Standard & Poor’s Ratings Services last year deemed the Marcellus Shale as the lowest-cost play in the country with the highest rate of return, indicating that production there was a drop in the bucket compared to what truly was underground (see Shale Daily, Oct. 18, 2012).

At this point, and even before the credit risk firm said the Marcellus was rewriting the nation’s gas flows, the bounty of the formation, and some of the success that exploration and production (E&P) companies have seen there is no secret. The low-density formation was trolled for decades by rigs that drilled vertical wells with great resultsm and ever since 2007, when modern horizontal fracturing (fracking) techniques took-off in the play, the oil and gas industry has put Pennsylvania in its spotlight and pushed the state as a poster child for meeting the country’s energy demands (see Shale Daily, Sept. 30).

Early on, though, heavy leasing activity and exploratory efforts took place in a small corner of the state where thick shale rock could be drilled at minimum depths. One look at a map from the early days of the modern play detailing well locations showed a cluster of them in the northeast corner of the state.

That cluster has slowly shifted, following a trajectory that bends toward northcentral Pennsylvania and winds down to the southeast corner of the state, where for sometime, drilling companies have focused their efforts. That activity is now intensifying as E&Ps dredge up natural gas liquids (NGL) and condensates in the play’s sweet spot, continue to delineate acreage and make use of new and old infrastructure to move product beyond the basin.

More important, the bell curve toward the southwest demonstrates the industry’s evolution in the state thus far. In some ways, it offers a look into the future; opening a window into the next frontier in an undeveloped part of the northwest, which could hold even more liquids as operators push the technological limits, go longer on the lateral and stack ever more wellbores that target multiple pay horizons in the west (seeShale Daily, Dec. 9).

It also offers a clue into some of the public debates that could unravel as those companies move closer to heavily populated areas, especially in Allegheny County, home to Pittsburgh, where many operators hold a significant chunk of acreage on its periphery (see Shale Daily, Aug. 12; March 9, 2011).

“The takeaway capacity is simply better in the west; the focus will be on southwest Pennsylvania, all the way up into the northwest, which is underdeveloped,” said geologist Michael Arthur, co-director of the Marcellus Center for Outreach and Research at Pennsylvania State University.

“The capacity is better in the west obviously because of the the historical and major pipelines that cross that area. Whether the focus will remain will have a lot to do with the market, but some of the results in the northeast have been somewhat disappointing given current prices and there was virtually no infrastructure in place to gather a lot of that gas there.”

The intensity of drilling anywhere is a product of demand, and the product is different in southwest Pennsylvania, added Penn State professor Terry Engelder, a long-time advocate of the potential in the Marcellus. In the east the gas is dry and in the southwest it is wet. But where that gas is in place, and what it will take to get to could dictate activity for years to come.

Texas-based Range Resources Corp. is a case in point. Two core areas consisting of condensates and NGLs have shaped up in the southwest. Range, which drilled the state’s first modern horizontal well in 2004 and has since come to hold about 1 million acres in the Marcellus, has a concentrated position there.

As a result, the company is one of the largest producers of wet gas in the Appalachian Basin (see Shale Daily, Oct. 30). A Bank of America Merrill Lynch study ranked Range second in its peer group last year for low-cost operations, with eight years of production history in the Marcellus on its logs.Like other operators, Range is targeting co-development of the Upper Devonian, the Marcellus and other shallow shale formations.

“The sweet spot has always been the sweet spot, that hasn’t changed,” Engelder said. “There is now the possibility of multiple gas shales in that area stretching from Allegheny to Washington counties, from the Marcellus and Devonian, to the Rhinestreet and the Burkett. It just so happens that if you draw lips around that area, it’s on the order of one third of the gas falls below Pittsburgh.”

By its estimates, Range has said that Pittsburgh — a city of more than 300,000 people — essentially sits smack dab in the middle of an area that contains 125-175 Bcf per square mile. The city also sits atop a portion of the Upper Devonian that contains 60-80 Bcf per square mile and near an area of the Utica/Point Pleasant that contains 140-160 Bcf.

The issue could be considered a thorny one. Pittsburgh banned fracking in 2010 — a move some have compared to barring an alien landing in the city — as urban density and surface conditions would not allow for drilling operations there. Range and other operators have said they have no intention of targeting the city’s gas in place anytime soon.

Engelder, though, said it’s not entirely out of the question, especially at the rate the industry has innovated in recent years.

