Marcellus Shale Field - Natural Gas Formation Location Marcellus Shale Formation States: New York, Pennsylvania, Ohio, West Virginia
Marcellus Shale Play is located in the following counties: PA: Erie,
Warren, McKean, Crawford, Mercer, Vanango, Lawrence, Forest, Clarion, Butler, Beaver, Armstrong, Elk, Clearfield, Indiana,
Cambria, Somerset, Westmoreland, Fayette, Allegheny, Washington, Greene, Bedford, Potter, Tioga, Bradford, Susquehanna, Wayne,
Pike, Lycoming, Sullivan, Wyoming View Map. Looking for a Job in the Marcellus Shale? View Here
What is the Marcellus Shale Formation?
History and Facts: The
Marcellus Shale Natural Gas Field Formation, which extends through Pennsylvania, New York, Ohio, and West Virginia, is a part of the Devonian Black Shale Field. The Marcellus Shale play is hinted to hold a huge amount of
natural gas, causing companies to go on a gigantic mineral rights land grab! This shale rock formation was named after the town of Marcellus, New York due to the outcrop formation
in the shale. The Marcellus shale extends over 575 miles and has a thickness of up to 900 feet. Also known
as the Pennsylvania Shale ( or New York Shale, West Virginia Shale, Ohio Shale ) this geologic natural gas shale
was reported to hold more then 1.9 trillion cubic feet back in 2002. This did not cause much excitement because the
amount that could actually be extracted was low. Combined with the fact that natural gas prices were very low, drilling in
the Marcellus Shale was not economical. One company, Range Resources, showed up to Marcellus Shale
back in 2003 in hopes to extract natural gas. Range drilled a well in Washington County, PA and found that this natural
gas well was very promising. Like many companies now a days, Range Resources used techniques and experience from
the Barnett Shale in Texas for the Marcellus Shale natural gas field. The first well that produced gas in Marcellus Shale
for Range was hit in 2005. Range Resources ( RRC ) now has drilled over 100 natural gas wells on their 900,000 acres in
the Marcellus Shale play. See more about companies drilling at Marcellus Shale below.
A new survey issued
by Terry Englander, a geoscience professor at Pennsylvania State University, and Gary Lash, a geology professor at the State
University of New York at Fredonia, surprised everyone as these men think the Marcellus Natural Gas Shale Field could
hold up to 500 trillion cubic feet of Natural Gas. 50 TFC would be a realistic amount that could be recovered.
All of this is made possible by more advanced technology which includes fracturing & drilling techniques
involved with horizontal drilling, thus making the Marcellus Shale Natural Gas Field very valuable! The price
of Natural Gas has risen sharply over the years and these new techniques allow companies to drill better and faster.
A horizontal well in the Pennsylvania, New York, Ohio, and West Virginian Shales back in 1970 might have taken up to
3 months to drill. Now a rough estimate is 30-45 days.
The United States produces roughly 30 trillion
cubic feet ( 30 TFC ) of natural gas every year. If research reports are correct and the Marcellus Shale holds
50 TFC's of recoverable natural gas, this would put the Appalachian Basin Natural Gas Shale into a different league.
The Marcellus Shale Deposit would be dubbed a natural gas super giant and would be one of the biggest natural gas fields
in the United States. The Haynesville Shale is a similar Natural Gas Shale.
How is Natural Gas extracted from Marcellus Shale? Energy
companies use a new drilling technique called horizontal drilling. First the drilling company drills vertical, and
then drills horizontally. The problem with Horizontal Drilling is the cost. A vertical drilled well in the
Marcellus Shale Zone costs around $810,000 while a horizontal drilled well at Marcellus will cost you roughly 3-5 Million
Dollars. In the Marcellus Shale, a horizontal well is drilled using multi stage fracturing techniques ( frac jobs ).
Large amounts of water are combined with sand which are blasted at the shale in order to get a fracture. This
contaminated water is then pumped back out and stored. There have been some environmental issues with regard to the
Marcellus Shale.(See Below).
