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Morningstar: Marcellus shale is game-changer for US energy industry

Morningstar Inc.

The emergence of the Marcellus shale formation in the northeastern US is a game-changer for the US energy industry, says a recent report by independent investment research provider Morningstar Inc.

“We think the US is likely to become a major exporter of natural gas over the next few years, which couldn’t have been possible before the rise of shale gas and the Marcellus shale,” said Mark Hanson, Morningstar’s strategist for energy equity research.

Morningstar analysts predict that the Marcellus shale will be the biggest driver of US gas production over the next few years -- and that US natural gas production will increase by approximately 2% every year through 2015, by which time the Marcellus shale play will account for close to one-fourth of domestic volumes.

Shale gas has been the biggest driver of US production over the past several years, helping boost volumes by 25% from 2007 to 2013, despite declines in conventional areas like the San Juan Basin in the southwestern US and the Gulf of Mexico. Without production from the Marcellus shale play, Morningstar analysts find it probable that US natural gas production would have peaked in late 2011 or early 2012.

If demand keeps pace with supply over the next few years, as Morningstar analysts expect, natural gas prices should normalize between $5 and $6 per thousand cubic feet of natural gas (Mcf).

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