Paul Fulton Scholarship Paper 

Marcellus Shale Decline Analysis 

Submitted by: Brandon Baylor 

Abstract: The major Appalachian Basin topic being discussed by oil and gas producers today is 

the Marcellus Shale formation. Since 2004 businesses have only recently been able to 

aggressively pursue natural gas production from this underground formation. Given the lack of 

production data in the Marcellus, this paper draws parallels from similar U.S. shale formations. 

The expected ultimate recovery (EUR) of hydrocarbons in the shale formations (such as the 

Barnett Shale and Haynesville Shale formations) is used as a basis for the Marcellus Shale 

predictions. 

In the engineering task of predicting the Marcellus Shale decline, past trends of performance will 

be evaluated. The analysis presumes that these trends and controlling factors will persist. 

Different factors such as initial production rate, curvature of the decline, and rate of decline will 

be taken into consideration in the analogy between shale formations. The EUR is defined as the 

amount of hydrocarbons produced from the time the well is drilled to the time of abandonment. 

This study will compare the Barnett and Haynesville Shale formations to the Marcellus Shale. 
Marcellus Shale Decline Analysis 

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Table of Contents 

EXECUTIVE SUMMARY ............................................................................................................ 3

Purpose ........................................................................................................................................ 3

Background ................................................................................................................................. 3

Method ........................................................................................................................................ 4

Scope ........................................................................................................................................... 4

Key Terms ................................................................................................................................... 5

BARNETT SHALE ........................................................................................................................ 6

Background ................................................................................................................................. 6

Decline Analysis ......................................................................................................................... 7

HAYNESVILLE SHALE ............................................................................................................... 8

Background ................................................................................................................................. 8

Type Curves ................................................................................................................................ 9

MARCELLUS SHALE ................................................................................................................ 10

Background ............................................................................................................................... 10

Type Curves .............................................................................................................................. 11

CONCLUSION ............................................................................................................................. 12

WORKS CITED ........................................................................................................................... 13

APPENDIX A: BIBLIOGRAPHY ............................................................................................... 14

APPENDIX B: TABLES .............................................................................................................. 15

Barnett Shale Reservoir Properties ........................................................................................... 15

Marcellus Shale Reservoir Properties ....................................................................................... 15
Marcellus Shale Decline Analysis 

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EXECUTIVE SUMMARY 

Purpose 

The purpose of this paper is to consider production decline curve parallels between the 

Barnett/Haynesville Shale and Marcellus Shale formations. Decline curve analyses and expected 

ultimate recovery (EUR) predictions are found in the public domain for the Barnett and 

Haynesville Shale. The type curve characteristics are thereafter applied to the Marcellus 

formation. The study of these reservoirs will benefit producers of the Marcellus formation and 

provide an insight into the expected value of this previously untapped formation. 

Background 

Shale formations are organic-rich rocks typically regarded as source rocks for underground 

hydrocarbons. Because of the low permeability and porosity of the shale formations, oil and gas 

companies had no way to economically produce the gas in place. However, with the onset of 

horizontal drilling, improved stimulation methods, and increased natural gas prices, producers 

began investing in the resources necessary to produce the formerly untapped gas reserves. 

The typical shale gas reservoirs consist of 50-600 feet of net pay thickness, 2-8% porosity, and 

depths of 1,000-13,000 feet (3). With trillions of cubic feet of natural gas now available, 

producers look to utilize vertical drilling, horizontal drilling, and hydraulic fracturing techniques 

to pursue production in the U.S. shale plays. 

Figure 1: Lower 48 Shale Gas Plays (http://www.oerb.com/Portals/0/images/shale_gas-map2.jpg) 
Marcellus Shale Decline Analysis 

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The Marcellus Shale lies 5,000 to 8,000 feet below the earth’s surface and covers roughly 2/3 of 

the states of Pennsylvania, New York, and West Virginia (6). This formation, which is still in its 

producing infancy, has 21 Bcfe of proven reserves and 4-8 Tcfe of probable and possible reserve 

potential (10). This relatively new play has drawn the attention of producers because of its large 

size and potential economic impact on the U.S. Commonwealth (9). In 2005 wells began to be 

drilled on a regular basis; although, sufficient production data has not yet been collected to 

accurately predict the EUR for these early producing wells. Pennsylvania oil and gas regulation, 

for instance, does not require producers to report annual well production until five years have 

passed. Therefore, 2005 well production will not enter the public domain until the year 2011 

(11). 

