Big US Shale Field Marcellus Faces Output Drop Due To Low Gas Prices

The EIA expects output to remain flat through 2018 before declining about 1 percent a year from 2019 to 2025, according to its 2015 Annual Energy Outlook.

"Relatively low gas prices, combined with low oil prices, have slowed drilling in the Marcellus so production from new wells is only offsetting the decline in old wells," said EIA lead upstream analyst Dana Van Wagener.

The EIA forecast prices in parts of the Marcellus would remain below $2 through 2016 and not exceed $4 until 2020.

"Many of the non-core areas of the Marcellus need prices to be sustained near $5 or above to be economic to develop," Van Wagener said, noting that price level would probably not be realized until around 2025.

Weak Prices

The sheer size of the Marcellus makes its continued growth vital to the expected expansion of the U.S. gas market. The basin produces twice as much gas as the nation's second-biggest shale oil and gas play, the Eagle Ford in South Texas.

But clearly the latest slump in prices is taking a toll.

Prices this year at Dominion South , an important Marcellus hub in southwestern Pennsylvania, have averaged $1.88 per million British thermal units on the IntercontinentalExchange, the lowest on record, according to Reuters data back to 2001.


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