Regional Report: Which future for Marcellus and Utica shales?

GORDON FELLER, Contributing Editor 

The Marcellus is a deep geologic formation that covers more than 95,000 mi² through parts of Pennsylvania, West Virginia, Ohio and New York. Pennsylvania is at the heart of the Marcellus, with the formation underlying about 60% of the state. The Marcellus is found between 4,000 and 8,500 ft below the surface and is 50 to 200 ft thick. The Marcellus is estimated to hold over 500 Tcf of natural gas. Even if only 10% of the gas is recovered, it would be enough to fuel the entire U.S. for two years and would be worth over $1 trillion. (See “baker hughes shale data”). 

The Utica lies between 4,000 and 6,000 ft beneath the Marcellus. Efforts to explore its potential began several years after the Marcellus was proven to have significant natural gas reserves. The Utica sits several thousand feet below the Marcellus shale throughout the Appalachian basin, including Pennsylvania. Some estimates suggest it could contain up to 782 Tcf of recoverable natural gas.  

Natural gas producers have invested billions in lease and land acquisitions; new well drilling; infrastructure development; and community partnerships.  A study conducted by PriceWaterhouse Coopers for API estimated that 322,600 jobs in Pennsylvania were directly or indirectly linked to drilling and producing natural gas in the ramp-up to 2015’s output level; during those years, the industry contributed $44.4 billion of economic impact to the state. Pennsylvania’s Public Utility Commission distributed billions in Impact Taxes to counties across the state, supporting hundreds of improvement projects that are driven by local communities and counties. Impact Tax payments will continue far into the future, as additional wells are drilled. 

Additionally, more than $200 million is paid each year in the form of lease payments to landowners, who lease property for drilling activity. Once a well is drilled and producing gas, landowners share in the benefits from royalty payments paid over the life of the well. These payments, made directly to property owners, are a dominant source of wealth and economic sustainability for property owners, particularly in rural counties. The payments have grown tremendously in recent years, as natural gas production grows. 

Ongoing advancements in technology and exploration techniques are likely to continue driving production growth throughout the years ahead. 

Fig. 1. Production from shale and tight formations accounts for nearly 80% of U.S. total dry natural gas production. Chart: EIA.

Production from both shale and tight formations accounts for up to 79% of U.S. total dry natural gas production, Fig. 1. The U.S EIA announced in October 2024 that its expert data analysis (https://www.eia.gov/todayinenergy/detail.php?id=63506&utm_medium) noted a slight decline in the first nine months of 2024, as compared with the same period in 2023. EIA says that, if this trend continues for the remainder of 2024, it would mark the first annual decrease since EIA started collecting these data in 2000. Just a few days later EIA produced a report with this headline: "U.S. energy production has increased faster than energy consumption over the past 50 years" (https://www.eia.gov/todayinenergy/detail.php?id=63544). 

Under the regime of Governor Tom Wolf (D), Pennsylvania has permitted thousands of new fraced wells, and is pushing for thousands of miles of new pipelines.  Meanwhile, groups working at the local level are springing up around Pennsylvania, pursuing strategies, such as pressuring municipal governments and carrying out direct actions targeting specific infrastructure projects.   

Fig. 2. While rigs and DUCs have dropped in the Marcellus and Utica shales, natural gas output remains strong, due to efficiency gains. Chart: NGSA.

According to Neil Shader of the State of Pennsylvania’s Department of Environmental Protection, “one trend for Pennsylvania is a decrease in the number of wells while total gas production has continued to increase. Data from the Natural Gas Supply Association (NGSA) seems to bear that out, Fig 2. Permits issued for new shale gas wells (including both Marcellus and Utica) have been decreasing steadily since 2015, with only 692 new permits in 2023 – compared to 2,081 in 2015.” However, annual production has increased in that time period – going from 4 TCF to 7.5 TCF over the same time period.” 

