Little Marcellus gas in New York
The analysis presented at Cornell showed that there are very limited areas in the state that might produce productive wells, and they include parts of Broome, Tioga and Chemung counties, and a small part of Delaware County. Even in these locations, however, the wells would be below average in terms of the amount of gas produced, and they would not be profitable until the price of gas rises significantly.
Some analysts have said those wells would be profitable when the price of gas reaches $5 per 1,000 cubic feet (mcf), which is not expected to happen until at least 2020 because of the glut of natural gas in the United States. One of the analysts, Chip Northrup, an investor and former energy executive, said the real break-even price is closer to $7.00. Further, if the cost of all the dry and failed wells is added to the mix, including those drilled by other companies, the price of gas would have to rise to about $10 mcf before the New York wells could be considered profitable across the entire industry.
Even with that pessimistic forecast, however, one of the analysts, Louis Allstadt, a former executive vice president of Mobil Oil Corporation, expects that some wells will be drilled in the Southern Tier towns in New York. He said. “There are thousands of drilling companies, there are always some that just have to take a shot somewhere… So will there be drilling? Probably not a whole lot, but there will be companies that come around and try it. And unfortunately those can be the least reliable outfits because they will try to do the wells as cheaply as possible. I would worry about these test wells in the outlying areas.”