Marcellus
Shale in 2011: During 2011, the Marcellus Shale fell victim to low natural gas prices due to the ramp
up in drilling. The drilling companies below really cut back on the number of active drilling rigs but we are seeing
a tick up in natural gas prices as we head into 2012. I am expecting the Marcellus
Shale to really come alive again during 2012. Natural Gas prices have the opportunity to hit $5-6 at some
point in 2012. This will spark even more activity as far as land leases and drilling go. If you are investing
in the stock market, I really like Chesapeake Energy ( CHK ) below $30 in 2011/2012.
Pennsylvania Warns Gas Companies to respect Natural Treasures at Marcellus
Shale:
Pennsylvania has an estimated 2.8 trillion cubic feet of proved natural gas reserves in
the ground awaiting development, according to the Pennsylvania Oil and Gas Association. Developing the Marcellus Shale
formation requires large amounts of fresh water to fracture the shale in order to extract the natural gas. Recent inspections
by DEP and its partners have uncovered violations that threaten the state's water resources and its environment. Department
of Environmental Protection Secretary Kathleen McGinty had this to say:
"Over the past few weeks, DEP
inspectors have observed a number of violations at drilling sites operated by companies that were new to Pennsylvania,"
said McGinty. "In light of those discoveries, we acted quickly to stop this harmful activity and felt it was necessary
to bring all current and potential operators together to meet directly with the agencies responsible for protecting our water
and other natural resources." Full Article Here
Companies Involved in the Marcellus Shale - Marcellus
Shale Stocks
- Chesapeake Energy CHK - Marcellus Shale (West Virginia, Pennsylvania and New York):With approximately 1.55
million net acres, an increase of approximately 50,000 net acres from the 2010 first quarter, Chesapeake is the largest leasehold
owner, second-largest producer and most active driller in the Marcellus Shale play that spans from northern West Virginia
across much of Pennsylvania into southern New York. On its Marcellus leasehold, Chesapeake estimates it has approximately
460 bcfe of proved reserves (based on the 10-year average NYMEX strip prices at June 30, 2010) and 34.1 tcfe of risked unproved
resources. As a result of continued strong production results, the company has recently raised its average estimated
ultimate recovery (EUR) on its Marcellus Shale acreage by approximately 24% from 4.2 bcfe per well to 5.2 bcfe per well.
During
the 2010 second quarter, Chesapeake’s average daily net production of 105 mmcfe in the Marcellus increased approximately
65% over the 2010 first quarter and approximately 250% over the 2009 second quarter. The company’s average daily
net production rate in the Marcellus in July 2010 was approximately 130 mmcfe and the company anticipates adding more than
60 mmcfe of net production in the West Virginia portion of the play in the second half of 2010 once new natural gas processing
facilities become operational. Chesapeake is currently drilling with 26 operated rigs in the Marcellus and anticipates
operating an average of approximately 28 rigs in 2010 to drill approximately 150 net wells. During the 2010 second quarter,
Chesapeake received approximately $144 million of drilling and completion carries from its Marcellus joint venture partner
Statoil (NYSE:STO, OSE:STL). From July 2010 through 2012, Chesapeake should receive approximately $1.7 billion in additional
drilling carries from STO.
Marcellus. First Chesapeake production was 2008. Current gross operated production
is 730 million cubic feet of gas equivalent per day. We are the top producer in the play as of July 31, 2011
If
you have a lot of land in the Marcellus Shale fairway and want to sell your mineral rights, give Chesapeake a call. More on CHK
- EOG Resources EOG - Regarding the Pennsylvania Marcellus Shale Play, in total, we have 220,000 net acres. On our previous quarterly
call we indicated we proven up about 40,000 acres in Bradford County by drilling two wells with two net Bcf of reserves each.
Additionally, we recently proved up additional acreage, we own via an NFG farmout by successfully testing the COP 409 #3H
well in Elk County which we believe is a 1.6 Bcf net well. We plan to operate one rig in Pennsylvania this year.
More on EOG
- Rex Energy REXX - Rex Energy (REXX) Marcellus Shale - Appalachian
Basin — Butler County, Pennsylvania - Appalachian Basin
In Butler County, PA, the company has drilled 29 gross
(18.4 net) wells year-to-date, with 16 gross (11.2 net) wells fracture stimulated and placed into sales. The company currently
has 20 gross (12.1 net) wells drilled and awaiting completion with another four gross (2.8 net) wells completed and awaiting
pipeline infrastructure. The company expects to complete its 2011 fracture stimulation program with three wells on the seven
well Grosick pad in November. Currently, Rex has one rig in its Butler operated area and will continue the one rig program
through the first quarter of 2012. For additional details on current drilling and completion operations, please refer to the
company's updated corporate presentation.
