Marcellus Gas Reserves Estimate Cut by 66% on More Drilling Information

By Christine Buurma - Jan 24, 2012 12:04 AM GMT+0700

The U.S. Energy Department cut its estimate for natural gas reserves in the Marcellus shale formation by 66 percent, citing improved data on drilling and production.

About 141 trillion cubic feet of gas can be recovered from the Marcellus shale using current technology, down from the previous estimate of 410 trillion, the department said today in its Annual Energy Outlook. About 482 trillion cubic feet can be produced from shale basins across the U.S., down 42 percent from 827 trillion in last year’s outlook.

“Drilling in the Marcellus accelerated rapidly in 2010 and 2011, so that there is far more information available today than a year ago,” the department said. The estimates represent unproved technically recoverable gas. The daily rate of Marcellus production doubled during 2011.

The estimated Marcellus reserves would meet U.S. gas demand for about six years, using 2010 consumption data, according to the Energy Department, down from 17 years in the previous outlook.

The Marcellus Shale is a rock formation stretching across the U.S. Northeast, including Pennsylvania and New York. Shale producers use a technique known as hydraulic fracturing, which involves pumping water, sand and chemicals underground to extract gas embedded in the rock.

Geological Data

The U.S. Geological Survey said in August that it would reduce its estimate of undiscovered Marcellus Shale natural gas by as much as 80 percent after an updated assessment by government geologists.

Shale gas will probably account for 49 percent of total U.S. dry gas production in 2035, up from 23 percent in 2010, the Energy Department said today.

Gas’s share of electric power generation will increase to 27 percent in 2035 from 24 percent in 2010, the report showed.

The department also said the U.S. may become a net exporter of liquefied natural gas in 2016 and a net exporter of natural gas in 2021. U.S. LNG exports may start with a capacity of 1.1 billion cubic feet a day in 2016 and increase by an additional 1.1 billion cubic feet per day in 2019, the department said.

To contact the reporter on this story: Christine Buurma in New York at cbuurma1@bloomberg.net;

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net