It hasn’t taken long for the domestic natural gas market to be turned on its head, an Ultra Petroleum Corp. executive said recently.

Stuart E. Nance, the vice president of marketing for the Houston-based producer, recalled that in September 2008 at the LDC Forum Midwest, all the talk centered on how Rockies gas, pumped through the Rockies Express Pipeline, would be the go-to supply basin to serve the Midcontinent.

How quickly things change. Now it’s all about shale gas, and the go-to basin for East Coast markets is the Marcellus Shale, Nance told an audience at the recent LDC Forum Mid-Continent in Chicago.

“Since 2008 we have already tallied more than $70 billion of U.S. shale JVs [joint ventures] or acquisitions across the Haynesville, Marcellus, Eagle Ford, Barnett and Woodford shales,” he said. “Of the total more than $20 billion were from international players…”

Most everybody wants to get a piece of the Marcellus Shale, he noted. The “‘new’ conventional supply is coming from the Marcellus Shale.” Appalachia has been explored for about 200 years, but it was “rediscovered” by producers on technology gains and ample access to gas infrastructure, which feeds into the big consumer base on the East Coast.

But there’s another big reason that everybody wants to get into the act. The Marcellus play, said Nance, “may be the second largest gas field in the world” after the Pars field in Iran. Of the 15 million acres available in the Marcellus, he estimated that to date more than eight million acres have been leased by 20-plus producers operating there. About 500 wells have been drilled. And 80-plus gas rigs are working today.

“From what I’ve heard and from what our partners…have told me, it’s probably producing 1 Bcf/d already,” said Nance.

No one is sure how much gas will be available for delivery from the play, but Nance pointed to various expert estimates on what may be in store:

At the Chicago conference Ziff Energy Group’s Ed Kallio said the Marcellus play could be producing “close to 5 Bcf/d” by 2020 (see Daily GPI, Sept. 17).

Ultra began drilling in Pennsylvania in July 2009 (see Daily GPI, Feb. 16). By the end of last year 13 wells were producing, and initial production rates were averaging 7,500 Mcf/d with an average lateral length of about 3,800 feet. Preliminary estimated ultimate recoveries appeared to confirm the producer’s 3.75 Bcfe type-curve, with some preliminary estimated ultimate recoveries at more than 6 Bcfe.

But is the Marcellus Shale truly a “game changer?” Nance asked the audience. “No and yes. It is a ‘new’ conventional resource…on the one hand we still develop resources by leasing and exploring, prove up resources by drilling, then produce and sell gas to customers who appreciate and value the product…but the magnitude of the resource is so large that we have the ability to capture new markets, convert existing users of other fuels and grow overall long-term demand for natural gas to fuel our future.”

©Copyright 2010Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.