The company's midstream partners at Keystone Midstream operated the Sarsen
Plant at an average inlet of approximately 30.7 MMcf/d during the month of September. Keystone Midstream has received the
permit for the Sarsen Plant's Voll compressor station. The Voll compressor station is expected to be commissioned in January
2012 and will allow the plant to run at its full inlet capacity of 40.0 MMcf/d.
Keystone Midstream's second cryogenic
processing plant in Butler County, the Bluestone Plant, is in the final stages of permitting. Pending receipt of this permit
under the current timeline, the anticipated commissioning of the Bluestone Plant will be in May 2012. The expected inlet capacity
of the Bluestone plant is 50.0 MMcf/d. In January 2012, Rex expects to begin fracture stimulation and completion efforts on
its inventory of drilled wells in anticipation of commissioning the Bluestone Plant.
Appalachian Basin — Westmoreland,
Pennsylvania
In Rex Energy's non-operated areas within Westmoreland County, Williams (the operator) is continuing
to move forward with its 2011 program. At the end of the third quarter, Williams had drilled 20 gross (8.0 net) wells, fracture
stimulated 14 gross (5.6 net) wells, and placed 12 gross (4.8 net) wells into service. For additional details on current drilling
and completion operations, please refer to the company's updated corporate presentation.
For the month of September,
the average gross production from Rex Energy's non-operated Marcellus wells in Westmoreland County was approximately 28.5
MMcf/d. Current expansion plans are underway to increase capacity into the Peoples Natural Gas line by commissioning a 35.0
MMcf/d high pressure line. EQT has also increased the capacity of its system that will allow for an additional 15.0 MMcf/d
capacity at the Salem Beagle Club compressor station. Both projects are expected to be commissioned in December 2011.
Appalachian
Basin — Clearfield and Centre Counties, Pennsylvania
In Clearfield and Centre Counties, Williams has recently
completed fracture stimulation on the four-well Resource Recovery pad. The first two of four Resource Recovery wells, the
#3-2H, and #3-4H, were drilled with average lateral lengths of 5,485 feet and have been placed into sales with a five-day
and 15-day average rate of 6.0 MMcf/d and 5.7 MMcf/d for each well, respectively. The second two of four wells, the Resource
Recovery #3-1H and #3-3H, have average lateral lengths of 4,870 feet, and were recently placed into sales. Production rates
from these two wells will be included with the company's next operational update. Williams is not planning any further development
in the Clearfield and Centre county area for the remainder of the year.
The Utica Shale is also being tested in select PA counties
Exxon Mobil XOM - XOM has a small position in the Marcellus Shale. Exxon Mobil has It's own
Marcellus Shale assets along with the XTO Energy and Phillips acquisitions. ExxonMobil concluded the acquisition of the Phillips companies
on June 2, 2011. The Phillips transaction included 317,000 net acres across the heart of the rapidly growingMarcellusShale play and nearly doubles ExxonMobil's
acreage to more than 700,000 net acres in the play. XTO will manage the Phillips assets from the recently established Appalachia
Division headquartered in Pittsburgh, Pennsylvania. Given
the proximity to our current operations in Southwestern Pennsylvania, the addition of the Phillips acreage will create significant
value by leveraging regional synergies and also makes ExxonMobil a leading leaseholder in theMarcellus. The Phillips properties currently produce 50 million net cubic feet per day of natural
gas, which includes both shallow gas and deeperMarcellusproduction.
- Anadarko Petroleum APC - Anadarko Petroleum (APC)Marcellus Shale:
The Marcellus set a weekly high production rate during the quarter of 566
MMcf/d (151 MMcf/d net) from about 150 producing wells. For the quarter, net sales volumes increased almost 300% over the
same period of 2010. The company exited the quarter producing more than 600 MMcf/d gross, an increase of about 30% over the
2nd quarter exit rate of approximately 460 MMcf/d. The company is making significant progress in increasing available
capacity on transmission lines with year-end tap capacity expected to nearly double from the beginning of the year to approximately
2.3 billion cubic feet per day.
