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Expert says Marcellus Shale’s potential ‘beyond imagination’

Experts Say...

The natural gas reserves contained in the Marcellus Shale formation are so extensive, people have difficulty grasping the magnitude of its potential impact on the state's economy, Penn State geosciences professor Terry Engelder said Tuesday during the Lycoming County Conservation District's annual awards banquet.

"The economic potential for the state of Pennsylvania is beyond imagination," Engelder said.

How big is the gas production potential of the shale?

Engelder, who is considered a leading authority on the Marcellus Shale, said the formation could contain between 167 and 515 trillion cubic-feet of natural gas.

Some sources rank the formation third behind the South Pars gas play in Qatar and the Urengoy play in Russia, he said.

Each gas well in Lycoming County likely will produce an average of 2.8 million cubic feet of gas per day, and 2.8 billion cubic feet over the life of the well, he said.

And that is a conservative estimate, he said.

Engelder said a well that produces an average of 4 million cubic feet of natural gas, at a wholesale price of $10 per 1,000 cubic feet and a royalty payment of 12 percent, could produce income of about $5 million for the owners of the land from which the gas is taken.

"Tell me that doesn't impact the local economy," he said.

Engelder said when he calculated the natural gas potential of the Marcellus Shale, his "jaw almost dislocated."

"It was so large, it was on the order of 50 times what the (U.S. Geological Survey) had predicted it would be," he said.

Engelder discussed methods by which gas companies could extract gas from the shale, including the use of a single four-acre pad to drill multiple horizontal wells.

A company could drain a square mile area - or 640 acres - from a single well pad, he said, thus reducing the surface disturbance to land in the extraction area, he said.

Engelder also discussed the production life of an operating well.

There is a sharp decline in the amount of gas a well will produce after the first year, he said. The well continues to decline for several years thereafter, but then levels off and produces at a steady rate for many years.

Engelder said he discussed the Marcellus Shale with a Norwegian energy company interested in the shale formation.

Not long after, he received a phone call from a reporter in Oslo who was curious as to why the company was interested in the shale.

Engelder said he called the company and asked them the same question.

Their answer was threefold, he said.

The company believed the shale formation was one of the largest in the world.

It is located near the easten seaboard of the United States, the largest energy consumer market in the world.

The formation contained so much natural gas it could be exported to Western Europe, which largely is dependent on gas supplied by Russia, he said.

With Russia's tendency to shut off gas supplies to Europe during the winter, the Marcellus Shale will provide another source of natural gas for the continent, he said.

"They are looking at Marcellus Shale (gas) as a major export," he said. "This is wonderful for America."

The impact of the Marcellus Shale also will be in job creation, Engelder said.

Engelder, quoting a report by the Christian Science Monitor, said gas and oil extraction industry employment figures for February 2009 were up 9.6 percent over the previous year.

The increase was highest among U.S. industry sectors that added new jobs, he said.

Engelder said Random House publishing company plans to release a book this summer about the impact of the Marcellus Shale.

The second chapter of the book is titled "Merry Christmas America," he said.

With much of Lycoming County sitting atop the formation, the title could very well be "Merry Christmas Lycoming County," he said.
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