Penn State’s Engelder Stands by His Convictions/Projections

By: Rick Stouffer, Senior Energy Editor, Shale Energy Business Briefing

Seven years ago last month, Terry Engelder, Geosciences professor at Penn State University, brashly predicted the Marcellus Shale play, still counting more exploratory rigs  than production rigs within its borders, held 50 trillion cubic feet (Tcf) of technically recoverable natural gas.

That projection, thought by many in the industry to be outlandish, was very conservative, the Penn State University Geosciences professor told Shale Energy Business Briefing (SEBB) last week at Hart Energy’s Sixth Annual Marcellus-Utica Midstream (MUM) Conference & Exhibition.

Engelder did not let the gasps from the industry put a damper on his science-based beliefs, as roughly 18 months after his initial pronouncement, he estimated the Marcellus held 489 Tcf of technically recoverable gas – enough to satisfy US needs for roughly two decades.

That projection pretty much has become the gold standard for Marcellus reserve estimates; and Engelder takes a great deal of pleasure/comfort when naysayers, who stopped short of calling the Penn State professor a crackpot, are proven wrong.

“There never was a reason to change the estimate,” Engelder told SEBB.

Engelder was a bright spot at the sixth annual MUM conference with his optimistic remarks, when audience questions for most of the sessions during the day-and-a-half conference centered on how much companies were cutting their 2015 capital expenditure (CAPEX) budgets.

“The Appalachian Basin’s production will not be surpassed anywhere in the world for shale gas,” Engelder told his Thursday, Jan 29, morning audience.

“We will reach 5 trillion cubic feet of production from the Marcellus within Pennsylvania within the year,” he said.

The Marcellus produced 20% of all natural gas production in the US in 2014, according to Sunil Sibal, Director and Senior Master Limited Partnership /Energy Infrastructure Analyst for Global Hunter Securities, who also spoke Thursday at MUM.

As for an upper limit to Marcellus production, Engelder told SEBB he sees production stabilizing at roughly 6 Tcf/year.

“But there are so many wells that still need to be connected that production will be in the 6 Tcf/year to 7 Tcf/year range,” Engelder said. “And just think, in 2007, Chesapeake [Energy, one of the first movers in the Marcellus] was talking about 3.7 Bcf [EUR, Estimated Ultimate Recovery] wells.”

Daily production within the Marcellus (all but a small percentage from Pennsylvania) went from zero some eight years ago, to roughly 16 billion cubic feet per day (Bcf/d) recently. Projects call for the Marcellus/Utica Shales combined to be flowing 30 to 32 Bcf/d by roughly 2020.

“I have no doubt the 30-32 Bcf/d production total can be accomplished with intensive drilling over the next five years,” Engelder told SEBB.

Addressing the Utica specifically, Engelder said the play is technologically a half-step away from reaIizing its potential – specifically concerning bringing crude oil out of the eastern Ohio ground. Oil was thought to be the primary asset the Utica contained prior to producers closely examining the play. That fossil fuel has given way to natural gas liquids and even prodigious amounts of dry gas.

“The Utica is not fractured like the Bakken; it’s a tougher technology [to tap its crude reserves],” according to Engelder.

The upper Devonian play above the Marcellus has potential, according to Engelder, but it has thinner beds and is shallower, so it won’t have the pressure the Utica and Marcellus have, and therefore production rates will be lower and reserves per well too.

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