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

An inability to move all the gas out of the Marcellus region has depressed prices there compared with the Gulf Coast benchmark, the Henry Hub in Louisiana, making it less attractive for local producers to drill more.

Energy companies have cut the number of rigs in the Marcellus to 66 from 81 a year earlier, according to data from oil services firm Baker Hughes Inc.

Production in the eastern United States, which includes the Marcellus and neighboring Utica shale in Ohio, was averaging 19.6 billion cubic feet per day so far in May, down from a record average high of 20 bcfd in December, according to data from Thomson Reuters Analytics.

"Some production declines this year are maintenance-related and should come back quickly, while others are economic," said Charles Nevle, vice president of energy data provider PointLogic in Houston.

But with reserves estimated at 64.9 trillion cubic feet - one-fifth of the U.S. total - there is little doubt that Marcellus will remain a workhorse.

"We are seeing declines so far this year in Marcellus production, but don't believe this is going to last," Nevle said. "There is plenty of gas available."

(Reporting by Scott DiSavino; Editing by Lisa Von Ahn)


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