Putting The Marcellus / Utica Into Perspective -- October 16, 2015 -- Part VI

From a reader:

Some numbers to give some perspective on the Marcellus/Utica supply situation:

• At the moment there are 8,000 producing unconventional wells in Pennsylvania and Ohio.
• There are over 3,000 wells that are already drilled (some frac'd) that are not yet online (producing).
• At the recent rate of three (3) wells per day being brought online, it would take over 1,000 days - over 2 1/2 years to bring these wells into production.
• A leading operator, Antero, recently said that they have less than a quarter of their leased acreage held by production (HBP).

The 'wildcatting' of the dry gas Utica has barely started and is already showing off the charts production.

One of the arguments for intermittent energy (wind/solar) is that once the farms are brought on-line, the energy source is free (wind is free; solar is free). Proponents of intermittent energy will say, that, yes, the upfront cost of building an intermittent energy farm is two, three, or several times more expensive than building a natural gas plant, but the cost of energy going forward will offset that initial upfront cost (and that's with huge government tax subsidies).

It's the same thing as buying a house. Most folks don't buy a house based on the advertised sales price. They buy what their monthly cash flow can cover. It becomes ever more difficult to convince folks to pay two times, three times, or several times the cost of an intermittent energy farm when the cost of the natural gas plant energy source will be so inexpensive going forward. I'm sure I am not articulating that well enough for Minnesotans to understand but there you are.

But with natural gas so inexpensive and so plentiful, the argument that wind/solar is free while natural gas will still incur a cost does not hold up. The on-going cost of natural gas is so inexpensive it is a minor piece of the full utility bill. The major part of the utility bill (coal, natural gas, solar, wind) is administrative costs, profits, regulatory inefficiencies, transmission costs, hidden fees, taxes, net metering, etc. Just like buying a bag of potato chips: a $4.99 bag of chips with 20 cents worth of potatoes.

On another note, regardless of how you slice and dice it, America is sitting in the catbird seat (as they say in the Midwest) when it comes to energy. Saudi Arabia and Russia see the writing on the wall. Or perhaps in the sands of the desert. Whatever. All I can say is I'm glad I'm here and not there, and I'm glad we're whining about $30 oil and not struggling with $300 oil -- where we would likely be today without the frackers.