Lower gas prices and a production glut in Appalachia aren’t deterring the biggest drillers in the Marcellus shale.
Companies continue to report surging production in their quarterly statements, and several are forecasting growth into next year.
Production is growing because drillers are finding more efficient ways to extract gas from shale formations. But in Appalachia, which accounts for the lion’s share of domestic gas production, a pipeline bottleneck has created a glut that is pressuring prices.
Spot prices at several Appalachian pipeline hubs spent the summer and fall $1 to $2 below the national benchmark of roughly $4 per million British thermal units. Lower prices have not hurt many of the big players or forced them to dial back production. But executives and investors are closely watching the dilemma created by oversupply and pipeline constraints.
“If prices crashed to $1.80, everybody would be hurting. But I don’t see that happening,” said Mark Marmo, president of Zelienople-based Deep Well Services, which completes wells for top Marcellus and Utica shale producers, such as Southwestern Energy, Range Resources and Chesapeake Energy.