Early Utica Shale results suggest its rates of return are less dependent on natural gas liquids (NGL) pricing than the wet portion of the Marcellus Shale

Tuesday, July 10, 2012

BENTEK’s Northeast Observer analyzes drilling economics in the Utica Shale based on preliminary well data and finds that if the NGLs-oil price ratio diverges from historical levels of around 50% and NGL prices fall, internal rates of return (IRRs) in the wet Marcellus drop proportionally more than in the Utica. At a 30% NGLs-oil price ratio and $60/Bbl of oil, Utica IRRs average around 24%, whereas wet Marcellus IRRs drop to only 9%. This reflects the fact that the wet portion of the Marcellus produces no oil and only NGLs, whereas early estimates show the Utica producing 330 b/d of oil.

Follow BENTEK’s Northeast Observer for ongoing IRR analysis for the wet portions of the Marcellus, as well as updates on oil and associated gas production in the Utica. The Northeast Observer provides unparalleled daily data and analysis on one of the most important regions in the U.S. natural gas market, including regional drilling activity, supply/demand trends and price spreads for key Northeast pipeline flow corridors.

Key features of BENTEK’s Northeast Observer:

• Natural gas supply, demand and storage trends in the Northeast

• Natural gas production, including a breakdown of wet and dry volumes in the Marcellus and Utica, and pipeline inflows

• Northeast constraint points and weekly volume changes by market

• Basis analysis for key Northeast markets including Appalachia, New York, Boston and New England

• Prices, pipeline variable costs and price spreads for key Northeast pipeline flow corridors


BENTEK’s Northeast Production Monitor provides timely coverage of Northeast natural gas rig counts and drilling activity, including five-year production forecasts for each region and basin.

BENTEK’s Northeast Market Call offers a comprehensive and forward-looking view of Northeast basis through a sector-by-sector analysis of the underlying factors that drive the regional market, including production, storage and demand.

To learn more, please contact your BENTEK sales representative or call BENTEK Sales at 1-888-251-1264.