Accordingly, the Baker Hughes rig count for October 2024 in the Marcellus and Utica shales has slipped from where it was a year ago, Fig 3. It is down 21% in the Marcellus and has slipped 10% in the Utica. 

Fig. 3. As of October 2024, the Baker Hughes rig count in the Marcellus and Utica shales had slipped from where it was a year earlier.

MARCELLUS 

Chesapeake Energy/Southwestern Energy. On Oct. 1, 2024, Chesapeake Energy and Southwestern Energy completed their merger into what is now called Expand Energy. In the third quarter, legacy Chesapeake operated an average seven rigs to drill 30 wells and turned seven wells in line, resulting in net production of approximately 2.65 bcfe per day (100% natural gas). Additionally, the company built an inventory of 18 drilled but uncompleted (“DUCs”) wells and 12 deferred turn in lines (“TILs”).  

Fig. 4. Expand Energy is running two rigs in Northeast Appalachia on assets that are both legacy Chesapeake and legacy Southwestern Energy. Map: Expand Energy.

Expand Energy continues to execute its previously disclosed plan to defer completions and new TILs. As of Oct. 1, 2024, the combined company had 58 DUCs (in Appalachia, as well as Louisiana), excluding working inventory, and 58 deferred TILs. The company intends to “prudently activate production as market conditions warrant.” Expand Energy is running two rigs in Northeast Appalachia (Fig. 4), and two in Southwest Appalachia (Fig. 5), plus two completion crews in Northeast Appalachia, and one in Southwest Appalachia.  

Fig. 5. Expand Energy is running two rigs in Southwest Appalachia on properties that are legacy Southwestern Energy. Map: Expand Energy.

EQT. With over one million gross acres and approximately 18.0 Tcf of proved gas reserves in the Marcellus play as of Dec. 31, 2020, EQT is a leading developer in the Marcellus shale, Fig. 6. EQT owns or leases approximately 610,000 net acres in Pennsylvania. Most of the acreage is located in the southwestern region of the state, with the majority located in Greene and Washington Counties. EQT owns or leases approximately 405,000 net acres in West Virginia. Most of the acreage is located in the northwestern region of the state, with the majority located in Doddridge, Marion, Tyler and Wetzel Counties. 

Fig. 6. EQT is a leading developer in the Marcellus shale, owning or leasing approximately 610,000 net acres in southwestern Pennsylvania. Image: EQT.

At the end of the third quarter, EQT’s capital expenditures were headed toward $558 million for the full year, below the low-end of guidance. This was driven by efficiency gains and lower-than-expected midstream and pad spending in the Marcellus. EQT announced it has entered into an agreement with Equinor USA Onshore Properties Inc. and Equinor Natural Gas LLC to sell the company's remaining interest in its non-operated natural gas assets in northeastern Pennsylvania, representing approximately 350 MMcfd of forecasted 2025 net production. Consideration for the transaction is $1.25 billion of cash. The transaction has an effective date of Dec. 31, 2024, and is expected to close during fourth-quarter 2024. 

One key shale actor has been Seneca Resources Company. Seneca first targeted the Utica in 2011 and has tested it across much of the company’s acreage. Their Marcellus program began in 2007, with a network of exploration or test wells drilled across the company’s acreage. Since 2007, Seneca has collectively drilled and completed more than 400 horizontal Marcellus wells, Fig. 7. 

Fig. 7. Seneca Resources has been a prolific driller of horizontal wells in the Marcellus. Image: Seneca Resources.

With a solid understanding of the formation, Seneca has focused Utica development in Elk, Cameron and McKean counties in the western portion of ourits Pennsylvania acreage, and Tioga County in the eastern portion. 

Seneca says that, generally speaking, well performance is stronger in the Utica than the Marcellus in the same area: “This is due to greater thickness of the reservoir and higher reservoir pressure, due to its greater depth—more than 10,500 ft below the surface in the west and 12,000 ft in the east.” 

