Pennsylvania Gov. Tom Wolf is hanging not only his budget proposal, but at least some of the state’s economic future, on continued growth in natural gas production in the state, but rumors of gas being sold at 60 cents per thousand cubic feet (MCF) is prompting concern among many.
Penn State Marcellus Center for Outreach and Researcher Director Tom Murphy said there is no single number where drillers stop working in the Marcellus Shale or any other shale formation in the state. Often the discussion centers on being viable below $2.00 per MCF.
Sales of $.60 gas, if they ever existed, do not seem to be the norm in Pennsylvania but $1.25 per MCF for Marcellus Shale gas has been a reality for several months.
“Most companies that are drilling in Marcellus right now, if not all companies, would tell you that the price environment that they are experiencing is a very difficult market for them to be operating right now,” Murphy said.
Murphy has seen a decrease in the number of wells being drilled in Pennsylvania compared to last year but he noted the volume of gas being produced is increasing year-over-year.
“That is due to better and more efficient drilling techniques” and better personnel in the field, and high flow rates from Utica Shale wells said Murphy. More wells producing in the state is also a factor.
Marcellus Shale wells are expected to produce gas for 25 to 50 years but about half of that gas comes out of the wellhead in the first two to three years, creating a parabolic production curve that slowly tapers to nothing according to Murphy.
Production numbers are also expected to rise as more pipelines are laid across the state allowing drillers to more easily get their gas to market. Much of the investment in the region has been in the so-called midstream sector, which moves the gas, and in ancillary industries including water treatment facilities.
Last week, Neptune Solutions Company announced it is establishing its new headquarters in Eighty Four, PA. It has committed to creating 30 new, full-time jobs over the next three years as a condition of receiving $60,000 in Department of Community and Economic Development job creation tax credits.
The company’s products and technologies recycles fracking fluid on site to reduce the need to truck hundreds of thousands of gallons of water to and from the well pad.
“All those pieces of the infrastructure are still being built in earnest throughout Pennsylvania and pretty much all of the contiguous states,” Murphy said.
