The International Energy Agency (IEA) released its World Energy Outlook 2013 just as Hart Energy’s DUG East conference was gearing up in Pittsburgh. In it, the IEA proclaims that “many of the long-held tenets of the energy sector are being rewritten.”
The news of this rewrite is certainly not new to those in attendance at the conference as the significant impact of the development of the Marcellus shale is widely evident across the region.
For example, more than 6,000 wells have been drilled in the Marcellus as of 2013, according to Cameron Horowitz, director of E&P equity research at US Capital Advisors. He also noted in his DUG East presentation that in the last six years there have been more than 12,000 drilling permits issued. Wells in two counties are producing some staggering results. Susquehanna and Bradford counties each produce close to 56.6 MMcm/d (2 Bcf/d), according to Horowitz. Future production in the Marcellus is forecast to be 566 MMcm/d (20 Bcf/d) by 2019. In the Marcellus, there are more than 5.7 Tcm (200 Tcf) of remaining resource with an approximate 30,000 viable drilling locations at less than US $4 gas.
This resource richness triggered the transformation of the region’s largest coal producer into a leading natural gas producer. CONSOL Energy’s president Nicholas Deluliis described this transformation of the 150-year-old company. “Ten years ago we were a traditional coal producer. In fact, we were the largest underground coal producer in the world. Natural gas was just an afterthought to what we did,” he told DUG attendees. “Eight years ago we created CNX Gas through an IPO [initial public offering] to grow our gas segment alongside our coal segment. Three years ago we acquired the Dominion Resources Appalachia E&P business and became a coal company with a growing natural gas business.”
The transformation did not end there. In October CONSOL announced the sale of five of its West Virginia coal mines. According to Deluliis, the company is now “an E&P business with a best-in-class legacy coal position. The world’s changing, and true to our legacy, CONSOL is as well.”
Yes, to quote musician Bob Dylan, “the times they are a-changin’,” and natural gas production is fueling that change for the better. And with the IEA stating in its outlook that the global demand for all forms of energy will increase by one-third from 2011 to 2035, the change is a necessary one.
On another topic, this will be my last production technology column. I have “jumped ship” and will begin covering the offshore sector for the magazine. Look for next month’s column to be written by senior editor Amy Logan, our newest addition to the E&P editorial team. In closing I would like to add that I’ve enjoyed covering the production side of the industry this past year. Thank you for your emails full of suggestions and observations. Please keep them coming as we truly appreciate hearing from you.
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