The company spud 37 operated wells during the quarter
with seven rigs and participated in 37 wells with about 13 non-operated rigs. At quarter end, there were seven operated and
seven non-operated rigs in the play. Anadarko lowered its average drilling cycle time to 20 days during the quarter,
which represents a 33% improvement relative to the same period of 2010. The company's water conservation efforts resulted
in a 25% reduction in water costs during the quarter when compared to 2010. More on APC
Marcellus Shale Map - Marcellus Shale Fairway
Marcellus Shale
Marcellus Shale Jobs
- Range Resources RRC - Range Resources (RRC) Marcellus
Shale Division - Significant progress was made on multiple fronts in the Marcellus Shale and the division is solidly
on track to reach the 2011 year-end production target of 400 Mmcfe per day net to Range. Currently, total production from
the Marcellus Shale is running approximately 350 Mmcfe per day net to Range. In southwest Pennsylvania, Range drilled 42 wells
during the third quarter. During the quarter, a total of 28 wells were turned to sales bringing the total horizontal Marcellus
wells producing in the southwest to 214 wells. At the end of the third quarter, there were 12 wells waiting on pipeline and
74 wells waiting on completion in the southwest. In northeast Pennsylvania, Range drilled 14 wells during the third quarter.
A total of 10 wells were turned to sales during the third quarter. At quarter-end, there were 15 wells on production in the
northeast with 11 wells waiting on pipeline and 22 wells waiting on completion.
In
addition to the operational progress in the Marcellus, Range made substantial progress during the quarter regarding infrastructure
build-out and marketing arrangements. Below are the key accomplishments achieved during the third quarter. More on RRC
St Mary Land and Exploration SM - St. Mary has drilled and completed its first two horizontal wells in
this program. The wells are the Potato Creek 1H and the Potato Creek 3H (both SM 70% WI). These wells are located in McKean
County, Pennsylvania. The Company is currently laying a temporary sales pipeline to test the first well. As a reminder, St.
Mary has a total acreage position of approximately 41,000 net acres in McKean and Potter Counties in north central Pennsylvania.
- Unit Corp UNT- In the Marcellus
Shale, we have now participated in two vertical wells located in Somerset County, Pennsylvania. The Shale (inaudible) segments
in these wells came in as expected and completion work on these two wells should begin mid to late May. In addition, we'll
participate in one more vertical well and two horizontal wells during the remainder of 2009 at approximate net cost of about
$8 million. Anticipated first gas wells from these wells should occur later this year.
In
this Somerset area we own approximately 180,000 gross and 55,000 net acres.
- Southwestern Energy SWN - Southwestern Energy SWN is active in the Marcellus Shale - Appalachia -
Southwestern has participated in a total of 40 wells in northeast Pennsylvania,
of which 18 were producing and 22 were in progress at September 30, 2011. The producing wells
are all operated Marcellus Shale wells located in its Greenzweig area in Bradford County.
Net production from the area was 7.4 Bcf and 15.2 Bcf for three months and nine months ending September
30, 2011, respectively, compared to 0.2 Bcf and 0.2 Bcf for the same periods in 2010, respectively. The company is
currently running 2 drilling rigs in Susquehanna County.
The company is currently completing
a five-well pad in its Greenzweig area in Bradford County which is expected to be placed
on production in November. The company also noted that the Ball Myer 1H well which was placed on production on June
23, 2011 is currently producing at a tubing constrained rate of approximately 8.2 MMcf per day at a flowing tubing
pressure of 1,300 psi after 120 days of production This well had a completed lateral of 4,502 feet and was fracture stimulated
in 19 stages. In total, the company's 17 horizontal wells have average completed lateral lengths of approximately 3,849 feet
and have averaged 10.8 stages of completion. Gross operated production from the area is currently approximately 110 MMcf per
day and constrained by a temporary pipeline curtailment.
The graph below provides normalized average daily production
data through September 30, 2011, for the company's horizontal wells in the Marcellus Shale.