Much like the Marcellus Shale, the Barnett Shale was previously thought to have been only a 

hydrocarbon source rock with no producing reservoir potential. However, the success in the 

Barnett Shale led to development in other shale plays, including the Marcellus Shale. Because of 

the lack of production data from the Marcellus, the Barnett and Haynesville formations will be 

used as case studies and an analogy to the Marcellus. Gas in place of the Barnett Shale is 50 

trillion cubic feet. However, according to geology.com only ten percent of the gas in place is 

economically recoverable utilizing the current hydraulic fracturing and stimulation techniques 

(5). 

Method 

Numerous sources were referenced during the research phase of this paper. Information about 

the history of shale plays in the Lower 48 was obtained online from various industry resources. 

Well costs and decline curve data for public companies were obtained for the Marcellus, 

Haynesville, and Barnett Shale formations. In addition, data about shale gas reservoir modeling 

was available from the SPE Eastern Regional Meeting in 2009. 

Scope 

The document will cover the EUR of the Barnett and Haynesville Shale formations and decline 

predictions in the Marcellus. Data is also available regarding the economic viability in the 

Marcellus. The feasibility of producing from shale reserves depends on effective fracturing and 

stimulation techniques. Usually production from shale plays is not possible unless complex, 

non-linear fractures are present to connect the large reservoir surface area to the wellbore. This 

paper does not address the topic of complex hydraulic fracturing techniques or stimulation 

techniques to maximize production in shale gas formations. 
Marcellus Shale Decline Analysis 

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Key Terms 

-Bcfe: Billion cubic feet equivalent 

-EUR: Expected Ultimate Recovery 

-FBHP: Flowing bottom hole pressure 

-ft: Feet 

-Mcfe: Thousand cubic feet equivalent 

-mD: Millidarcy 

-MMcfe: Million cubic feet equivalent 

-psi: Pounds per square inch 

-SPE: Society of Petroleum Engineers 

-Tcfe: Trillion cubic feet equivalent 
Marcellus Shale Decline Analysis 

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BARNETT SHALE 

Background 

The Barnett Shale formation, located in the Fort Worth Basin, is a complex reservoir that began 

drawing the attention of oil and gas producers in the 1980s. The first well was drill in 1981 in 

Wise County, TX (2). Because most of the parameters across an entire formation are not exactly 

consistent, most reservoir decline predictions come with a range of input values and results. The 

Barnett Shale still provides a good comparison to the Marcellus Shale because of similar rock 

and reservoir properties. See Table 1 in Appendix B for more information on the specific 

formation properties of the Barnett Shale. 

Figure 2: Barnett Shale Geographic Map (http://geology.com/research/images/barnett-shaleformation-map-lg.jpg) 
Marcellus Shale Decline Analysis 

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Decline Analysis 

Figure 3 provides a type curve for the first five years of production of the Barnett Shale 

formation. The EUR was found to be 2.5 Bcfe with an initial production rate of approximately 

3.5 MMcf/d. For this formation, the production rate falls nearly 73% in the first year. This steep 

decline in rate means that the majority of cumulative production will come early in the life of the 

formation. It is important to note that most companies consider the first 10 years of production 

to be the most important. This is because the majority of the EUR is produced during this period 

and drives the project economics. Figure 3 below also provides type curves for other U.S. shale 

plays in the Lower 48. 

Figure 3: Type Curves for the Barnett Shale (12) 
Marcellus Shale Decline Analysis 

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HAYNESVILLE SHALE 

Background 

The Haynesville Shale is another shale gas play in the Lower 48 that may provide insight into the 

Marcellus production decline. It extends into East Texas, Northwest Louisiana, and Arkansas; 

sometimes it is referred to as the Louisiana Shale. Schlumberger assessed the total depth of the 

formation to be 18,000 ft in 1981 (1). Pressure in this deep, thick formation is abnormally high 

for a shale play (20,000 psi). Predictions expected the Haynesville Shale to be as big as the 

Barnett formation, which would make the Haynesville one of the biggest natural gas fields in the 

United States (4). Now the Haynesville Shale is recognized as the fourth largest gas field in the 

world (1). 

