Consol sells drilling leases; Marcellus gas production surges
Consol Energy announced this week that it's selling half of its interest in Marcellus Shale drilling in Pennsylvania and West Virginia to Houston-based Noble Energy for $3.4 billion. A local energy expert says that he expects such deals to continue. "The amount of available shale gas is so great that it's becoming beyond the ability of any company to develop its own acreage," said Kent Moors of the Institute for Energy and the Environment at Duquesne University.
The agreement between Consol and Noble involves more than 660,000 acres that Consol has under lease. A statement from Consol says that the company will double the number of Marcellus rigs from four to eight this year and up to 12 by 2013.
Moors says similar deals and joint ventures will continue because it's more cost effective to extract the gas from Pennsylvania's Marcellus Shale. "The volume is greater, the pressure is higher, the pay zones where the gas actually resides in the rock is deeper," said Moors. "It is enabling companies to bring in a greater volume at a cheaper price." He says the lower average cost of the wells in the Marcellus formation is attracting the interest of major and minor investors throughout the country.
Meanwhile, the Department of Environmental Protection reports that the state's 1,632 working wells produced 432.5 billion cubic feet of natural gas in the first half of 2011. That's a 60% increase over the amount produced in the last six months of last year. Moors says the higher yield is due to more wells, more gathering pipeline networks and more processing facilities coming on line. "What a lot of people don't realize is that most of the gas coming out of shale these days is put in storage," said Moors. "It doesn't directly go to end users, and most [of] that storage is located in pipeline systems. So, the greater the pipeline systems, the more storage capacity; the more storage capacity, the easier it is to extract a greater amount of volume out of the ground."