GlobalData’s latest report, ‘Marcellus and Utica Shales in the US, 2020 – Gas Shale Market Analysis and Outlook to 2021’ provides a comprehensive review of the natural gas appraisal and development activity in Marcellus and Utica shale plays against the backdrop of Covid-19 pandemic. It analyses the competitive landscape for operators in these plays on the basis of permit activity, investment trends, type well economics, and mergers and acquisitions (M&A).

Natural gas production from Marcellus and Utica shale plays in the Appalachia Basin is majorly driven by the large industrial and commercial demand from the eastern US. The Covid-19 outbreak led to temporary closure of workplaces and industries resulting into significant decline in natural gas demand. In September 2020 alone, natural gas consumption dropped 29% year-on-year in Pennsylvania, a major industrial state in this region. During the same month, natural gas consumption in the state of New York fell by 11% year-on-year. The Covid-19 pandemic also considerably impacted the US LNG exports – the utilisation rates at some of the LNG liquefaction terminals dropped to as low as 50% in May 2020. These scenarios collectively had bearing on natural gas production from the Appalachia Basin.

As a result of declining natural gas demand, major operators in the Marcellus and Utica shale plays collectively reduced their 2020 capital spending by 28% from their initial guidance. The top two producers in the Appalachia Basin, namely EQT Corp and Antero Resources, reduced their 2020 capex by 20% and 35%, respectively. Naturally, these companies scaled down their shale appraisal and development activity in this region. In Q3 2020, EQT Corp announced to curtail natural gas sales volume by 15 bcf. Ascent Resources, another major player in this region, revised down its Appalachia Basin capex for 2020 by 17% that is to $625m from its original planned spending of $750m. The pandemic also forced some Marcellus and Utica operators, such as Gulfport Energy and Chesapeake Energy, to file for Chapter 11 bankruptcy.

The count of active rigs in Marcellus and Utica shale plays also dropped to as low as 31 in August 2020, from 80 in February 2020. Natural gas production in Marcellus shale dipped about 4% to 26.4 bcfd in November from 27.5 bcfd in April 2020. Similarly, natural gas production in Utica shale also declined about 7% during April–November 2020.