“If I could look into the future of horizontal drilling, I’d say it will become so sophisticated that the laterals will be reaching two miles. If that’s the case then you might find drilling heading underneath the city,” he said. “Then the issue will become how safe fracking at that depth is without disrupting the surface. I anticipate that the industry will demonstrate that it’s pretty darn safe. Obviously, there has to be a shift in public perception, those activities around the drill pad are of primary concern.

“If natural gas continues to remain in demand, then operators will have to demonstrate that what goes on below the surface is much different than what goes on above it,” Engelder added.

In many ways, the revelations that have swirled around Pittsburgh and its place in the future of the Marcellus are more emblematic of how the industry is proceeding in southwest Pennsylvania.

Huntley & Huntley, a Pennsylvania-based conventional oil and gas developer, is serving as a leasing agent for Range in its Allegheny County pursuits. Its efforts helped prompt the county to issue a request for proposals in September for a deal to drill near the 1,180 acre Deer Lakes Park, which Allegheny owns .

The county is home to 1.3 million people and since a proposal was put forward, media outlets have covered it extensively, leading a public debate about the merits of such a project to unfold.

“We’re preparing for drilling that’s going to happen anyway,” said Allegheny County Executive Rich Fitzgerald. “Everything around the park has been leased; it’s all private land. The companies we were approached by are not interested in drilling on park land.”

Fitzgerald said Range has 23,000 acres under lease in one corner of the county and another 58,000 acres near Westmoreland and Butler counties. Any drilling activity, he said, would occur 1,000 feet from the park’s property line.

At a lease bonus of $3,000 an acre, Allegheny could be looking at a $3 million windfall on that payment alone, with anywhere from 16-18% in royalties thereafter. Fitzgerald said it would ultimately be up to the county council to decide what to do with that money, but he suspects much of it will be reinvested into the county’s parks, some of which he said desperately need additional funding.

The county owns 12,000 acres in nine different parks and there has been further consideration to allow drilling near some of those, as well. Fitzgerald said he believes county council could approve the Deer Lakes agreement by the end of the first quarter or early in the second quarter of next year.

Local governments in Butler, Washington and Beaver counties are also considering proposals to drill on public land.

Consol Energy Inc. was given approval in August for a landmark proposal to drill on 10,000 acres on Pittsburgh International Airport land, which will add to Allegheny County’s fortunes (see Shale Daily, Aug. 29). And EQT Corp. has been busy conducting seismic testing in Butler, Washington and Allegheny counties as well.

Marcellus Shale Coalition spokesman Travis Windle said there are more than 50 rigs operating in the state, with most concentrated in its southwest corner. Moreover, as Kinder Morgan Partners converts to liquids more than 1,000 miles of the Tennessee Gas Pipeline, and as Mariner West and the Appalachia-to-Texas pipeline carry more ethane off the gas stream in the southwest, operations there are bound to stay consistent (see Shale Daily, August 9)

There are several ethane takeaway solutions to the Gulf Coast on the table, including Williams and Boardwalk Pipeline Partners’ Bluegrass Pipeline and one by Kinder Morgan and MarkWest Energy Partners LP. Sunoco Logistics Partners LP earlier this month launched a open season for another ethane solution, Mariner East 2 (see Shale Daily, Dec. 5).

If Bluegrass were to move forward, and that is questionable at this point, a section would originate in Mercer County, in the northwest, where since 2011 thousands of leases have been recorded, along with a similar trend in nearby Lawrence County.

Mercer County Recorder Dee Dee Zickar said that lease-grab appears to be tapering, adding that county officials remain optimistic about the boom in activity heading their way.

“There’s a possibility in a formation like the Marcellus that as you move northwest, things will get more wet than dry,” Engelder said. “The formations become shallower up there, which means the rock has not been heated as much as it has in the northeast.”

One problem in the Northeast, experts say, is the Marcellus is not as thick, which presents a challenge for horizontal drilling. Still, Hilcorp Energy Co., Royal Dutch Shell plc affiliate SWEPI LP nd Halcon Resources Corp. have been actively scooping up land for development there, records show.

“It’s all of the above; the attraction of multiple pay horizons is a big one,” Arthur, of the Marcellus Outreach Center said. “The Utica prospect alone could even be wetter in western Pennsylvania and Ohio; there’s not a lot of data, but the Marcellus is almost certainly wet in the northwest too. As you head that way, the rock shallows and thins and there could even be oil there.”