The "red curve" indicates results for two wells with 15 or more fracture stimulation stages, the "purple curve"
indicates results for eight wells with 10 to 14 fracture stimulation stages and the "green curve" indicates results
for seven wells with 9 or less fracture stimulation stages. The normalized production curves are intended to provide a qualitative
indication of the company's Marcellus Shale wells' performance and should not be used to estimate an individual well's estimated
ultimate recovery. The 4, 6 and 8 Bcf typecurves are shown solely for reference purposes and are not intended to be projections
of the performance of the company's wells.
Chevron (CVX)- Chevron Corporation (NYSE: CVX) Marcellus Shale Update - I'll
highlight some of our recent activities in the Marcellus Shale. In February of this year, we
closed on the acquisition of Atlas Energy and are currently working to complete the integration of these assets into our North
America business. In May, we announced the acquisition of assets from Chief Oil and Gas and Tug Hill.
Through
these transactions, we added another 228,000 net acres of high-quality Marcellus Shale to our existing
footprint. Largely focused in Southwestern Pennsylvania, the acreage includes over 30,000 acres of rich gas Marcellus
in Marshall County, West Virginia. This expansion of our shale gas portfolio gives us additional high-quality resources, as
well as strong synergies with existing operations.
Talisman Energy TLM - Talisman Energy (TLM) Pennsylvania Marcellus Shale
Update - In the Marcellus, the company brought 34 net wells
onstream during the third quarter, and will continue to operate with 11 rigs for the remainder of the year. Talisman expects
Marcellus production to average approximately 400 mmcf/d in 2011, which is at the upper end of the target range set at the
beginning of the year.
Penn Virginia PVA - Penn Virginia (PVA) Marcellus Shale Update - Marcellus Shale - During the second quarter of 2011, we
drilled three (2.3 net) wells in the Marcellus Shale in Potter County, PA, including two (1.8 net) operated wells and one
(0.5 net) non-operated well. One (1.0 net) operated well was completed and two (1.3 net) wells are WOC. We have reduced our
2011 guidance for the Marcellus Shale by six (5.5 net) horizontal wells. As previously disclosed, our recently completed wells
failed to meet our expectations, but we plan to test the eastern portion of our acreage position in Potter and Tioga Counties,
initially anticipated with vertical wells, commencing in the second half of 2011
Ultra Petroleum UPL - Ultra Petroleum (UPL) is very active in the Marcellus Formation - Pennsylvania -
Operational Highlights
During the first quarter, Ultra Petroleum and its partners drilled 31 gross (17 net)
horizontal wells. As of March 31, 2011, Ultra and its partners have drilled 185 gross (111 net)
horizontal wells since the program's inception in 2009.
Ultra and its partners initiated production from 13 gross (8
net) new horizontal Marcellus wells during the first quarter of 2011. The average initial production rate for the wells brought
online was 6.5 MMcf per day. At the end of the quarter, there were 105 gross (67 net) horizontal wells producing since the
program's inception in 2009.
In western Tioga County, Ultra drilled an extended lateral
test to 6,700 feet during the first quarter. Subsequent to quarter-end, the Pierson 810-3H
was completed with 27 frac stages and turned to sales at 10.0 MMcf per day. Similar to adjacent well estimates, preliminary
results suggest the well's estimated ultimate recovery (EUR) could exceed 8.0 Bcfe, over two times the company's 3.75 Bcfe
type curve for this area.
In western Lycoming County, the company brought online a
6-well pad in the first quarter with average per well initial production rates of 7.7 MMcf per day. These wells are demonstrating
flatter declines and significantly stronger performance compared to Ultra's conservative 5.0 Bcfe type curve for this area.
At the end of the first quarter, Ultra's inventory of wells either waiting on completion or awaiting pipeline connection
was 80 gross (44 net) wells. Ninety percent of this year's expected well startups will occur in the remaining nine months
of the year with 148 gross (75 net) horizontal Marcellus wells online by the end of 2011. For the year, Ultra anticipates
its total Pennsylvania production will grow 2.5 times the company's 2010 Pennsylvania
annual volumes.
