NGA ISSUE BRIEF: Marcellus Shale & Appalachian Production

SUMMARY

  • Major shale gas basin located in Appalachian region (WV, OH, PA, NY)
  • Estimated to be the largest natural gas supply basin in the U.S.
  • Production output already extensive, and is expected to grow further in coming years
  • Provides supply security and cost competitiveness for high-priced Northeast region
  • Responsible environmental management a key element of successful development
  • NGA: production can yield multiple benefits: increased supply; source diversity; improved air quality; proximity to high-demand, high-cost demand market; local and state tax revenues; jobs

Source: PA DEP, 5-14

The Appalachian region is the largest natural gas production area in the United States, and the Marcellus Shale basin is the largest source of that regional production. The Northeast, long accustomed to being "at the end of the pipeline," now finds itself located next to - and indeed on top of - one of the largest natural gas basins in the U.S.

Location

This shale gas formation extends from West Virginia into Ohio, Pennsylvania and New York.
As shown in the map, its geographic area (around 95,000 square miles) is quite large, leading to great expectations for the ultimate size of the economically recoverable resource base. In a July 2011 report, the U.S. Energy information Administration (EIA) reported the share of Marcellus acreage by state as follows: Pennsylvania, 35.35%; West Virginia, 21.33%; New York, 20.06%; Ohio, 18.19%; Virginia, 3.85%; and Maryland, 1.09%.

Appalachian Production

The Marcellus/Appalachian Shale region is the largest shale gas producing region in the U.S. - and is estimated to have the largest resource base.
Output has grown to over 34 Bcf/d as of Spring 2021. U.S. EIA observed in March 2021 that "The Appalachia region remains the largest natural gas producing region in the United States. Natural gas production from the Marcellus and Utica/Point Pleasant shales of Ohio, West Virginia, and Pennsylvania continued to grow [in 2020] despite low regional natural gas spot prices. Natural gas production from these three states increased from 32.1 Bcf/d in 2019 to 33.6 Bcf/d in 2020."
Annual production in Pennsylvania alone has grown from 1.3 trillion cubic feet (Tcf) per year in 2011 to 7.2 Tcf in 2020. Pennsylvania is the second largest gas producing state in the U.S., after Texas."

In January 2021, RBN Energy released an update on Northeast natural gas production. It noted: "[D]espite the stiff headwinds - the lower rig count, low prices, and price-responsive shut-ins in the shoulder periods - Northeast gas production last year [in 2020] still managed to hit record highs, both for daily output as well as on an annual average basis... So production maintained year-on-year gains through much of last year, while demand fell behind year-ago levels and storage inventories soared. The combination of those factors meant that Northeast outflows to adjacent regions also hit record highs, at times straining available pipeline takeaway capacity."

Charts: U.S. EIA, 9-1-2021

Managing Environmental Issues

Environmental issues associated with unconventional gas production are multiple but manageable. The issues include infrastructure development, land and water access, air emissions, and water treatment (water is one of the key ingredients in the hydraulic fracturing process used to dislodge the gas from the shale rock formations). Responsible production is not only achievable but essential.
The MIT study on natural gas from June 2011 notes that "the environmental impacts of shale development are challenging but manageable." State and federal agencies have regulatory oversight, with state environmental agencies holding primary responsibility over the drilling process. Industry has the responsibility to ensure that the entire process is conducted in an environmentally safe manner, and to follow "best practices."
In an April 2009 report entitled "Modern Shale Gas Development in the United States: A Primer," issued by the U.S. Department of Energy (DOE), the following was noted:
Photo source: PA PUC

"The primary differences between modern shale gas development and conventional natural gas development are the extensive uses of horizontal drilling and high-volume hydraulic fracturing. The use of hydraulic drilling has not introduced any new environmental concerns. [emphasis added] In fact, the reduced number of horizontal wells needed coupled with the ability to drill multiple wells from a single pad has significantly reduced surface disturbances and associated impacts to wildlife, dust, noise, and traffic...Hydraulic fracturing has been a key technology in making shale gas an affordable addition to the Nation's energy supply, and the technology has proved to be an effective stimulation technique. While some challenges exist with water availability and water management, innovative regional solutions are emerging that allow shale gas development to continue while ensuring that the water needs of other users are not affected and that surface and ground water quality is protected. Taken together, state and federal requirements along with the technologies and practices developed by industry serve to reduce environmental impacts from shale gas operations." (p. ES-5).
NGA notes that Marcellus Shale development, managed with the greatest care for the environment, is helping contribute to a "cleaner energy" path for producing states (and the larger region), and also to create jobs, provide local and state tax benefits, air quality improvements, and diversity and security of regional and U.S. supply.

For Further Information

Pennsylvania Dept. of Environmental Protection Marcellus Shale page

Pennsylvania DEP 2020 Annual Oil & Gas Report, released June 2021

NGA Issues Brief: Natural Gas & the Environment

U.S. EPA web page on hydraulic fracturing