Figure 4: Haynesville Shale Geographic Map 

(http://carmouchelandservices.com/images/haynesville-shale-map.gif) 
Marcellus Shale Decline Analysis 

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Type Curves 

Figure 3 below presents recently released data for Petrohawk’s decline curve analysis and 

cumulative production plot for the Haynesville formation. Like the Barnett, the early years of 

production decline will be considered because this is the most critical time of the well’s life. At 

18 MMcf/d, the Haynesville has a higher initial production rate than both the Marcellus and the 

Barnett. This means that the reservoir has a greater potential to produce natural gas; however, 

many other factors also play into the overall amount of production for a given formation. 

Petrohawk predicted the EUR of the Haynesville formation to be 7.5 Bcf with 6 Bcf of the 

recovery coming in the first 10 years of production. In other words, 80 percent of the overall 

recovery from this formation will take place over the first ten years (8). Compared to other 

formations, that is a large amount of recovery in the early life of the producing field. Companies 

working in this field have seen an early pay-off to their investments. How does this compare to 

predictions in the Marcellus Shale? 

Figure 5: Type Curves for the Haynesville Shale (8)
Marcellus Shale Decline Analysis 

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MARCELLUS SHALE 

Background 

Old vertical wells have existed in the Marcellus Shale, but the formation was not tapped into on a 

regular basis. Before horizontal drilling was utilized, producers occasionally hit natural 

fracturing systems and were able to see some production. Now producers are assertively 

pursuing this formation with new drilling and completion techniques. The reservoir properties of 

the Marcellus are comparable to the Barnett Shale, but production data may not decline in the 

same manner. See Table 2 in Appendix B for more information about the reservoir properties of 

the Marcellus Shale. 

Figure 6: Marcellus Shale Geologic Map (http://schema-root.org/science/geology/stratigraphy 

/formations/shales/marcellus/marcellus_shale_map.gif) 
Marcellus Shale Decline Analysis 

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Type Curves 

Figure 7 below presents Chesapeake Energy’s predicted decline curve analysis of the Marcellus 

Shale formation. The initial production rate for this curve is about 4 MMcf/d, which is lower 

than the Haynesville Shale but slightly higher than the Barnett formation. The EUR for this type 

curve is 4.2 Bcfe. Both the Barnett and Haynesville Shale formations had steep decline rates in 

the first few years of production. In Figure 7 the Marcellus production rate declined 70% after 

the first year but only 17% of the EUR was produced. In addition, only 55% of the production 

will be produced in the first ten years, which is considerably less than the Haynesville formation. 

Year Cum. Production (Bcfe) % of EUR Recovered 

2 1.1 26 

4 1.5 36 

6 1.8 43 

8 2.1 50 

10 2.3 55 

 Table 1: EUR for the Marcellus Shale 

Figure 7: Type Curves for the Marcellus Shale (7) 
Marcellus Shale Decline Analysis 

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CONCLUSION 

1.) Due to hazardous terrain, environmental regulations, and lack of equipment, the Marcellus 

Shale formation is not expected to take off until 2010 (9). 

2.) Potential of the Marcellus Shale will be comparable to the Barnett because of their similar 

initial production rates and first year decline rate. However, the Marcellus may decline slower in 

later years. 

3.) It will take longer to evaluate the profitability from the Marcellus Shale because a smaller 

percent of the reserves will be recovered in the first ten years than the other shale plays. Longer 

reserve recoveries will impact the overall economics of the play. 

 

4.) According to estimates generated by Deutsche Bank, the range of internal rate of return (IRR) 

for the Marcellus Shale is 72-100% before tax deductions. IRR is used by producers to 

determine whether or not to make an investment. The IRR is greater for the Marcellus than for 

any other U.S. shales, Deutsche Bank concluded, because of premium natural gas pricing due to 

location and relatively low royalties in Appalachia. In addition, the Marcellus is estimated to 

have the lowest breakeven price ($3.17) when compared to the Haynesville and Barnett Shales. 

5.) The lack of annual production data in the public domain for five years (due to state 

regulations) limits independent analysis of actual well data. 
Marcellus Shale Decline Analysis 

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WORKS CITED 

1.) American Exploration Corp. “Target: New Haynesville Shale Resources,” presentation, 2009. 

2.) Brackett, Will. “A History and Overview of the Barnett Shale,” presentation for the Powell 

Barnett Shale Newsletter, October 2006. 

