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A Local Company Goes International Thanks to Marcellus Shale
May 15, 2012
Three years ago, Tim Schoen was a sports reporter intern covering Penn State football games for the Altoona Mirror and on track to become a journal...
Pennsylvania’s natural gas industry has caused a ripple effect of job creation
July 31, 2015
U.S Shale Gas Booming despite Global Glut
July 9, 2017
The United States has led the pack in the shale revolution, profiting more than any other nation. The U.S. enjoys the benefit of having the majority of its wells located domestically, thanks to vast natural shale formations, allowing the nation to keep all profits for themselves without any negotiations or diplomatic gymnastics. Due to the up rise of fracking and other technological advances, the production of natural gas and shale oil in the U.S. had been increasing steadily for years.
Last year marked a sharp decline as a gas glut led to a dramatic plunge in pricing. But now, just as shale gas prices are finally rebounding from last year’s all-time-lows, the United States’ two biggest shale gas deposits are producing record amounts of fuel, threatening to push gas prices back down. As the Appalachian Marcellus shale basin and the Texas-based Permian basin rush to conquer a market share, the U.S. gas glut shows no signs of stopping.
Though the Marcellus and the Permian are on opposite ends of the nation, there is sure to be a surge in production as producers on both sides rush to conquer the Midwest and other major markets. According to a report released by the U.S. Energy Information Administration, Marcellus gas output will rise 0.5 percent to 19.4 billion cubic feet daily this month as compared to June, while Permian production will climb 1.9 percent to 8.5 billion, a record high for both basins.
In the first half of 2017 in Pennsylvania alone, natural gas producers drilled 397 shale wells, more than double the number the created in the same period in 2016. Additionally, about 20 rigs are currently exploring for new founts of natural gas.
Despite this, producers remain cautious in their optimism for a total rebound after last year’s historic downturn. The pace of production increase, while huge, is still lower than it was during the fracking boom nearly a decade ago, and this year’s gas renaissance hasn’t been nationwide. In the Marcellus, drillers are focused on just the areas with the highest-producing and most dependable shale reserves. More than 60 percent of the well drilled this year have been in Pennsylvania’s Washington, Greene and Susquehanna counties, while other gas towns, once thriving, remain abandoned.
But where business is booming, it’s really booming. In the Marcellus, new constructions of cross-country pipelines into Canada is catalyzing a low-cost shale surge, while in the Permian, a recovery in oil prices has boosted the production of gas that’s extracted alongside crude oil.
Shale oil is also facing a similar set of difficulties. Last week Goldman Sachs downgraded its projections for oil prices over the next quarter the amid a sudden increase in shale drilling, not just in the U.S., but also, unexpectedly, in Libya and Nigeria after they were left out of OPEC’s historic deal in November to curtail a shale glut.
Goldman Sachs had previously forecasted $55.00 a barrel, but has now revised this number to a three-month average of $47.50 per barrel. Analysts have predicted that oil prices will have to fall into the ballpark of $30 a barrel before U.S. shale producers will be pushed into reducing oil production. Some U.S. oil companies, however, are locked in at $50 per barrel oil prices for 2017 crude production, meaning they’ll happily keep pumping crude into the already saturated market.
While oil has a more uncertain future thanks to the failure of OPEC’s attempts to tamper the crude glut, there is hope for gas if the U.S. can break into new markets. Just this week the U.K. is set to receive its very first shipment of liquefied natural gas from the U.S. Hopefully this trend will continue, as European countries look for strategies to reduce their dependence on Russian pipelines. If--and it’s a big if--they decide that U.S. gas is the answer for European energy security, the gas glut may not be the harbinger of market value doom after all.