The Marcellus Shale is continuing to attract entrants and capital despite the low price for natural gas and the industry bias towards oil development at the current time. The development of the play has also started to expand out of Pennsylvania and West Virginia into neighboring states where the Marcellus Shale is present. (To learn more, see our Oil And Gas Industry Primer.)

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New Entrants
Enerplus Resources Fund (NYSE:ERF) is a Canadian royalty trust that is converting to a corporate form of ownership in 2011. The company has chosen the Marcellus Shale as one of its growth areas over the next few years as it changes strategy.

Enerplus Resources Fund has 197,000 net acres that are prospective for the Marcellus Shale. The company hopes to grow production here to 150 million cubic feet equivalent per day within four years.

Some of this acreage is located in Garret County, Maryland, an area that has not seen extensive development. The company has compared this area to Somerset County, which lies just across the border in Pennsylvania.

Enerplus Resources Fund made its decision to enter the Marcellus Shale after comparing the economics of various shale plays in North America. The company concluded that the Marcellus Shale was one of the best with a break even natural gas price of $3.57 per Mcf.

Record Production
The Marcellus Shale seems to be getting better and better for companies that are developing properties here. National Fuel Gas (NYSE:NFG) just reported the completion of a well with a production rate of 15.8 million cubic feet per day during a 24 hour test period.

Joint Venture
Other companies are still looking to get a foothold into the Marcellus Shale. Gastar (NYSE:GST) just announced a joint venture in the Marcellus Shale with an investment firm in South Korea. The company will give up 50% of its acreage in return for $70 million. Atinum Partners Co., Ltd. will pay $30 million at closing in cash, and will pay up to $40 million in future development costs to earn the full 50%.

Drilling into the Marcellus Shale has also spread into New York. Gastem (TSX:GMR), a Canadian exploration and production company, just received approval from the New York State Department of Environmental Conservation to drill in New York. The company plans to complete a horizontal well in Otsego County to the Marcellus Shale. Gastem has 33,000 net acres of leases in the area.

Bottom Line
Exploration and production companies are still crowding into the Marcellus Shale due to what many consider the best economics of any natural gas shale play in North America. The industry is also starting to push development into New York and Maryland as it seeks out prospective areas for development.

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