So much gas: Pa. Marcellus drilling slow til 2017, analyst says

Key Northeast markets are "oversupplied" with natural gas, so the number of gas drilling rigs in Pennsylvania's prime Marcellus Shale counties (Bradford, Sullivan and five others) is expected to drop until at least 2017. Gas shipments from existing wells and wells in process will still grow by around 15% a year over the next couple of years, through existing and expected new pipelines shipping Pennsylvania gas to New England and other markets, writes analyst Karl Chalabala this morning, in a report to clients of Canadian investment bank Canaccord Genuity Group Inc.

"Potential for price-reactive production curtailments" is delaying new drilling projects at both of the region's largest producers -- Chesapeake Appalachia LLC and Cabot Oil & Gas Corp. -- according to Canaccord. Chesapeake produced over 2 billion cubic feet/day from Northeast Pennsylvania, with Cabot adding more than 1.6 billion, Cannacord reported, citing state data. Together that's 48% of total production in the zone.

The number of drilling rigs has dropped from more than 60 in 2011 to fewer than 20 in 2013, and is not expected to rise above 20 until projects scheduled for 2017 pick up.