Yahoo Finance Why Marcellus Natural Gas Production Fell for 4th Straight Month
Why the EIA Expects the US Shale Production Drop to Accelerate
Marcellus Shale natural gas production
In its Drilling Productivity Report on February 8, 2016, the EIA (U.S. Energy Information Administration) estimated that the Marcellus Shale’s natural gas production totaled ~16.0 Bcf (billion cubic feet) per day in January 2016. That’s ~1% lower than December 2015’s production level but 1% higher than production in January 2015. Month-over-month, natural gas production in the Marcellus Shale has gradually fallen in the past four months.
Over a longer period, natural gas production growth at the Marcellus Shale has been outstanding. Natural gas production rose from ~1.3 Bcf per day in January 2008 to 16.0 Bcf per day in January 2016.
Rigs and monthly additions from the average rig
The number of active rigs in the Marcellus Shale decreased from 42 in December 2015 to 36 in January 2016. In January 2015, there were 78 drilling rigs in the region.
The EIA calculates that the average Marcellus Shale rig added production of 10.1 million cubic feet of natural gas per day in January 2016, a 27% rise compared to January 2015. In the past eight years, the gain amounts to ~17x.
What does this mean for oilfield services companies?
The lower Marcellus Shale rig count in the past year has hurt oilfield equipment and services providers like Weatherford International (WFT), National Oilwell Varco (NOV), Cameron International (CAM), and FMC Technologies (FTI). However, higher production and drilling productivity have benefited oilfield equipment and services companies. NOV makes up ~1% of the Vanguard Energy ETF (VDE), which tracks an index of large, mid-size, and small US companies in the energy sector.
In the next part of this series, we’ll look at drilling efficiency at the Eagle Ford Shale.
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