Natural gas drillers are accelerating exploration of several Appalachian rock formations that sandwich the Marcellus Shale beneath Pennsylvania, and some experts say the new discoveries may be as prolific as the Marcellus itself.
"What we've got is Marcellus times two," said Terry Engelder, the Pennsylvania State University geosciences professor whose Marcellus Shale estimates in 2008 first drew public attention to the region's shale gas potential.
Since The Inquirer reported in May that drillers had found recoverable gas in the Utica and Upper Devonian Shales, several operators have become more openly optimistic about a potential natural gas triple play in the region. The new discoveries add momentum to an industry that is rapidly reshaping the economy and the environment of large swaths of rural Pennsylvania.
"A year ago, I didn't have a feeling the tests were going to be as large as I've seen," Engelder said. "The implications of this are just amazing."
Range Resources Corp., the Texas company that drilled the first Marcellus well in 2004, is bullish about multiplying output from its acreage, mostly in southwestern Pennsylvania.
"The Utica and Upper Devonian could combine to equal the Marcellus," Range spokesman Matt Pitzarella said, though he cautioned that the estimates were preliminary.
At least four gas drillers, including Range, told investors this year they were exploring the formations, which lie above and below the Marcellus in a geological layer cake.
The expanding outlook of shale gas reserves goes far beyond Pennsylvania.
Worldwide estimates of gas reserves are growing because of revolutionary advances that couple horizontal-drilling techniques with hydraulic fracturing to unlock gas in long reaches of tight rocks.
The U.S. Energy Information Administration on Tuesday said technically recoverable shale gas worldwide could add 40 percent to global gas supply. China, South Africa, Argentina, and Australia have big reserves. So do Mexico and Canada.
According to the administration, American natural gas reserves are now at the highest level in 40 years. By 2035, shale gas will account for 46 percent of U.S. natural gas production.
Though gas burns cleaner than coal or oil, the escalation of an industrial extraction process that produces large volumes of toxic wastewater has raised fears about the trade-offs of shale gas. President Obama has championed natural gas development, but only if it can be done without endangering water supplies.
"It's a little disheartening the industry is wringing its hands in excitement when they clearly haven't figured out how to drill in the current shale without creating problems," said David Masur, executive director of PennEnvironment, a lobbying organization.
Pennsylvania regulators on Wednesday pressed Western Pennsylvania water suppliers to expand the scope of tests to screen for radioactive pollutants and other contaminants from the natural gas drilling industry.
So far, 2,748 Marcellus wells have been drilled in Pennsylvania - 399 in the first three months of 2011. Experts say 50,000 wells could be drilled in the coming decades, not counting wells in other formations.
"We're still in the early stages of this," Masur said.
Awareness of the presence of gas in other Appalachian formations - even deep ones - is hardly new. Some operators, such as Anadarko Petroleum Corp., were attracted to Pennsylvania to explore other deep formations and then switched to the Marcellus. Range's first Marcellus well had targeted a deeper formation called the Lockport Dolomite.
The potential of the Marcellus has eclipsed all other formations. In the last 150 years, operators have produced 47 trillion cubic feet of gas from Appalachian wells, Pitzarella said. By comparison, the Marcellus Shale is believed to contain 500 trillion cubic feet, though the amount eventually recovered will be less.
In recent months, operators have begun to focus capital on some of the other formations.
Atlas Energy Inc. executives, before their company was sold to Chevron Corp., told analysts they were exploring the Utica formation and the Upper Devonian Shale.
"Both of these shale packages are prevalent throughout Western Pennsylvania and New York, where we have over 630,000 net acres," Atlas president Richard D. Weber said in August.
Consol Energy Inc., a Pennsylvania coal producer that last year moved aggressively into natural gas, said it had a promising Utica well last year in eastern Ohio.
Brandon Elliott, Consol's vice president for investor relations, told investors on Feb. 28 that a vertical well produced 1.5 million cubic feet of gas from a 200-foot-thick Utica layer 8,450 feet below the surface.
That production, which required no hydraulic fracturing, "actually would be greater than any of our other vertical wells that we drilled in the Marcellus," Elliot said.
Consol has budgeted $35 million to drill six more Utica wells later this year, he said.
Ultra Petroleum Corp. of Houston says the Utica Shale appears to be uneconomical beneath its acreage in northern Pennsylvania. But it plans to drill into a shallower Upper Devonian formation, the Geneseo Shale, this month.
"We're optimistic about this target, and we feel it has the potential to add significant value across a large part of our Pennsylvania acreage position," Douglas Selvius, Ultra's director of exploration, told investors.
John H. Pinkerton, chief executive of Range Resources, says he believes a lot of other companies will follow his lead into the Utica and Upper Devonian Shales.
Range is attracted to the additional shales because all three layers lie under much of its prime 700,000 Marcellus acres - making those mineral leases equal in value to 1.5 million acres in other shale regions.
Pinkerton said production costs for the new wells would be lower than those of the original wells because many will use the same infrastructure - the same well pads, roads, and pipelines now being installed for the Marcellus wells.
"The incremental cost to develop the Upper Devonian and Utica will be reduced by approximately one-third versus the development of these zones on a stand-alone basis," Pinkerton told analysts in March. "We believe this will allow us to continue to drive down the cost of the entire play."
The new shales also seem more promising in Western Pennsylvania areas where the Marcellus produces "wet gas" that contains liquid fuels in addition to natural gas. Those areas are considered attractive in the current market because liquids, which are valued according to oil prices, which are soaring, fetch a premium.
Some analysts say the Utica and Upper Devonian Shales have limited promise.
Subash Chandra, a Jeffries & Co. managing director, said the Utica formation "is not going to work" in much of Pennsylvania because it may not contain attractive quantities of natural gas in its deepest parts.
"The real Utica play is in Ohio, where it's shallower," he said.
As Marcellus drillers have discovered, not all shale acreage is created equal.
Encana Corp., a Canadian driller, last year pulled up stakes in Luzerne County, near Wilkes-Barre, after its wells produced disappointing results, marking what may be the productive boundary of the Marcellus.
According to industry experts, some deep Marcellus pockets on its eastern edges are "baked" - they received too much heat over the ages and no longer contain commercial quantities of natural gas.