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Observations of the Sixth Annual Developing Unconventional Gas Conference
June 26, 2014
I had the great learning experience of attending The Sixth Annual Developing Unconventional Gas Conference, known as DUG East, earlier this month. The conference is based around the sharing of ideas, performance updates, and networking across the supply chain of the Marcellus and Utica shales. DUG East brought the best and brightest corporate leadership together to update the 3,200 attendees on the innovation, continuous improvement, and execution of business plans in the 95,000 square mile Marcellus Shale and in its older, deeper and at 170,000 square miles, even geographically larger, Utica Shale.
William Gladstone, four-time Prime Minister of England, once observed all you needed to know about a country was whether people were trying to get into or out of it. Therefore, applying a similar metric to U.S. shale plays provides a powerful affirmation that the best and brightest minds in energy see the long-term opportunities as being very abundant. The following are several personal takeaways from the conference:
  • Experts predict in the near future, the Marcellus Shale Play could rank as the largest natural gas field in the world, as it is already number one in the United States.
  • During just the first half of 2013, the Marcellus produced more than 1.4 trillion cubic feet of gas in Pennsylvania alone. By the end of 2013, more than 1,000 wells were drilled and awaiting completion throughout the formation.
  • In 2012, the U.S. Geological Survey estimated the Utica Shale holds some 38.2 trillion cubic feet of undiscovered, technically recoverable gas, 940 million barrels of oil, and 208 million barrels of natural gas liquids. Much of the drilling in the Utica has taken place in Quebec and eastern Ohio. However, the hotbed of activity is spreading to Pennsylvania, West Virginia and New York.
  • Many different types of companies are participating in drilling, including storied companies, such as CONSOL Energy.  CONSOL has reinvented itself many times since its founding in 1860, to youthful companies, such as Rice Energy, who just had a very successful IPO in 2014. There is great opportunity for many.
  • Stacked plays, where existing pads can be used to access multiple formations, were mentioned by many presenters. This maximizes the production while reducing the footprint, be it areal or carbon.
  • There was a strong consensus that there are huge hydrocarbons in place, especially considering the stacked plays, and the fact that the collective industry is increasing the rate of recovery by ascending the learning curve faster and faster.
  • Ultimate Expected Recovery (EUR) per well is increasing, while drilling times and supply chain costs are decreasing., Together, they are making natural gas, oil and natural gas liquids (NGL) collectively ever more efficient, effective fuel and feedstock, especially for the Manufacturing Renaissance, which is underway and growing.
  • Because individuals and companies can own minerals in the U.S., whereas the government or sovereign owns the minerals in most countries, the wealth creation propelled by shale development can enable individuals and local communities to leverage the wealth from the shale to fund long-term economic development communities that host drilling.
  • An “All of the Above” energy strategy makes great sense, although the percentage a given fuel has of any market segment will change from time to time in response to market and regulatory factors.
  • Railroads have become very significant participants in the supply chain for the O&G sector, with a role as long-term solutions in certain key geographic areas, not just temporary solutions. Railroads are representative of diverse opportunities being created by the shale revolution.
  • The end-use versatility of oil, natural gas, and NGLs continues to evolve, which offers further flexibility under an “All of the Above” energy strategy.
In short, the Marcellus and Utica Shales are providing tremendous opportunities for a variety of industries, developing economic strongholds for the many regions throughout the footprint, and positively impacting the communities and the individuals that are benefiting  from sound investments. The future of natural gas exploration and drilling in the Marcellus and Utica is bright and proving to be better than originally anticipated.