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Natural gas 101: Rise of the Marcellus

Natural gas 101: Rise of the Marcellus

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In 2010, the U.S. Energy Information Administration released a report ranking the top 100 natural gas fields in the country. You won't find the Marcellus shale play mentioned in the list. Instead a reader finds a number of smaller gasfields scattered across Pennsylvania, Ohio and West Virginia. The Big Sandy field, situated along the Kentucky-West Virginia border, is the largest at number 18. 

Fast forward five years. EIA today lists the Marcellus shale area as the number one gas producing region in the country. Almost as notable is the Marcellus's listed discovery year: 2008. 

The rise of the Marcellus has dramatically altered the natural gas landscape of the United States, unleashing a wave of new supply onto the market and driving down prices nationwide. Henry Hub, a national benchmark for natural gas prices, averaged $2.34 per million British Thermal Units in October. That average was nearly $3.78 per million BTUs the October prior.

The torrent of gas has been met by projections of a mild winter in much of the United States. Inventories are near all-time highs. The 3.9 billion cubic feet in storage recorded at the end of the October was almost 4 percent more than the rolling five-year average. 

The rapid increase in Marcellus production coincided with a national oil boom. Many of those wells generated a significant amount natural gas as a byproduct, particularly in the Eagle Ford of Texas, where natural gas output was 7.1 billion cubic feet per day through the beginning of November. Many analysts expect that production will wane as crude output declines. 

But the impact has already come home to roost in Wyoming. The prolific Green River Basin, home to the Pinedale Anticline and Jonah Field, has watched production fall in each of the last five years.

The affect of the Marcellus has been even greater on the Powder River Basin's coal-bed methane fields. CBM wells generate high volumes of water as a byproduct, adding to operation costs.  And so as production in the Marcellus and elsewhere has grown, CBM production has plummeted. Daily production rates have fallen from 1.3 billion cubic feet in 2011 to 67 million cubic feet in 2014. 

The following graphic, a map of major U.S. natural gas basins, chronicles the rise of the Marcellus relative to its national peers.  

Follow energy reporter Benjamin Storrow on Twitter @bstorrow

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