The Marcellus Shale| February 2021
Field Overview
The Marcellus Shale is the largest gas play onshore in the US. Located in the Northeast, it supplies the high demand markets along the East Coast. Most of the basin’s gas is produced through unconventional methods, while the little oil produced is mostly by conventional means. Some of the top formations include Onondaga and the Huntersville.
State Drilling Statistics (End of February)
Active Drilling Rigs in Basin- 31
Total Rigs in Pennsylvania- 20
Total Rigs in United States- 402
Total U.S. Rigs down 49% YTD
Marcellus Top Producers
Top Producer By BOE – Chesapeake
Basin Highlights
Pipelines Can’t Survive
Midstream companies in the United States remain apprehensive about putting money towards new pipeline projects, especially under current administration. The Biden administration made its stance clear by revoking the permit for the construction of the Keystone XL pipeline, but there is even pushback on a much smaller scale. In July of last year, two companies, Dominion Energy and Duke Energy jumped ship on an $8 billion dollar Atlantic Coast Pipeline project. Since the Marcellus is booming, it would have been useful to move gas out of Pennsylvania to the coast. Unfortunately, disagreements with environmentalists caused extreme delays and skyrocketed costs. Even New York rejected a pipeline last may that would have mobilized gas from the Marcellus. The demand for energy still exists, especially in regions like the Marcellus, but it would seem that infrastructure to cater to that demand will not be approved in the near future.
River Fracking Bans
The Delaware River is responsible for delivering water needs to several millions of people in Northeastern states. The Delaware River Basin Commission will be banning natural gas drilling and fracking near the banks of the river citing the potential of “significant immediate long-term risks. This directly affects 2 counties at Pennsylvania’s northeastern tip that operate out of the Marcellus. Already, landowners and Republican legislators are filing lawsuits to challenge the commission’s authority to regulate gas development within the watershed. Gene Barr, chief executive of the Pennsylvania Chamber of Business and Industry claims, “This was a political decision uninformed by science.” In the past, the basin commission had been working to introduce updated environmental regulations, before pivoting in 2017 in favor of all out bans. Conservation officials once estimated that gas companies had leased more than 300 square miles of Delaware River watershed land which is about 0.33% of the total area of the Marcellus Basin. While this is relatively small in scale now, there is no telling how much more pushback the region will experience.
Cabot Grows Despite Continued Pushback
While most people did not remain successful in 2020, the heavily vilified Cabot Oil and Gas found a way to win. The Q4 and year lookback report from Cabot reveals that 2020 was their 5th consecutive year of positive free cash flow generation even though they experience the lowest natural gas realizations of their 31 years as a public company. Plans for 2021 include decreased activity and capital spending. Ultimately, production growth from existing assets is expected to remain flat unless gas prices surge.
Top Producers By BOE (2021 cum)
| Rank | Company | Production (MCF) |
| 1 | Chesapeake | 16,949,857 |
| 2 | Cabot | 14,450,357 |
| 3 | Range | 11,058,816 |
| 4 | EQT | 10,652,711 |
| 5 | Rice Drilling | 10,122,757 |
Rig Count
Marcellus Production
Marcellus Natural Gas
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