Seneca touts numerous analyses of Ohio’s and Pennsylvania’s energy economies which point to the role that Utica is playing. Those who advocate for the expansion of Utica Shale usage emphasize its potential to alleviate energy costs and contribute to economic stability in the region. They have been busy highlighting its importance as a major natural gas resource. 

Seneca’s judgement is that one major “advantage of having a ‘stacked’ play strategy—utilizing multiple rock formations—is that it allows them to take advantage of existing infrastructure. By making repeat visits to previously used pads, Seneca argues that environmental impacts are minimized, and greater cost savings are realized.” 

Range Resources has been operating in Pennsylvania for more than 25 years and has nearly a million net acres across the state, most of which has stacked pay potential for the Marcellus, Utica and Upper Devonian shale formations. Range pioneered the Marcellus shale in 2004 ,with the successful drilling of the Renz #1 well in Washington County, Pa. In issuing the firm’s third-quarter 2024 report, CEO Dennis Degner commented, “This month marks the 20th anniversary of Range drilling the first commercial Marcellus shale well. The Marcellus and Utica now produce nearly one-third of U.S. natural gas, and the U.S. has become the leading global supplier of safe, clean, affordable natural gas.” 

Fig. 8. Third-quarter drilling and completion expenditures by Range were $146 million, indicating a full-year total well above $500 million. Image: Range Resources.

Third-quarter 2024 drilling and completion expenditures by Range were $146 million, Fig. 8. In addition, during the quarter, approximately $10 million were invested in acreage leasehold, gathering systems and other items. Total capital spending by Range in Southwest Appalachia through the third quarter was $501 million, representing approximately 76% of Range’s capital budget for 2024. 

Coterra Energy. The firm’s properties are principally located in Susquehanna County, Pa., where it holds roughly 186,000 net acres in the dry gas window of the Marcellus. The company’s 2023 net production in the Marcellus was 377 MBoe per day, representing 57% of its total equivalent production for the year. Net natural gas production in 2023 averaged 2.263 Bcfd, representing 78% of Coterra’s total natural gas production. As of Dec. 31, 2023, the firm had a total of 1,108.2 producing net wells in the Marcellus shale, of which 99% are operated by Coterra. 

Fig. 9. As of the third quarter, Coterra’s drilling was down considerably, compared to the same period in 2023. Image: Coterra Energy.

According to the third-quarter, 2024, report, wells drilled by Coterra in the Marcellus totaled only four, compared to 17 a year earlier, Fig. 9. For the first nine months of 2024, the firm drilled just 26 wells, compared to 53 in the same period during 2024. 

NGSA’s basin analysis. In May 2024, as part of the Natural Gas Supply Association’s annual “Summer Outlook for Natural Gas”, their experts did a basin-by-basin analysis of where growth in natural gas production is taking place. They included a close-up look at the Marcellus and Utica shales. They found that the Marcellus had some modest growth, while the Utica had a minor loss, Fig. 10.  NGSA also looked at the declining gas-directed rig count and the slowing rate of depletion of drilled-uncompleted-wells (DUCs) and provided some insights into why production continues to be record-breaking even though production activity is slowing.    

Natural gas production from the Marcellus averaged 37.7 Bcf/d in 2023. This accounted for approximately 29% of total U.S. gross natural gas production. Production in the Appalachia region (which includes the Marcellus) grew by 3%, or 1.2 Bcf/d, in 2023 compared to the previous year. To provide context for the Marcellus production, consider that total U.S. natural gas production grew by 4% in 2023, averaging 125.0 Bcf/d. The Appalachia region (including Marcellus), Permian, and Haynesville accounted for 59% of all U.S. natural gas production in 2023. In January 2024, wells across the Appalachian Basin (which includes both Marcellus and Utica shales) produced an average of 147,000 bpd of oil. This production was projected to decline slightly to 145,000 bpd in February 2024.

