Natural gas prices between $4/MMBtu and $5/MMBtu will trigger a return to large-scale drilling in the nation's dry-gas plays, executives said Monday at Platts' 5th Annual Appalachian Gas Conference in Pittsburgh.
"Consistent pricing above $4/MMBtu must be in place before we move back into dry-gas plays," said Chad Stephens, Range Resources' senior vice president of corporate development.
The exception would be the Marcellus Shale, where roughly 1,200 completed dry-gas wells in northeastern Pennsylvania sit waiting for higher prices and/or pipeline hook-ups.
Current month-ahead prices in the $3.50/MMBtu range have caused a notable slowdown in the dry-gas region, but the spigot isn't close to being turned off, according to Jennifer Robinson, a senior analyst at Platts' unit Bentek Energy.
"Dry Marcellus development continues at a rapid pace," Robinson said.
The Marcellus as of October 5 was down about 48 rigs year-to-date, but the physical relocation of rigs to wet-gas and oil-rich plays elsewhere is not impacting gas coming out of the ground, she said.
"In 2011, production in the Northeast [primarily the Marcellus] was a little over 5 Bcf/d," Robinson added. "Right now, we're at 9 Bcf/d."
And that might be only the beginning, as Robinson told the audience that within a little more than a decade, the Northeast could be producing more than 22 Bcf/d.
Return on investment keeps rigs running in the Marcellus, Robinson said. In the dry-gas portions, the the return is 19% while in the wet-gas areas, which include southwestern Pennsylvania and the West Virginia Panhandle, the return jumps to 47%.
