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Hail Shale
Shale Gas Production Booming in Northeastern US

For the first time ever, natural gas production out of America’s Marcellus shale region topped 15 billion cubic feet per day last month. Here’s a chart, from the EIA:

While the Bakken and Eagle Ford formations in North Dakota and Texas, respectively, get the lion’s share of attention when people talk about America’s shale revolution, the United States is no two-trick pony. The Marcellus formation, which extends across Pennsylvania, West Virginia, and even into New York (though a moratorium on fracking there has left New York’s portion of the formation untouched), accounts for some 40 percent of US shale gas production. Marcellus production has grown nearly 8 times over from its 2010 levels, and the Energy Information Administration (EIA) expects this to continue as drillers continue to get more gas out of the ground per well:

The rig count in the Marcellus Region has remained steady at around 100 rigs over the past 10 months. Given the continued improvement in drilling productivity, which EIA measures as new-well production per rig, EIA expects natural gas production in the Marcellus Region to continue to grow. With 100 rigs in operation and with each rig supporting more than 6 million cubic feet per day in new-well production each month, new Marcellus Region wells coming online in August are expected to deliver over 600 million cubic feet per day (MMcf/d) of additional production.

The U.S. shale boom is multi-nodal, and that’s a good thing—the more diverse an energy mix, the more resilient it is to geologic complexities or natural disasters. This also poses a challenge for getting these new sources of gas to market; just as we’re struggling to build out pipelines to North Dakota, so too are we working to un-kink bottlenecks in the northeast’s gas pipeline network.

This flood of shale gas is also driving down natural gas prices in the northeast, so while New York snubs its own shale reserves, its residents are enjoying the fruits of fracking’s labor.

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  • Fat_Man

    “while New York snubs its own shale reserves, its residents are enjoying the fruits of fracking’s labor.”

    New York, and other states that forbid fracking, should be charged a special tax which should be given to the states that do permit fracking. Given that US NG prices are less than half of world prices, the tax should be at least 100% ad valorem.

    • Thirdsyphon

      Similarly, the ~40% of states like Montana, Wyoming, North Dakota, South Dakota, and Utah, which “enjoy the fruits” of nuclear energy but have no nuclear power plants on their soil, can be made to remit an equivalent tax to states that do have them, like New York.

      • Fat_Man

        They didn’t ban nuclear. The tax would apply to states that banned fracking.

      • CaliforniaStark

        The states listed above do not receive any nuclear power from New York. Only about 14% of electricity in New York is generated by nuclear power, most of which is used in New York, with some going to New England.

        Gas and Methane are the source of about 62% of New York’s energy, with coal providing another 4%. Most of these sources come from outside New York.

        Saying this, see no point to a special energy tax. The states that allow fracking are booming; contrast this with the extremely high price paid for energy in New England last winter. Foolish policy decisions assess their own tax.

  • Boritz

    “…New York snubs its own shale reserves…”

    Imagine a future president appointing a cabinet-level Fracker General to oversee and prevent this kind of anti-social behavior. &nbspIt’s easy if you try.

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