Fig. 10. NGSA’s basin-by-basin analysis shows that the Marcellus had some modest growth, while the Utica experienced a small loss. Chart: Natural Gas Supply Association.

The Marcellus accounts for approximately one-third of the total U.S. shale gas production. IN 2024, daily natural gas production from the Marcellus exceeds 25 BCF. By the beginning of 2024, the Marcellus had cumulatively produced 50 TSCF of natural gas - equivalent to 8.3 billion barrels of oil. The EIA says that 2022 marked the peak of gas production from the Marcellus and Utica in Appalachia, with that level not expected to be matched again until 2045. However, some companies are implementing strategies to manage supply in 2024, such as CNX Resources, which plans to delay completion of 11 Marcellus wells. The Marcellus-Utica was contributing about 36 Bcf/d to U.S. natural gas production in recent years. The Appalachian Basin, which includes both the Marcellus and Utica, was producing an average of 35.642 Bcf/d of natural gas in January 2024. 

UTICA  

During the first quarter of 2024, natural gas production from the Utica yielded 534.028 Bcf (5.934 Bcfd) of natural gas. Also in the first quarter, Ohio's Utica produced 7,227,503 bbl of oil (80,305 bopd). This production continues the upward trend observed in previous years, with expectations that 2024 will be a record year for oil production in the state. The Utica has been experiencing significant growth in oil production, due to new technologies and exploration strategies. This has led to a 70% increase since 2021 and 40% annual growth from 2022 to 2023. 

Utica oil production in 2023 was a bit different. For the first three quarters of 2023, nearly 20 MMbbl of oil (73,260 bopd) were produced from horizontal wells in the Utica. This represented an increase of about 300,000 barrels (1,099 bopd), compared to the total production in 2022. Oil production in Ohio saw a significant increase of 31% in the third quarter of 2023, compared to the same period in 2022. 

Appalachian Basin data, which includes the Utica and Marcellus, point to some interesting trends. In January 2024, Appalachian wells yielded an average 35.642 Bcfd of natural gas.  The Utica’s potential is estimated to contain around 117 Tcf of undiscovered, technically recoverable natural gas. 

Columbiana County in eastern Ohio emerged as a hot spot for oil production in the Utica/Point Pleasant shale. Through the first nine months of 2023, horizontal wells across the county collectively produced 728,413 bbl of oil (2,668 bopd). 

Looking back over the past year, Ohio Oil and Gas Association President Rob Brundrett thinks that his state has seen “rapid and record growth in production from the Utica oil window across the Eastern part of the state. Additionally, natural gas production, rig counts, new investments and direct and indirect jobs have been steady, allowing our local, regional and state leaders to see the value the industry brings to the state. While we are not without our challenges, Ohio continues to be a state that supports natural gas and oil development.” Brundrett thinks that one particular area where both the state and industry have made recent strides is identifying, prioritizing and plugging orphan wells.  

Looking past the national election and into next year, Brundrett and his association are approaching the coming months “with a sense of cautious optimism for a path forward for the industry to grow, invest and increase production across Ohio and the Appalachian basin.” Ohio currently ranks in the top ten states for both gas and oil production, and “we expect to hold both of those positions in the coming year.” 

Brundrett sees “increased energy demand from Ohio's new data centers, among other new facilities, that will be met by natural gas. While the leasing of public lands is not new to Ohio, “we have seen a renewed effort to lease, drill and produce minerals from under state lands, and there is a strong expectation for that to continue next year and beyond.” Overall, Brundrett believes that Ohio's natural gas industry is in a good position, “with strong support from across the Buckeye State and a bright future ahead that will be driven by lower emissions, increased production and innovation.”  

CNX. The company holds 1 million-plus net acres in the Marcellus and Utica shales, combined. CNX operates 4,425 net producing gas wells. Production during 2023 was 560 net Bcf of gas equivalent. Reserves at the end of 2023 were 8.74 Tcf of proved gas equivalent.  

