WSJ: Utica Shale Field, Way Way Bigger than Marcellus Shale...

That is what the experts have been saying, this natural gas miracle thing is way bigger than we can imagine. This thing is not only going to revolutionize our energy markets, it going to bring massive restructuring to our nation. It is a runaway monster bigger than what we could even imagine.  

So the Utica shale field is underneath the Marcellus Shale field...what is under the Utica shale? 

It is going to make the Marcellus shale field uncompetitive? 

Gas Driller Hits a Gusher—and Sinks Its Own Stock

A big find typically would send an energy company’s stock surging, but in an industry awash in the commodity, it is having the opposite effect

By

Timothy Puko and

Ryan Dezember

·     

Ryan Dezember

The Wall Street Journal

Nov. 26, 2015 5:33 a.m. ET

EQT Corp. EQT -0.89 % this summer drilled what by some measures is the biggest natural-gas gusher ever. The Pittsburgh energy company’s reward: a tumbling stock price.

The well, in southwestern Pennsylvania’s Greene County, spewed enough gas in its first 24 hours to power every home in Pittsburgh for nearly three days. Named Scotts Run 591340 after a historic coal field that sparked a regional energy boom after World War I, the well has continued to produce at unusually high rates with no signs of fading soon.

That would sound like good news. But in a glutted industry in which natural-gas prices are plunging as record amounts of unused gas build up in storage, it is a problem. Since EQT finished drilling the gusher in July, its shares have lost 29%, while U.S. natural-gas prices have fallen 24%.

Scotts Run 591340 taps part of a rock formation called the Utica Shale that has only been lightly explored so far because it sits almost 3 miles below the Earth’s surface.

Situated beneath Pennsylvania, West Virginia and Ohio, the Utica is close to gas-consuming regions of the Northeast. If it proves as productive as EQT’s well and a few nearby wells suggest, it could mean trouble for billions of dollars of wells and pipelines built in and from more established regions like north Louisiana and the Rocky Mountains.

“Because the Utica is a big unknown, fear has overtaken the market,” said Matt Portillo, managing director at energy-focused investment bank Tudor, Pickering, Holt & Co.

EQT said last month that it would suspend drilling projects in other parts of Pennsylvania to concentrate on the Utica, where it thinks wells have the potential to be so prolific that they could lower natural-gas prices and make competing projects uneconomical.

“Some of our other inventory that requires higher prices to make economic returns would be deferred, possibly for many years,” David Porges, EQT’s chief executive, told investors on a conference call last month.

The Utica is already starting to alter the U.S. natural-gas balance. The U.S. Energy Information Administration said this week that the country’s proved reserves of natural gas rose 10% in 2014 to a record of 388.8 trillion cubic feet. Ohio’s reserves nearly tripled thanks to finds in portions of the Utica Shale, a big factor in the higher total, the government agency said.

Meanwhile, gas stockpiled in the contiguous 48 states exceeded four trillion cubic feet for the first time ever last week, as producers continue to drill new wells despite depressed prices and forecasts for a mild winter that would limit demand for the heating fuel.

Shares of EQT rivals Range Resources Corp. RRC -2.41 % and Consol Energy Inc. CNX -5.63 % have slid 44% and 54%, respectively, since those companies disclosed their own prolific Utica wells in December and July.

“Regardless of where gas prices are, the Utica is exciting,” said Tim Dugan, who runs Consol’s gas-production arm. Range Resources didn’t respond to requests for comment.

Not long ago, big natural-gas discoveries translated to stock-market success. Cabot Oil & Gas Corp. COG -0.36 % ’s shares doubled in 2011, making the stock the S&P 500’s top performer that year, as it tapped vast stores of natural gas in northern Pennsylvania’s Marcellus Shale.

The finds helped make Pennsylvania a top producer and wreaked havoc in states like Louisiana and Arkansas, where the fuel costs more to extract from shale formations. BHP Billiton, BBL -4.18 % one of the biggest mining and energy companies in the world, had spent big buying fields in those states only to idle drilling rigs and write off billions of dollars in losses soon after.

Much of the Utica lies beneath the Marcellus, and some producers and investors believe it could take over as the country’s biggest source of low-cost natural gas.

“The Utica certainly has the potential to be more economic than the Marcellus, but it’s too early to make a definitive call,” said David Schlosser, EQT’s executive vice president of engineering, geology and planning.

The prospect has companies calculating whether they need to rewrite their playbooks again.

Shares of Southwestern Energy Co. SWN -4.14 % and Chesapeake Energy Corp. CHK -2.59 % , which have drilling land above the Utica but derive most of their production from other regions, have dropped 53% and 40%, respectively, since EQT disclosed the first details of its well in late July. Southwestern has begun exploring its Utica acreage ahead of schedule, and executives have said they expect it to become a key part of the company’s future.

Samson Resources Corp., which filed for bankruptcy protection in September after falling commodity prices prevented it from keeping up with debt payments, told a judge last month that the recent swoon in natural-gas prices has imperiled its restructuring plan.