Is there a massive natural gas field located in the Appalachians?
For many years geologist have known about the Devonian black shale called the Marcellus. It is easy to spot with its black color and is slightly radioactive, making it easy to identify on a geophysical well log. The problem was that most wells drilled within the Marcellus did not produce large quantities of gas. Most natural gas industy players never envisioned the formation being a "super giant" gas field, thus very few investments were made in the area. As recently as 2002 the United States Geological Survey published its "Assessment of Undiscovered Oil and Gas Resources of the Appalachian Basin Province." In their report they concluded the formation contained an estimated undiscovered resource of about 1.9 trillion cubic feet of gas. Given the massive area of the Marcellus, it wasn't a large amount.
Major changes in estimates and production
November 2008 Dept. of Energy Shale Gas Map
Most naturally occuring fractures within the Marcellus were vertical, therefore a vertical well would not intersect very many fractures. With newly developed horizontal drilling methods, suddenly wells were able to intersect a number of naturally occuring fractures. This dramatically increased initial production of wells drilled. Another method used to increase production is Hydrofracing. This is done by sealing off a bore hole and injecting water or gel at very high pressure into the well. The high pressure fractures the shale and increases the size of previous fractures. In order to prevent the fractures from closing when the water is removed, sand or another form of "propent" is used to maintain the size of the fractures and allow the gas to escape into the well. Using these two methods, wells were able to substantially increase the flow of gas, and profits for the operators.
Potential economic benefits
The Marcellus is the largest volume of natural gas located closest to the major population areas of New York, New Jersey, and the rest of the Eastern Seaboard. It is also located in an area that is accessable to the Eastern Midwest regions of the United States. Since most of the gas has to be transported by pipelines, the central location leads to significantly lower investments for transportation. As time goes and the availability of the gas is proven, the infrastructure to produce, transport, and consume the gas will be expanded. Could Pennsylvania be the next Texas of energy production?
Landowners, Leasing, and Right-of-ways
Just like Jed Clampet, many people are discovering new found wealth in land they thought was only good for farming etc. Initially mineral rights were going for a hundred or so dollars per acre, but recently that figure has grown to as much as two or three thousand per acre. Landowners have begun to recieve checks in the hundreds of thousands, just for the right to drill. As well as mineral rights, gas producers also need right-of-ways to build pipelines to transport the gas to where it will be consumed. It is estimated that thousands of miles of pipeline will be needed in order to get the gas to the locations it will be used. Right-of-ways are being purchased throughout the Marcellus Shale and can range from a couple of dollars per linear foot to as much as a hundred dollars per foot in populated areas.
Drilling activity and companies involved
There are quite a few companies you may invest in that are involved in the Marcellus shale. They participate by leasing mineral rights from land owners or sharing in royalties from producing wells. Range Resources, Chesepeake Energy, Cabot Oil & Gas, Southwestern Energy Production Company, Atlas Energy Resources are just a few of the companies participating in the rush to take claim to the area.