Fig. 11. During third-quarter 2024, CNX made significant progress in the continued development of its deep Utica play. Image: CNX.

Production volumes of 134.5 Bcfe during third-quarter 2024 were flat, compared to the second quarter. The company expects volumes to increase in the fourth quarter, as the remainder of its planned 2024 wells come on-line. On the capital side, the company continued its focus on “safe, efficient execution and optimizing lateral lengths to drive down costs.” During the quarter, CNX made significant progress in the continued development of its deep Utica play by drilling three wells with an average total depth (TD) of 26,628 ft and an average lateral length of 12,783 ft, Fig. 11. The company continues to optimize its drilling performance. For the deep Utica wells drilled in 2024, CNX reduced its average drilling time down to 49.3 days, a 23% improvement, compared to the deep Utica wells drilled during 2023. 

EOG Resources has stockpiled 445,000 net acres in the Utica, but the firm has mainly focused on working 225,000 acres in the play’s oil window. As of late in the third quarter, EOG planned to 20 net wells in the Utica for 2024. This is a significant increase, compared to just six net wells last year. Results are said to be encouraging. 

In its third-quarter 2024 report, EOG said that in the Utica, it had achieved a 29% reduction in the number of days required to drill a 3-mi lateral. Compared to 10.0 days during all of 2023, EOG did the same amount of drilling in just 7.1 days during the first three quarters of 2024. In addition there was a 13.1% increased in the amount of Utica lateral feet completed per day, going from 1,685 ft in 2023 to 1,900 ft in 2024. 

Gulfport Energy has approximately 193,000 net reservoir acres located primarily in Belmont, Harrison, Jefferson and Monroe counties in eastern Ohio, where the Utica ranges in thickness from 600 to over 750 ft, Fig. 12. During 2023, the firm produced approximately 784 MMcfed, net to its interests in the area, and that output accounts for approximately 74% of Gulfport’s total production. 

Fig. 12. Gulfport Energy’s Utica acreage lies primarily in four counties of eastern Ohio. Image: Gulfport Energy.

During third-quarter 2024, the company’s “production and cash flows benefited from the turn-in-line of our four-well Utica condensate pad in Harrison County, Ohio, increasing our average daily oil production by 68% quarter-over-quarter,” said President and CEO John Reinhart in the quarterly results release. “The wells have exhibited attractive production rates in combination with minimal pressure drawdown during the initial 90-day period. Increased production rates are now being tested to determine the optimal production profile aimed at maximizing long-term well performance. The company also completed drilling on four additional Utica condensate wells during the third quarter.”  

Antero Resources Antero has a 78,000-acre position in the Point Pleasant shale of eastern Ohio, the most prolific part of the Utica play, Fig. 13. The company has more than 200 producing horizontal wells in operation. Effective with its third-quarter report, Antero is decreasing its drilling and completion capital budget for 2024 to a range of $640 million to $660 million, from $650 million to $700 million previously. The decrease is driven by continued operational efficiency gains and the further deferral of completion activity, due to low natural gas prices. 

Fig. 13. Antero Resources operates on 78,000 acres in the Point Pleasant portion of the Utica in eastern Ohio. Image: Antero Resources.

EQT owns or leases approximately 65,000 net acres in eastern Ohio and is actively developing the Utica Shale in Belmont County.  

Encino Energy, a prominent player in the Utica region, significantly increased its production of liquids by nearly 35% in 2023, reaching 70,000 bpd, with a third of this volume being crude oil. The firm is the largest oil producer in Ohio and is one of the largest gas producers in this state.  

Four wells drilled by EAP Ohio at the Sanor Farms well pad in Knox Township yielded 258,739 barrels of oil, with three of these wells ranking among the top 10 oil producers in the state. In mid-November, EAP picked up four Utica drilling permits in Ohio and had three wells actively drilling.  

