Horizontal development of just 11 of the hottest U.S. unconventional- and conventional-resource plays will cost more than $2 trillion, according to a new Jefferies & Co. estimate. The figure is just for drilling and completing wells across the core acreage of each play and at current well spacing, says Bill Marko, Jefferies managing director.

“There is an enormous amount of capital required to develop the unconventionals and, now, horizontal development of conventional resources, such as the Mississippi Lime. It’s $560 billion for the Marcellus alone and, taken altogether, it is more than $2 trillion,” Marko says.

“We’ll need $2 trillion to drill out these plays and that’s just based on what we know now. That’s before you talk about further infill drilling or new techniques.”

Marko addressed members of ADAM-Houston, an organization of E&P mergers and acquisitions professionals, in late November.

The figures also exclude the cost of infrastructure build-out to get the oil, gas liquids and dry gas out of the plays. “That could be another $500 billion,” he says. “Just to drill these plays out, that’s $2 trillion. Over 50 years, that’s more than $40 billion a year.”

To drill and complete the Eagle Ford, the cost estimate is $263 billion ; the Utica, $263 billion; Niobrara, $188 billion; and Bakken, $66 billion.

The new, conventional Mississippi Lime play in northern Oklahoma and southern Kansas that is being targeted now with horizontal wellbores and multistage fracing will cost at least $109 billion to develop, he adds.

“These are long-term, world-class accumulations of hydrocarbons.”

Developers of the plays are in- creasingly tapping joint-venture capital to fund continued drilling, such as Chesapeake Energy Corp.’s multibillion-dollar arrangements in the Eagle Ford and Niobrara with CNOOC Ltd., in the Marcellus with Statoil ASA and now in the new Utica with a company that was to be named at press time.

Other capitalization will come from M&A, such as multishale player XTO Energy Inc.’s sale to ExxonMobil Corp. last year for $41 billion; Haynesville, Eagle Ford and Permian player Petrohawk Energy Corp.’s sale to BHP Billiton Ltd. this summer for $15.1 billion; and the pending sale of Bakken player Brigham Exploration Co. to Statoil for $4.7 billion. Also, funding has come from private-equity sources, such as KKR. (See article elsewhere in this issue.)

International E&Ps’ investments in U.S. resource plays will continue, Marko forecasts. The firm advised Chesapeake on all of its shale JVs, among which at least five have been with non-U.S.-based companies. The profit margin of U.S. horizontal plays will grow, he adds. “The higher-quality shale plays will continue to see improved economics as we learn more about them and get better at drilling them and completing them, well design and building economies of scale.

“And, at the same time, EURs (estimated ultimate recoveries) go up,” he says.