After this data was published, and with Range Resources experience in Washington County, other gas companies entered the region, snapping up leases and applying for permits for drilling. The gas boom was on.
It is almost impossible to know exactly what the size and extent of the Marcellus Shale gas deposits are. The best determinant is using data from active wells, and extrapolating data from the actual production, taking a cue from other long-term unconventional gas wells. The principal control are wells in the Barnett Shale in central Texas. In 2009 Range Resources revised their initial estimates for the estimated ultimate recoverable (EUR) from wells within the southwest play of the Marcellus from 3 to 4 Bcfe (billion cubic feet estimated) per well to 4 to 5 Bcfe per well across the 430,000 net acres. These estimates are rooted in data from the first 145 days of active production, including the decline over time of productivity. According to Dave Cohen, the author of the article linked here, these estimates assume an active production life for Marcellus wells of 40 years. He notes, however, that the Barnett Shale wells only had an average active life of 7.5 years. What would the recovery rate be if the wells had, rather than a 40 year productive life, only 20 years? Certainly less than half, because the curve in the production decline is neither uniform nor proportional.
In other words, while initial production has been highly promising, only three years in to extensive drilling across much of the region, and more and more new wells skewing any attempt to estimate the productive capacity of the Marcellus Shale play make it impossible to come up with solid figures on how much gas is recoverable. This is not to say Engleelder and Lash's initial estimate is wrong, or that the gas companies assumption of a 40-year production life for Marcellus wells is wrong. It is, rather, to note that, by and large, the boom in Marcellus Shale gas production is rooted in a combination of unknowns and promising but as-yet not definitive initial well production figures.
In his Drilling Down series at the New York Times, Ian Urbina published a story on June 26, 2011 whose headline sums up the content:
Insiders Sound an Alarm Amid a Natural Gas RushThe story, and over 400 pages of accompanying source documents, highlights gas industry and investment advisers caution in the face of public hype. Of all the stories in the series, this one has received the most criticism from the industry, some of it fair. While there are, indeed, hundreds of pages of email exchanges, internal documents and memoranda, there are many honest questions that need to be asked concerning these documents and other information that formed the basis for Urbina's story.
Reading through those hundreds of pages yesterday, I, for one, got the sense that, far from "sounding an alarm", the emails reflected the quite natural give-and-take concerning everything from caution in regards to the investment potential to downplaying the public hype over Marcellus Shale production numbers. While I find the claim the Times "outsourced" the article to a critic of shale gas the kind of scurrilous, semi-ad hominem attack that does not address the facts in question, the insistence that the documents were "cherry picked" does, to me at least, seem well-founded. In any large organization/industry, there are going to be a variety of points-of-view. In light of two recent financial bubbles - the dot-com bubble of the late 1990's and the housing bubble of the middle years of the previous decade - many investment advisers are likely skittish about claims of piles of money to be made in an untested area, full of wild-catters, new companies looking to make a quick buck, and serious concerns over environmental quality and state oversight of everything from leasing permits and land use to where hydraulic fracturing can and cannot be used.
A further problem with Urbina's story is simple enough - he does not use any actual data to bolster his claims that the doubting Thomas's within the industry have facts on their side. In essence, his story places without context the discussions among some within a large and diverse set of industries that, perhaps, the public relations campaign regarding natural gas recovery in the Marcellus Shale may not be all its cracked up to be.
The responsibility for a lack of data, however, rests squarely on the shoulders of the natural gas industry. They are reluctant to reveal large quantities of externally audited data concerning the production at wells, a complaint many researchers have repeated. It would be helpful if the industry allowed outside production audits, independent researchers, and others investigate their data in order to understand and give some kind of support to their various claims.
On the other hand, the idea that all may not be coming up rainbows and kittens within the Marcellus Shale gas boom does have some actual evidence.
The environmental impact of natural gas drilling is subject to debate, but nobody disputed that driller Encana Oil & Gas USA Inc.’s continued presence in Luzerne County would have created jobs and work opportunities.Another article that same day explained Encana's decision, and some of the underlying geology:
Encana’s decision to scrap drilling in Luzerne County means that major development probably won’t happen here, Kelsey said.
The company announced Thursday that the two exploratory wells it has drilled in the county are unlikely to produce natural gas in commercial quantities, prompting the company to immediately cease operations in Luzerne and Colombia counties.
Kelsey characterizes the company’s departure as a “missed opportunity.”
“It’s different than a situation where you have a major employer who quits and leaves, suddenly leaving many people unemployed,” Kelsey said. “It was more an opportunity that looked like it was coming to Luzerne County but won’t happen.”
“Over time, we’ve seen the industry trying to define where the limits of where the Marcellus play are,” said Dave Messersmith, an educator with Penn State University Cooperative Extension and a member of Penn State’s Marcellus Education Team.That same day, the same newspaper, The News Leader of Wilkes-Barre, PA, had the following editorial:
“So we have a basic understanding of the geology, but in many cases, it really takes some exploratory wells to really understand what the potential is,” he said.
Messersmith said he expects to see companies drill more exploratory wells to define the edges of the economically viable shale play in Northeastern Pennsylvania generally.
“It’s a highly speculative business, especially in the early stages of a play’s development,” Messersmith said, adding that cases like Encana’s are “pretty common within the industry. We haven’t seen a lot of that happen in Pennsylvania, but obviously, as the years pass, we will see industry continue to look at the edges of the play.”
As it rapidly withdraws from the county’s Back Mountain region and the commonwealth, Encana carries in its draft a flurry of emotions, not the least of which are certain residents’ dashed hopes. The natural gas firm and its partner company, Whitmar Exploration Co., had drilled two exploratory wells in this territory and recently deemed it unlikely to produce sufficient amounts of natural gas to be profitable.
So long, land leases. (The companies had signed renewable deals for the rights to more than 25,000 acres in the county).
See ya, royalty checks. (They remain but a fantasy, for now.)
[L]et’s use this reprieve in the Marcellus Shale melodrama as an opportunity for personal introspection and public action. Did our state, county and local governments respond appropriately to the industry’s potential threats, or its possible economic upside? If not, why not? What weaknesses have been exposed that can be addressed? Was cooperation evident among governing bodies?
Are adequate safeguards in place for our water supplies today? What about tomorrow?
Were our decisions related to the natural gas industry motivated mostly by self-interest, civic good or something else entirely?
The next time drilling companies, or another outside force, begin to influence our communities, how can we be better prepared to handle the situation smoothly, swiftly and collaboratively?