The bottlenecks of the Marcellus Shale appear to be easing, as two of the oldest shale producers in the region recently announced production milestones.

Range Resources Corp. is now producing 400 MMcfe/d from the Marcellus, its target for the year. The company exited 2010 producing 200 MMcfe/d from the Marcellus. And Consol Energy Inc. recently passed the 500 MMcf/d milestone, primarily from Marcellus production but also from some coalbed methane and conventional gas activities.

For Range, hitting its target makes 2011 its eighth consecutive year of double-digit production growth, and the company expects to make it nine in a row next year.

The company said it will be able to continue adding production in 2012 because it increased its firm transportation capacity and firm sales agreements to 650 MMcf/d, increased its natural gas processing capacity in southwestern Pennsylvania to 435 MMcf/d and executed the first ethane sales contract in the play (see Shale Daily, Sept. 7).

Those moves give Range room to meet its 2012 production targets, but Range said it will continue to expand infrastructure to meet its long-term needs for the region. The company is increasingly focused on Appalachia after selling its Barnett Shale assets earlier this year, but is still building its operations in the region (see Shale Daily, March 2).

While Range touts the economics of the Marcellus, the company doesn't expect its operations there to pay for themselves until late 2013. The company is reporting an average drilling and completion cost of $4 million per well in liquids-rich southwestern Pennsylvania, and said it can earn a 79% internal rate of return over the life of a well at a New York Mercantile Exchange (Nymex) Henry Hub index price of $4/Mcf.

"Achieving our Marcellus Shale production target is an outstanding accomplishment for our operating teams," CEO John Pinkerton said. "Importantly, given the excellent progress we have made with regard to infrastructure buildout, we are very well positioned as we look to 2012. In particular, due to the superior economics of the liquids-rich portion of the play, we are very pleased with the infrastructure progress made this year and out ability to capture the associated high returns for our shareholders."

Analysts at Canaccord Genuity Energy Research estimate that Range will increase its Marcellus production 46% in 2012, above the company's guidance figure of around 35%, but said they believed the company "reflects an unjustified 20-30% buyout premium."

Meanwhile, Consol also expects to expand its Marcellus operations in 2012.

Considering its steady increases in the Marcellus, Consol said it is raising its fourth quarter production estimate to between 38 Bcf and 40 Bcf.

Noble Energy Inc. recently paid Consol $1 billion for a 50% stake in its Marcellus assets. The companies plan to drill around 140 wells using eight rigs in 2012, compared to the 35 wells Consol drilled this year using four rigs (see Shale Daily, Oct. 5).

While Range is taking a "wait and see" approach on the Utica Shale, a luxury it can afford because its leases are held by production, Consol plans to ramp up it joint venture with Hess Corp. in the Utica of Ohio in the coming year (see Shale Daily, Oct. 21).