Despite plans to lay down all rigs in the Marcellus shale play, Noble Energy and CONSOL expect to see gas production growth in 2015 and 2016. Our analysts explore the implications of this growth in a period of weak oil and gas prices and operational cost cutting.
Noble Energy and CONSOL recently announced plans to suspend further drilling through next year in the Marcellus shale play. Despite these plans to lay down all rigs, we expect CONSOL's gas production from Marcellus to increase in both 2015 and 2016.
Even without drilling new wells, the expected growth will come from increased productivity from existing wells, extensive debottlenecking projects throughout the pipeline infrastructure, and drawing down drilled but uncompleted (DUC) well inventories.
Our analysts continue to see this theme across much of the northeastern US, where contributions from well backlog completions allow operators to grow production from existing wells. Our recent Insight report, Northeast supply and price outlook: decoding the latest from the Marcellus and Utica, examines the implications of production growth in a low-price climate.
In addition to expected production growth in the Northeast, improved estimated ultimate recovery (EUR) volumes and lower costs have brought down breakevens across the Marcellus and Utica plays. We estimate that 45,000 wells will break even under US$3/Mcf Henry Hub (dollars per million Btu), which we discuss in greater depth in our dedicated reports on Marcellus and Utica.
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