Photo: US Geological Survey.

Photo: US Geological Survey.

Industry concerned federal regulations stifling natural gas production, manufacturing opportunities in Mancos Shale

Now that natural gas reserve estimates for the Mancos Shale in the Piceance Basin of Colorado have been revised dramatically upwards to 66 trillion cubic feet, is it fair to ask if the Mancos will benefit the American economy in the same way as the Marcellus Basin?

Mancos shale

USGS scientist Sarah Hawkins, lead scientist for the Mancos Shale assessment, examining a core drilled by the USGS Core Research Center. This core provided valuable data for the assessment. Photo: Joshua Hicks, USGS.

The Marcellus – which lies beneath parts of Ohio, Pennsylvania, New York and West Virginia – contains 88 trillion cubic feet of technically recoverable gas according to the US Geological Survey (US Energy Information Administration estimates 141 Tcf). The abundance of cheap gas has revitalized manufacturing investment in the Rust Belt and even led to export opportunities in Canada.

“In the last decade, new drilling in the Mancos Shale provided additional geologic data and required a revision of our previous assessment of technically recoverable, undiscovered oil and gas,” said USGS scientist Sarah Hawkins, lead author of the assessment, in a press release.

The Mancos Shale now contains an estimated mean of 66 trillion cubic feet of undiscovered, technically recoverable shale natural gas (previous assessment was 1.6 Tcf), 74 million barrels of shale oil and 45 million barrels of natural gas liquids, thanks to an updated assessment by the US Geological Survey.

Can the abundance of natural gas in the Mancos Shale power a manufacturing revitalization?

There was talk of shipping gas west to the proposed Jordan Cove LNG export terminal in Oregon, but the project was denied a federal permit in April, though Calgary-based Veresen Inc. has submitted a request to rehear the application.

The Mancos Shale faces other challenges, according to Kathleen Sgamma, VP of government & public affairs for industry group Western Energy Alliance.

The problem with the Mancos Shale areas I’ve mentioned above is that, unlike the Marcellus, they are predominated by public lands.

“These areas did not enjoy the shale boom of recent years, until the current price collapse, because the federal government has made it extremely difficult to access them,” she said in an email.

“Extra costs associated with federal regulations and outright obstacles that have blocked projects caused these Mancos shale areas to lag other shale plays during the boom, and they will likewise be slower to recover once commodity prices rebound.”

Sgamma says industry continues to see BLM and other federal agencies as problematic.

“From general bureaucratic permitting delays to wildlife restrictions to retroactive cancelation of leases, public lands in the Piceance have been particularly difficult to operate on over the last several years,” she said.

The agencies have even gone so far as to justify themselves by saying that they’re not the reason production on federal lands was dropping – it was because shale plays like the Marcellus and Bakken just happened to be on non-federal lands, she argues,  the implication being that producers were just naturally more interested in non-federal areas.

“This recent USGS report on the Mancos takes that excuse away from the agencies; there’s real untapped potential that the federal government is undeniably prohibiting the development of,” she said. “The report helps us make the case for reasonable access to non-park, non-wilderness public lands for responsible energy development.”

Another disadvantage that the Mancos has compared to the Marcellus is the remoteness from major population centers, she says. The abundance of natural gas from many plays across the country, particularly in the Marcellus and Utica basins on the northeast coast, has enabled manufacturers to expand operations or return to the United States to take advantage of low energy prices.

“We haven’t seen an expansion of manufacturing in the West as much as that associated with the eastern plays, but it would certainly be welcome,” she said.

“We’re also looking for LNG exports to increase demand for western gas, particularly from the proposed Jordan Cove terminal, which is the only one that would be sourced directly by western gas.”