Pennsylvania's Marcellus Shale: Welcome to America's Next Great Energy Boom 25 comments
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Commodities expert Matt Badiali says Pennsylvania will be the center of America’s next great energy boom. The state is home to the mammoth Marcellus shale bed, a sedimentary rock rich in natural gas. Experts have estimated that up to 1,000 trillion cubic feet of gas could be extracted from Marcellus. Matt says it won’t be long before the share prices of companies setting up there will take off.
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Twenty years ago, Fort Worth, Texas, was a much different place than it is today. Once an unremarkable Dallas suburb, it has blossomed over the last two decades into the most important natural gas hub in the United States.
Just this week, I flew into the Dallas-Fort Worth Airport. Driving around, I was struck by how the typical suburban landscape in Fort Worth has been overrun with natural gas infrastructure. Natural gas pipes wend their way through the community. New pipeline rights of way and wells are everywhere. Companies are leasing subdivisions – cul-de-sac by cul-de-sac – to drill beneath them for gas.
You see, Fort Worth sits in the heart of the gas-rich geologic formation known as the Barnett Shale. Shale is a sedimentary rock made of fine particles of clay and mud deposited at the bottom of ocean basins or giant lakes. The shale oil and gas companies covet has a lot of old plants and algae mixed in. That kind of shale makes natural gas and sometimes oil over time. The Barnett Shale is a textbook example.
Here’s what Oil and Gas Investor recently said about the Barnett Shale:
With high-profile Barnett asset sales of more than $1 billion and gross production topping 1 billion cubic feet per day (bcf) – and even the Fort Worth City Council willing to lease city land for drilling – no one needs to be convinced that shale plays are valuable, highly prospective and worth a closer look.
Indeed, the boom is on… Between 2004 and 2007 alone, the number of well permits issued by the state for the Barnett Shale rose 231%, from 1,112 to 3,679. As of June 3, energy companies had drilled 7,766 gas wells in the Barnett Shale, and drilled and permitted another 4,661 wells.
The Barnett Shale adds $5.2 billion per year to the Fort Worth economy. You can expect that to double in the next seven years.
And plenty of energy companies have made fortunes in the Barnett Shale over the last five years. One company in the S&A Oil Report portfolio, XTO Energy (XTO), went from $32 per share to more than $73 at its peak in just two years. Another Barnett player, Quicksilver Resources (KWK), went from $19 to $45 this year alone.
The U.S. consumes about 23 trillion cubic feet of natural gas per year, but only produces about 19 trillion cubic feet. Canada supplies the rest, but it is falling short. Between a lack of drilling and the increased use in developing tar sands, Canada’s exports will dwindle.
That means the future of U.S. natural gas prices looks good for the long run.
Of course, the run-up in share prices for Barnett Shale developers like XTO and Quicksilver means we won’t find a lot of bargains there. But seeking to repeat its overwhelming success in Barnett, the energy industry has turned its attention to an equally promising shale region – this one in the birthplace of the U.S. petroleum industry, Pennsylvania.
Central Pennsylvania is flush with a dark, organic-rich shale industry professionals compare to the Barnett Shale. The shale, called Marcellus, has the kind of potential to turn poor farmers into millionaires.
Importantly, these gas-rich shale beds are close to the demand centers of the urban corridor from Boston to Richmond – unlike natural gas stranded in Colorado and Wyoming.
In 2002, the U.S. Geological Survey estimated these eastern shale beds hold 30.7 trillion cubic feet of natural gas – that’s a little more than a year’s worth of consumption for the entire U.S. But more recently, Schlumberger’s (SLB) engineers updated those estimates, taking into account the technological advances from 2002 to today. Schlumberger puts the volume up as high as 1,000 trillion cubic feet – more than 32 times the old estimate.
Right now, companies are rushing to the shale region of Pennsylvania the way they did in Fort Worth a few years ago. Pretty soon, companies working there will see their shares take off the way Barnett developers did.
I’m a long-term natural gas bull, so I think you’ll do well in several different kinds of investments here… from pipelines to ETFs to exploration companies. But for the biggest returns, I recommend focusing on Pennsylvania – the site of the next great American energy boom.
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This article has 25 comments:
oilismastery.blogspot..../
These Natural Gas companies will keep drilling as long as Nat Gas prices stay above $7
www.oilshalegas.com/ma...
Barnett Shale is not an ocean full of dead dinosaurs. Check this out
thebarnettshale.com
Volcanic igneous rocks lie beneath every so-called "organic" sedimentary rock.
The reason why bacteria "literally excretes methane" is the same reason why cows fart methane, because hydrocarbons have nothing to do with biological organisms.
Your claim that "this [abiotic] theory has failed to produce a single drop of oil or natural gas" is absolutely absurd. Every well drilled past 15,000 tvd and into igneous rock that produces oil and gas proves that vitalism/biogenic theory is a failure. Due to the success of abiotic theory, Russia has now surpassed Saudi Arabia to become the number one petroleum producer in the world.
There's a Pennsylvania company which has gas transmission infrastructure already in place. It's an excellent Marcellus pure play....except they don't do horizontal drilling. Can anyone name that company? Why is horizontal drilling important?
BTW, Bakken shale has been in the news. In what state and what company from Enid OK is a huge benefactor?
Bakken, try MDU (E&P unhedged; highway spending bonus)
and try HLND (Continetal Resource's pipeline company)
Barnett, try ETE (high splits with excellent growth),
Marcellus, try MWE (no GP or IDR's),
Rockies, try EPB or WMZ (drop-down pipeline assets)
The pipelines will bottom when hedge funds who were playing the spread and buying PIPE shares finish deleveraging. Then the partnerships will provide new investors very attractive tax-deferred growth with income. OOOH AAAH. Check the $AMZ index, KMP, etc., if you think pipes can't get the job done over time. Hope to see a few 10% distributions outside of the E&P partnerships before the bottom arrives.
NEXT- Marcellus stks already out performed nat gas indexes by 20%.
You are late into this.
I will sell you some Marcellus stks, which do you want?
And Marcellus stks have been outpreforming their averages since Dec 15.
I will sell you some now if you really want some. name it
www.aogr.com/index.php...
Size Of Marcellus Resource
During the past several months, a number of estimates concerning the size of the Marcellus play have been published. Several reputable reporters have confused various measures of gas in the Marcellus Shale. Gas in-place is the total amount of free and adsorbed gas within the Marcellus. Given a resource that is found under more than 34,000,000 acres of real estate with at least 50 feet of organic-rich section, the Marcellus Shale weighs in with more than 500 trillion cubic feet of gas in-place spread over a four state area. Continuous natural gas accumulations such as the Barnett Shale produce more than 10 percent of the gas in-place, which when applied to the Marcellus Shale, translates to a resource that will return 50 Tcf in time.
Zman's web site rocks!
Delaware Basin (West Texas), Green River (Wyoming), Antrim Shale (Northern Michigan) — where oh where is the next Barnett Shale play to be found?
industry.bnet.com/ener.../