More on the economic impact of shale gas drilling

Submitted by admin on Sat, 07/16/2011 - 21:50

In a study done by a consortium of northeastern PA colleges in 2008, "The Impact of Marcellus Shale in Northeastern Pennsylvania with an Emphasis on Charities, Crime, and Poverty,"  there is this on pg. 7:

The example below uses Barnett Shale [in TX] production rates as a baseline for estimates:

 

  • If you own 100 acres of gas-producing land, and

  • You receive a royalty of 15%, and

  • Natural gas is priced at $10 per Mcfe

  • The daily production rate is 2 Mmcf (million cubic feet) per day (an estimate), then

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  • Total royalty would be approximately $1,095,000 in the first year.
     

It is very difficult to predict a well’s output at any point in time – especially so early in the Marcellus Shale play. This is only one possible scenario. It is also important to note that output declines quickly at first, but such decline slows towards the well’s half life. A well’s production typically lasts 20 – 30 years. The figure above does not include the lease value or sign-on bonuses.

Read the rest of the study.