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The shale gas revolution in the United States just keeps getting better – especially if you know the best energy stocks to buy now.
This past spring the research group Potential Gas Committee raised its estimate of potential recoverable U.S. natural gas reserves significantly.
The group increased its 2010 estimate by 25.6% to 2,384 trillion cubic feet of gas. That is double the estimate of just 10 years ago.
The Potential Gas Committee said the increase in the estimate for U.S. gas reserves was mainly due to one factor. It re-evaluated the potential of U.S. shale gas plays in the Appalachian basin and particularly the Marcellus Shale formation in Pennsylvania.
The U.S. Energy Information Administration (EIA) also sees huge potential in the Marcellus.
A few weeks ago it revised the gas reserve estimate for the area. The EIA more than doubled its estimate to 31.9 trillion cubic feet of natural gas – about one-fourth of the country's total shale gas reserves.
And, this story gets even juicier for investors hunting for the best energy stocks to buy now…
Why the Marcellus Offers Energy Stocks to Buy Now
The Marcellus story goes far beyond potential reserves. Natural gas production from the Marcellus in Pennsylvania and West Virginia is also exceeding expectations.
Energy analysis company Bentek says that output this year is up nearly 50% from 2012 levels.
In the first six months of this year, Pennsylvania gas production from the Marcellus was roughly 1.5 trillion cubic feet. Bentek forecasts that total output for 2013 will be 3.2 trillion cubic feet of natural gas, the equivalent of 550 million barrels of oil.
Bentek went on to say that this higher production from the Marcellus more than offsets decline in other shale gas fields around the country.
Vikas Dwivedi, an analyst at Macquarie, told the Financial Times that the Marcellus has "almost single-handedly been making up for the small declines everywhere else in the country."
Macquarie should know… it is the country's fourth-largest natural gas marketer.
The production numbers should also put to bed one argument that anti-fracking activists were using in the region just a couple years ago. Their argument was that the energy companies were vastly exaggerating the potential of the Marcellus, so it really wasn't worth drilling.
Turns out the energy companies vastly underestimated the gas contained in the Marcellus. No one was forecasting it would become the nation's most productive natural gas field.
Marcellus Shale Efficiencies
Yet, many investors remain turned off by the Marcellus because wellhead prices in Pennsylvania are so much lower – sometimes less than one-third – of Henry Hub natural gas prices.
But that will change as more infrastructure is built, particularly pipelines, to carry the gas to the energy-hungry major cities in the Northeast. That will remove the current problem of stranded gas.
Any investors skipping over the Marcellus are also ignoring several other important factors…