PITTSBURGH -- The wheeling and dealing over the natural gas-rich Marcellus Shale has hit the pause button.
Marcellus mergers and acquisition activity fell to zero in the third quarter of 2012, after major energy companies spent tens of billions of dollars over the last three years, according to a quarterly report Thursday of the financial firm PricewaterhouseCoopers. In the previous quarter, the deals totaled $1.6 billion.
PwC said low natural gas prices were the main factor, not the output or potential of the vast shale gas formation that lies under parts of Pennsylvania, West Virginia, New York, Ohio and Maryland.
"The problem ultimately for the Marcellus is gas prices," said Rick Roberge, a principal in PwC's energy practice. "The Marcellus is the biggest shale play in the U.S. It's got a great future. But it's got one big headwind."
The "headwind" is the Marcellus production of mostly conventional dry gas. That market is glutted.
And the same technology that unlocked the shale gas deposits _ hydraulic fracturing or fracking _ also works to extract shale oil. That's meant activity in shale oil formations in North Dakota, Texas and other states is booming and the price of oil has not dropped the way natural gas prices have this year.
Kathryn Klaber, president of the Marcellus Shale Coalition industry group, also noted that an enormous amount of mergers and acquisitions have already taken place in the Marcellus.
"While the number of these transactions may be lower relative to previous years, the billions in previously announced investments are still resulting in enormous amounts of clean-burning American natural gas being safely produced across our region. Exploration and production companies, as well as midstream providers and manufacturers, continue to make significant investments throughout the basin," Klaber wrote in an email.
According to PwC, there have been about $32 billion in Marcellus merger and acquisition deals since the beginning of 2010. The third quarter of this year was the first in that period with no deals at all.
PwC also noted that the national picture on shale-related mergers has slowed.
There were almost $12 billion in such deals nationally in the third quarter, compared to $33 billion in the same period the previous year. But some other areas, such as the Gulf of Mexico, saw a rise in deals compared to the last two years.
PwC said it expects Marcellus merger activity to pick up again, if natural gas prices rise.
And production of natural gas from the Marcellus is still rising steadily, even though drilling activity has slowed.