SUSTAINABILITY ANGLE  

Another notable fact about these shale plays is the possibility of developing carbon dioxide storage and hydrogen production. The Marcellus and Utica shales will soon be home to one of the new hydrogen hubs created by the Bipartisan Infrastructure, Investment, and Jobs Act. Natural gas from shale formations will be used in the generation of clean-burning hydrogen, and new Class VI underground injection wells will sequester the carbon dioxide generated in the process.   

Pennsylvania is pursuing primacy over the permitting and oversight of Class VI wells, and DEP has submitted an application for a grant from the U.S. Environmental Protection Agency to provide the funds necessary to develop and submit an application to pursue federal primacy.  Pennsylvania Governor Josh Shapiro (D) has been a leader in pushing for the hydrogen hubs, with Pennsylvania being the only state in the nation to have two regional hubs. 

The Biden/Harris administration–working from both Washington DC and regional offices—has been mindful of the fact that shale gas production has boosted the economy while increasing energy independence. Also, advancements in extraction technologies are being introduced that aim to reduce environmental impacts. And land conservation efforts are being introduced in some key places.  

Sidebar: WHAT DOES THE MARCELLUS SHALE CONSORTIUM THINK? 

We asked The Marcellus Shale Consortium to provide their expert insights. Here is what their team wanted to say: 

Energy has long set the Appalachian region apart, driving its economy through significant discoveries since the 19th century. With world-class resources, innovative technologies, and a skilled workforce, the basin has achieved positive energy and environmental outcomes that support its future and improve lives across the globe. Thanks to the prolific Marcellus and Utica shales, the natural gas industry across Pennsylvania, West Virginia and Ohio has played a crucial role in establishing the U.S. as a global energy leader, supplying essential fuel for millions of consumers, reducing energy poverty, and fueling economic and environmental gains, Fig. 14.  

Fig. 14. Thanks to the prolific Marcellus and Utica shales, the natural gas industry across Pennsylvania, West Virginia and Ohio provides the largest share of gas production in the U.S. Image: Marcellus Shale Coalition.

Throughout the year, Appalachia remained the largest shale gas producing region in the U.S., and third-largest in the world. This growth directly translates into high-paying jobs for workers and economic investment, significant energy savings for consumers, as well as opportunities to be a source of stable and sustainable energy for our allies. 

Consider, a recent study conducted by FTI Consulting for the Marcellus Shale Coalition found that in Pennsylvania, alone, the industry generated $41.4 billion in economic activity, boosting the state’s GDP by nearly $25 billion in just one year. West Virginia continues to see industry-related tax revenue totals in the millions for communities, contributing $428 million in property taxes, alone, last year. In Ohio, the industry has driven more than $100 billion in industry-tied investment over the years. 

Increased demand for Appalachian natural gas domestically can be seen in the call for reliable energy to fuel the nation’s growing electric power needs, as well as globally through exporting liquefied natural gas (LNG) abroad. The International Gas Union (IGU) warns of a 22% global supply shortfall by 2030 without proper investments. Already producing nearly a third of America’s natural gas, Appalachia is more than capable of filling that gap.  

The industry is also at the forefront of clean energy innovation, applying technical and engineering expertise that’s paving the decarbonization pathway, focusing on research, innovation and implementing new technologies that enhance both economic and environmental outcomes. Notably, advancements in hydrogen production and carbon capture can help decarbonize challenging sectors, positioning natural gas as a key player in our energy and climate future.  

Looking toward the future, the Appalachian region has generations of this supply left to offer. Estimates from the Potential Gas Committee indicate more than a hundred years’ worth is beneath our feet, reinforcing the region’s vital role in addressing both national and global energy demands. With the right policies promoting the safe development and expanded use of Marcellus and Utica’s abundant, low carbon natural gas reserves, this region will remain the keystone of cleaner, more stable and secure natural gas markets.