Marcellus Shale Sends Terminal Operators Scrambling

The US Geological Survey has dramatically boosted its assessment of Marcellus shale reserves in the Appalachian Basin to 84 Tcf of undiscovered, technically recoverable natural gas and 3.4 billion barrels of undiscovered, technically recoverable natural gas liquids. The USGS released its new assessment on August 23. The last time the USGS analyzed the Marcellus resource was in 2002 when it reported about 2 Tcf of natural gas reserves and 0.01 billion barrels of natural gas liquids. While the latest assessment represents an increase in reserves by 42 times over the 2002 figures, the estimate is substantially less than the 410 Tcf of technically recoverable reserves developed by Intek, Inc in 2010 and used by the Energy Information Administration in its 2011 Annual Energy Review. Even at the lower reserve estimate, which the EIA is now adopting, Marcellus gas represents a paradigm shift in the Northeast gas market. The implications for LNG trades is extending south along the eastern seaboard and even to the Gulf Coast, where terminal operators are searching for viable business plans to alter their original import designations. Download here