Marcellus & Utica to lead future US gas supply


We share our latest view that cost declines have the potential to offset reduced associated gas growth in certain key plays. 

The collapse in oil prices has had a mixed impact on gas supply. While associated gas economics have deteriorated, wellhead costs have fallen and returns in dry gas plays are now more competitive.

Our latest supply view shows that the Marcellus and Utica will add 10 bcfd of additional low cost gas over the next three years, driven by the construction of additional pipe and eventually higher NGL prices as more ethylene capacity comes online in the US Gulf Coast.

Cumulative Gas Resource

Over in the Haynesville, costs have fallen by 20% while EURs have increased by 60% as operators begin to apply techniques learned in other plays. Over the past few years, proppant and water usage has increased by an average 43% and 105% respectively.

Although it's still too early to understand the impact refracturing could have on gas production, the technique could provide additional volumes and value in the Haynesville, helped by high IP rates caused by an over-pressurised reservoir.

Should oil prices increase, it's clear that gas supply would not be affected equally across individual plays. Our modelling shows that if prices rise,  the Woodford SCOOP Core  and the Utica's Southern Wet Gas sub play would see increased returns while, overall, the Mid-Continent region would contribute the greatest growth in gas volumes.

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2015 Cost of Supply Update [Subscription required] 

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