3.) Cipolla, C.L. et al. “Reservoir Modeling in Shale-Gas Reservoirs,” paper SPE 125530 

presented at the 2009 SPE Eastern Regional Meeting, Charleston, West Virginia, USA, 23-25 

October 2009. 

4.) "Haynesville Shale Natural Gas Play." OilShaleGas.com, 2009. Web. 25 Mar 2010. 

http://oilshalegas.com/haynesvilleshale.html 

5.) "Marcellus Shale - Appalachian Basin Natural Gas Play." Geology.com. N.p., n.d. Web. 20 

Mar 2010. http://geology.com/articles/marcellus-shale.shtml 

6.) "Marcellus Shale." Pennsylvania Department of Environmental Protection, Nov. 2008. Web. 

20 Mar 2010. http://www.dep.state.pa.us/dep/deputate/minres/oilgas/new_forms/marcellus/0100-

FS-DEP4217%20Marcellus%20Shale1.pdf 

7.) McClendon, Aubrey. Chesapeake Energy. “Marcellus Shale – Targeted Horizontal Well 

Profile,” presentation presented at the DUG East Conference, 19 October 2009. 

8.) Petrohawk. “Introducing Red Hawk and Black Hawk,” presentation presented at the Howard 

Weil 38th Annual Energy Conference, 23 March 2010. 

9.) Schweitzer, R. “The Role of Economics on Well and Fracture Design Completions of 

Marcellus Shale Wells,” paper SPE 125975 presented at the 2009 SPE Eastern Regional 

Meeting, Charleston, West Virginia, USA, 23-25 October 2009. 

10.) Seneca Resources. “Exploration and Production,” presentation presented at the BMO 

Capital Markets Unconventional Resource Conference, 12 Jan 2010. 

11.) Thomas, Ben. Marcellus Shale Decline Analysis. Personal Interview by Brandon Baylor. 28 

March 2010. 

12.) Ventura, Jeff. Range Resources. “Shale Play Comparison,” presentation presented at the 

DUG East Conference, 19 October 2009. 
Marcellus Shale Decline Analysis 

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APPENDIX A: BIBLIOGRAPHY 

1.) Ahmed, Tarek. Reservoir Engineering Handbook. 3rd. Burlington, MA: Gulf Professional 

Publishing, 2006. Print. 

2.) Jacobson, Michael. "Tax Treatment of Natural Gas." Penn State College of Agricultural 

Sciences, Web. 20 Mar 2010. <http://pubs.cas.psu.edu/FreePubs/PDFs/uh190.pdf>. 

3.) Nicholls, Tom, et. al. How the Energy Industry Works. London: Silverstone Communications 

Ltd, 2009. Print. 

4.) Pinkerton, John. Range Resources. Presentation presented at the Howard Weil 38th Annual 

Energy Conference, 23 March 2010. 

5.) Raymond, Lee R., et al. United States. Hard Truths: Facing the Hard Truths about Energy. 

Washington, D.C., 2007. Print. 

6.) United States Department of Energy. Projecting the Economic Impact of Marcellus Shale 

Gas Development in West Virginia. Tulsa, OK: ALL Consulting, LLC, 2009. Web. 25 Mar 2010. 

<http://www.iogawv.com/pdfs/WV_Marcellus_Economics_ALL.pdf>. 
Marcellus Shale Decline Analysis 

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APPENDIX B: TABLES 

Barnett Shale Reservoir Properties 

Table 1 (Source: Works Cited #3)

Depth [ft] 7,000 

Reservoir Pressure [psi] 3,800 

Pore Pressure Gradient [psi/ft] 0.54 

Net Pay [ft] 300 

Porosity [%] 3 

Matrix Permeability [mD] 1.0 e-5; 1.0 e-4 

Water Saturation [%] 30 

Reservoir Temperature [  F] 180 

FBHP [psi] 1,000 

Marcellus Shale Reservoir Properties 

Table 2 (Source: Works Cited #3)

Depth [ft] 5,000 

Reservoir Pressure [psi] 2,750 

Pore Pressure Gradient [psi/ft] 0.55 

Net Pay [ft] 100 

Porosity [%] 8 

Matrix Permeability [mD] 1.0 e-5; 1.0 e-4 

Water Saturation [%] 25 

Reservoir Temperature [  F] 105 

FBHP [psi] 500