Marcellus shale investment opportunities

How to understand Marcellus Shale natural gas investment opportunities

Want to know how to become a member of the quickly growing group of investors making huge natural gas investments in the Marcellus Shale formation? This report will give you a good background on the current developments which have thrust the Marcellus Formation onto investor's screens.

Is there a massive natural gas field discovered in the Appalachians?

For several years geologist have known about the Devonian black shale described as the Marcellus. It is not difficult to locate with its black color and is slightly radioactive, making it easy to detect on a geophysical well log. The challenge was that the majority of wells drilled inside of the Marcellus did not result in substantial quantities of gas. The majority of natural gas industy participants never envisioned the formation being a "super giant" gas field, therefore very few investments were made in the area. As recently as 2002 the United States Geological Survey published its "Assessment of Undiscovered Oil and Gas Resources of the Appalachian Basin Province." In their survey they came to the conclusion the formation contained an estimated undiscovered resource of about 1.9 trillion cubic feet of gas. Given the massivearea of the Marcellus, it wasn't a large amount.

Major changes in estimates and production

In 2003 a company called Range Resources drilled a well in Washington County, Pennsylvania (located inside the Marcellus). Early findings indicated good flows of natural gas were probable. They began to research with horizontal drilling and hydrofracturing techniques that had worked previously in other Barnett Shale wells in Texas. Fortunately something worked. Production comenced in 2005, and by 2007, over 350+ wells had been granted permits in Pennsylvania alone. As time continued many insiders started to take notice. In the early part of 2008, two geology professors released estimates that the Marcellus formation might contain more than 500 trillion cubic feet of natural gas. Using "fracking" techniques, and horizontal drilling methods, the scientists estimated approx. 50 trillion cubic feet of gas were recoverable. If true, the value of recoverable resources would be in the trillions also, and would be plenty to service the requirements of the United States for years.

What is shale and how is gas taken from it?

Shale is in effect rock. It is created by organic matter that's decayed and beenstored beneath the earth for millions of years. Natural gas is found in the pore spaces of the shale, and collects inside of fractures within the shale, and is also collected within mineral grains and organic matter. The gas has difficulty esacaping due to the simple fact that the pore spaces and fractures present inthe shale are really small. Most older wells inside of the Marcellus produced gas, but at a very slow rate. The majority wells that produced had one thing in common. They intersected multiple naturally occuring fractures within the formation. The well bore would intersect the natural fractures and adequate gas would be produced to make the wells feasible.

Horizontal drilling and fracturing

A large number of naturally occurring fractures inside the Marcellus are vertical, hence a vertical well would not intersect a lot of fractures. With recently developed horizontal drilling tactics, suddenly wells were able to intersect a number of pre-existing fractures. This dramatically enhanced preliminary production of wells drilled. Another method used to increase production is Hydrofracing. This is carried out by sealing off a bore hole and inserting water or gel at incredibly high pressure into the well. The very high pressure fractures the shale and raises the size of original fractures. To be able to stop the fractures from closing when the water is removed, sand or an additional form of "propent" is needed to sustain the size of the fractures and enable the gas to escape into the well. employing these two procedures, wells were able to considerably boost the flow of gas, and earnings for the developers.

Potential economic benefits

The Marcellus shale formation is the biggest volume of natural gas that is situated near the major population areas of New York, New Jersey, and the rest of the Eastern Seaboard. It is also situated in an area that is accessable to the Eastern Midwest regions of the United States. Due to the fact that almost all of the gas has to be moved by pipelines, the central location results in noticeably reduced investments for transportation. As time passes and the profitability of the gas is demonstrated, the infrastructure to produce, transport, and utilize the gas will be magnified. Could Pennsylvania be the next Texas of energy creation?

Landowners, Leasing, and Right-of-ways

Just like Jed Clampet, several people are discovering new found wealth in property they believed was only good for farming etc. At first mineral rights were being purchased for a hundred or so dollars per acre, but recently that figure has risen to as high as two or three thousand per acre. Landowners have begun to recieve checks in the hundreds of thousands, just for the oppotunity to drill. In addition to mineral rights, gas producers also need right-of-ways to assemble pipelines to transport the gas to wherever it will be consumed. It is projected that thousands of miles of pipeline will be vital to get the gas to locations it will be utilized. Right-of-ways are currently being acquired all over the Marcellus Shale and can range from a couple dollars per linear foot to a hundred dollars per foot in urban locations.

Drilling activity and companies involved

There are numerous companies involved in the Marcellus shale. They take part by leasing mineral rights from land owners or sharing in royalties of generating wells. Range Resources, Chesepeake Energy, Cabot Oil & Gas, Southwestern Energy Production Company, Atlas Energy Resources are just a few of the companies active in the rush to increase their holdings in the area. Find many more Marcellus shale and natural gas investing ideas by visiting the links below!