Is there a massive natural gas field discovered in the Appalachians?
For many years geologist have known about the Devonian black shale described as the Marcellus. Shale itself is simple and easy to spot with its black color and is slightly radioactive, making it easy to detect on a geophysical well log. The problem was that most wells drilled within the Marcellus did not yield great amounts of gas. Most natural gas industy players never envisioned the formation being a "super giant" gas field, thus very few investments were made in the region. As recently as 2002 the United States Geological Survey circulated 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. Provided the tremendous area of the Marcellus, it wasn't a large amount.
Major corrections in estimates and production
In 2003 a corporation called Range Resources drilled a well in Washington County, Pennsylvania (located within the Marcellus). Early results inferred good flows of natural gas were probable. They started to experiment with horizontal drilling and Hydraulic fracturing techniques that had worked well previously in other Barnett Shale wells in Texas. Apparantly something worked. Production began in 2005, and by 2007, over 350+ wells had been granted permits in Pennsylvania alone. As time progressed many insiders began to take notice. In the early part of 2008, two science professors issued estimates that the Marcellus formation could contain more than 500 trillion cubic feet of natural gas. Using "fracking" techniques, and horizontal drilling techniques, the scientists estimated approx. 50 trillion cubic feet of gas were recoverable. If true, the valuation of recoverable resources would be in the trillions also, and would be enough to satisfy the needs of the United States for decades.
What is shale and exactly how is gas taken from it?
Shale is in essence rock. It is shaped by organic matter that has decayed and beenstored below the ground for millions of years. Natural gas is formed in the pore spaces of the shale, and collects inside of fractures within the shale, and is also collected within mineral grains and organic material. The gas has difficulty esacaping due to the fact that the pore spaces and fractures contained bythe shale are really tiny. Nearly all older wells within the Marcellus shale region produced gas, but at a very delayed rate. The majority wells that produced had one thing similar. They intersected multiple natural fractures inside of the formation. The well bore would intersect the natural fractures and adequate gas would be produced to make the wells sustainable.
Horizontal drilling and fracturing
Nearly all naturally occurring fractures within the Marcellus are vertical, hence a vertical well wouldn't intersect many fractures. Through newly created horizontal drilling methods, suddenly wells could coincide with many pre-existing fractures. This radically increased preliminary output of wells drilled. Another process used to enhance production is Hydrofracing. This is done by sealing off a bore hole and inserting water or gel at extremely high pressure into the well. The excessive pressure fractures the shale and raises the size of preexisting fractures. To be able to stop the fractures from closing when the water is removed, sand or a different form of "propent" is required to preserve the size of the fractures and enable the gas to emanate into the well. making use of these two practices, wells were able to substantially raise the flow of gas, and profits for the drillers.
Potential economic benefits
The Marcellus shale is the largest volume of natural gas that is situated near the major population regions of New York, New Jersey, and the rest of the Eastern Seaboard. The shale is also located in a location that is central to the Eastern Midwest regions of the United States. Given that most of the gas has to be moved by pipelines, the central locale leads to noticeably lower investments for transportation. As time passes and the accessibility of the gas is confirmed, the infrastructure to drill, move, and consume 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 finding new found assets in acres they believed was only good for farming etc. In the begining mineral rights were being purchased for a hundred or so dollars per acre, but lately that figure has grown to as much as two or three thousand per acre. Landowners have begun to recieve checks in the hundreds of thousands, just for the oppotunity to drill. As well as mineral rights, gas producers also need to have right-of-ways to construct pipelines to transport the gas to the place it will be consumed. It is estimated that thousands of miles of pipeline will be required to get the gas to locations it will be utilized. Right-of-ways are currently being bought throughout the Marcellus Shale and can range from a couple dollars per linear foot to a hundred dollars per foot in populated 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 taking part in the rush to increase their natural gas holdings in the area. More on these, and many other natural gas stocks here.
Article Source: http://www.articlesbase.com/investing-articles/how-to-understand-marcellus-shale-natural-gas-investment-opportunities-1930228.html
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