Analyst: $200B investment coming in Marcellus, Utica region - WTRF 7 News Sports Weather - Wheeling Steubenville

Analyst: $200B investment coming in Marcellus, Utica region

Posted: Updated:
  • EnergyEnergyMore>>

  • Many WV coal counties losing revenue

    Many WV coal counties losing revenue

    Monday, August 8 2016 10:15 AM EDT2016-08-08 14:15:05 GMT

    As Appalachian coal production continues its drastic decline, West Virginia’s coal-producing counties are  not only losing people as lifelong residents are forced to flee their homes in order to find work, but in many cases, they’re also relinquishing millions of dollars from their budgets.

    As Appalachian coal production continues its drastic decline, West Virginia’s coal-producing counties are  not only losing people as lifelong residents are forced to flee their homes in order to find work, but in many cases, they’re also relinquishing millions of dollars from their budgets.

PITTSBURGH, Pa. -

The Marcellus shale represents more than half of the potential of U.S. shale plays.

That statement grounded observations from Jerry Swank, managing partner of Swank Capital of Dallas, at the third annual Marcellus Midstream Conference presented by Hart Energy March 19-22 in Pittsburgh.

Swank reviewed the region's gas development from a money manager's standpoint.

Almost $10 billion a year will be invested in the region over the next 10 years just to drill and complete wells, Swank said.

And in midstream development — processing and transportation of gas and natural gas liquids — there is projected to be over $110 billion of investment over the coming 20 years, almost all of it in the Marcellus, with some in the Utica shale.

"So that's $200 billion in this market," Swank said. "This is real shovel-ready stimulus, and it's going to provide an amazing number of jobs."

To illustrate that, he described conditions around his home in the Barnett shale, where, due to gas development over the past decade, every town has a new fire truck and a new school, and everyone has a new pickup truck.

Swank spoke of pipeline developments to carry gas north and east from the Marcellus and Utica, saying old sources of gas to the area — the Gulf Coast and, more recently, the Rockies — are scrambling to find new markets.

He spoke also of this region's natural gas liquids, particularly ethane, for which the market has not yet fully been developed.

In a market flooded with natural gas and ethane, he said, "probably the largest arbitrage I've ever seen is what's happening in the natural gas and ethane markets in the U.S." With gas prices not much above $2 per thousand cubic feet here and four and five times that in Europe and even higher in Australia, he said, people worldwide are trying to figure out how to take advantage of the price spread by buying low here, transporting and selling high elsewhere."

With gas so cheap that it sometimes doesn't pay to take it out of the ground, the Marcellus has become "a giant gas storage field," Swank said.

"Our consultants tell us there are over 1,300 shut in wells now, wells that haven't even been completed and hooked up," he said.

That is a set-up for future price dampening.

"As soon as prices tick up to $3.50, those will be the first tapped, and there will be another huge glut," he said.

 

Powered by Frankly