Economic viability of shale gas production in the Marcellus Shale; indicated by production rates, costs and current natural gas prices

The U.S. natural gas industry has changed because of the recent ability to produce natural gas from unconventional shale deposits. One of the largest and most important deposits is the Marcellus Shale. Hydraulic fracturing and horizontal drilling have allowed for the technical feasibility of production, but concerns exist regarding the economics of shale gas production. These concerns are related to limited production and economic data for shale gas wells, declines in the rates of production, falling natural gas prices, oversupply issues coupled with slow growth in U.S. natural gas demand, and rising production costs. An attempt to determine profitability was done through the economic analysis of an average shale gas well using data that is representative of natural gas production from 2009 to 2011 in the Marcellus Shale. Despite the adverse conditions facing the shale gas industry it is concluded from the results of this analysis that a shale gas well in the Marcellus Shale is profitable based on NPV, IRR and breakeven price calculations.

Do increases in oil prices precede U.S. recessions?

This thesis examines the relationship between oil prices and economic activity, and it attempts to address the question: do increases in oil prices (oil shocks) precede U.S. recessions? This paper also applied macroeconomics, either through the direct use of a macroeconomic point of view or using a combination of mathematical and statistical models. Two mathematical and statistical models are used to determine the ability of oil prices to predict recessions in the United States. First, using the binary cyclical (Bry-Boschan method) indicator procedure to test the turning point of oil prices compared with turning points in GDP finds that oil prices almost always turn five month before a recession, suggesting that an oil shock might occur before a recession. Second, the Granger causality test shows that oil prices change do Granger cause U.S. recessions, indicating that oil prices are a useful signal to indicate a U.S. recession. Finally, combining this analysis with the literature, there are several potential explanations that the spike in oil prices result in slower GDP growth and are a contributing factor to U.S. recessions.