Oppenheimer & Co. in New York City A new report from Bentek Energy, which examines national industry trends, estimates that even if companies stopped drilling new wells in northeast Pennsylvania, production could grow by 31 percent over the next 16 months as the partly drilled wells get hooked up.

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