Pennsylvania
Related: About this forumVolume of natural gas production increasing faster than expected, even with fewer new wells
http://thetimes-tribune.com/news/marcellus-shale-gas-growing-faster-than-expected-1.1573158Excerpt:
"Natural gas production from the Marcellus Shale region is growing faster than expected, according to a new federal report issued Tuesday.
Marcellus production has now reached 12 billion cubic feet a day, the Energy Information Administration report found. That's the energy equivalent of about 2 million barrels of oil a day, and more than six times the 2009 production rate.
The vast majority of the Marcellus gas is coming from Pennsylvania and West Virginia. The shale also lies under other states, but most of the wells in Ohio produce oil, and New York has placed a moratorium on shale gas drilling. Federal energy experts are surprised by the rapid Marcellus growth, since the number of drilling rigs has fallen over the past two years."
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Fortunately for the gas industry, Corbett and his friends instituted an impact fee instead of an extraction tax. State revenues from the industry may actually decrease in the next few years because of the way the state fee was structured. In comparison, an extraction tax would have raised more revenue as production increased each year. Every other state that has a natural gas industry uses an extraction tax (including Texas, which Corbett said he wants to be a model for PA.)
Curmudgeoness
(18,219 posts)was so screwed up, I think that the drillers are making a great effort to get as much as they can before someone comes along and changes the rules. Right now, drilling less wells is a benefit to them, so they are getting all that they can from those wells. If PA makes changes to an extraction tax, the largest amount of gas that can be extracted from those wells will be done already. I think that they are just getting while the getting is good.
tech3149
(4,452 posts)My limited study of fracking indicates there is a severe drop in output within the first year so there's a better profit to be made by milking the existing wells rather than drilling new. I also understand that there is a lot of sell-off of assets that could only be explained by the realization that there's no future in it.
The only smart move for the state should have been an extraction tax and impact fees. Anything else was a sloppy wet kiss to the extraction indusrty.
JPZenger
(6,819 posts)Parts of the gas industry were way over-leveraged - Chesapeake Energy in particular had ridiculous levels of debt. When retail natural gas prices fell, they had to sell off fracking fields at fire sale prices - including to the Chinese. The Chinese structured the deal so they got the technology too.
Curmudgeoness
(18,219 posts)that flooding the market with new gas resources would lower the price, especially when the wells are not located at a place where it is easy to the overseas market? That is either short-sighted, just plain dumb, or just an excuse.
As to the Chinese, I am not surprised.
happyslug
(14,779 posts)Shale Natural Gas has an inherent problem, most contracts were signed years ago, and those contracts contain a MUST Drill clause. No drill, the gas companies loses the right to drill. Thus a lot of wells were going into production more to minimize loss then to maximize gain (i.e. the right to drill has already been agreed to and payment for the right has already cleared the bank, thus unless the gas company wanted to lose its whole investment, it had to drill just to get some gas into production to pay off not only the land owners, but also their investors. It was almost a ponzi scheme, except the Gas Companies did not intend to enter into it, they just did.
Now, how long will these wells stay in production is an open question, production life is short, with an average of 60% production DROP after two years in production, 70% after three on on average 8% after that date, with most wells out of production within seven years:
http://www.marcellus-shale.us/Marcellus-production.htm
http://shalebubble.org/wp-content/uploads/2013/02/SWS-report-FINAL.pdf
http://blogs.worldwatch.org/sustainabilitypossible/shale-bubble/
http://americanenergycoalition.com/slide-view/the-big-fracking-bubble-the-scam-behind-the-gas-boom
http://shalebubble.org/
Now, right now, we are still in the boom section of Shale production, it is expected to last for a few more years. I have read the peak production will be 2017, then a rapid decline.
Total US Natural Gas production:
http://www.eia.gov/dnav/ng/ng_prod_sum_dcu_NUS_a.htm
Shale natural Gas production:
http://www.eia.gov/dnav/ng/ng_prod_shalegas_s1_a.htm
http://www.eia.gov/petroleum/drilling/pdf/marcellus.pdf
http://www.nofrackingway.us/2013/11/06/art-berman-bursts-shale-gas-bubble/