- Equitable Resources EQT - Geologists familiar with the Appalachian Basin have known for years about
the Devonian black shale called the Marcellus. The Marcellus Shale is organically rich shale that lies nearly a mile or more
beneath the surface throughout much of Ohio, West Virginia, Pennsylvania and New York. The Marcellus Shale has in recent
years emerged as a potential major contributor to the natural gas supply of the United States - large enough to be spoken
of as a "super giant" gas field. With approximately 500,000 acres, more than 3.9 Tcfe 3P reserves and 11Tcfe of
unrisked reserve potential in the Marcellus Fairway, EQT is a leading player in the Marcellus Shale.
July 2011 Update - The company drilled (spud) 61 gross horizontal wells during the second quarter 2011; 33 targeting the Huron play with an
average length of pay of 5,160 feet; and 28 targeting the Marcellus play with an average length of pay of 5,035 feet. The
company drilled 112 gross horizontal wells during the first six months of 2011; 61 targeting the Huron play and 51 targeting
the Marcellus play. More on EQT
Cabot Oil & Gas COG - Cabot Oil & Gas (COG) has land in the Marcellus Shale development field particularly
in West Virginia & Pennsylvania. Since the conference call last quarter, Cabot has achieved a new 24-hour production
record of 517 Mmcf per day in Susquehanna County from 94 horizontal wells, with cumulative production to date of approximately
175 Bcf. "Specifically we have seen one horizontal well produce 4.0 Bcf in 347 days and a different horizontal well reach
3.0 Bcf in 223 days," said Dan O. Dinges, Chairman, President and Chief Executive Officer.
"All told, we have 30 wells with cumulative production of more than 2.0 Bcf each, and of note, our two extended lateral
wells have cumulative production of more than 2.8 Bcf each in about 150 days." Cabot's position in this prolific area
of the Marcellus, resulted in Cabot recording 16 of the top 20 production wells for the first six months of 2011, as reported
by the Pennsylvania Department of Environmental Protection.
In addition to productivity gains, Cabot is improving operational
efficiency. A recent horizontal well with a 3,500' lateral, reached total depth in just 12.5 days. In the third quarter, the
Company turned-in-line 17 horizontal wells, all of which are producing at curtailed rates, pending new infrastructure commissioning.
More on COG
- Hess Corp - HES - Marcellus Shale Update - If I turn to the Marcellus
again, we're continuing to build our position in the Marcellus.
We're at about 80,000 net acres now in the Marcellus,
primarily in Wayne County, Pennsylvania. About 50,000 of that is Hess operated and the balance is part of this joint venture
we have with Newfield. Our plan this year are to drill five to 10 wells during the second half of 2010 in order to evaluate
the resource potential on the acreage.
- Atlas Energy ATLS - Atlas Energy ATLS Marcellus Shale - ATLS
expects to connect 16 Marcellus horizontal wells, drilled through the partnership management business, during the first quarter
2012. Eleven of these wells were drilled in 2011, and five of these Marcellus wells have been previously drilled and completed
and are awaiting pipeline connection.
EXCO Resources XCO - Exco Resources (XCO) 2011 Update Marcellus shale - Marcellus Shale - Our current gross operated Marcellus
shale production is approximately 100 Mmcf per day, which represents an increase of more than 50% since the end of the second
quarter 2011. We have implemented a development program within our acreage in northeast Pennsylvania and an appraisal program
primarily in central Pennsylvania. We plan to drill 49 gross (16.0 net) operated wells in the Marcellus shale play in our
Appalachia region during 2011. Of the 49 wells, 42 gross (12.8 net) will be development wells and 7 gross (3.2 net) will be
appraisal wells. We are currently drilling with four operated rigs, three of which are in our northeast Pennsylvania development
area. Our net drilling dollars are reduced by the effect of the carry we receive from BG Group. Approximately $78.8 million
of the carry remains available to us from BG Group as of September 30, 2011. We expect that the remaining carry amount will
be used in the first half of 2012.
We spud 12 new operated wells and drilled and completed 11 gross (4.0 net)
operated wells during the third quarter 2011 in the Marcellus shale. In northeast Pennsylvania, we turned six wells on two
pads to sales at the end of the quarter with an average IP rate of 6.4 Mmcf per day from an average lateral length of approximately
3,400 feet. In our central Pennsylvania area, we turned five wells to sales from two pads during the quarter with an average
IP rate of 5.0 Mmcf per day from an average lateral length of approximately 4,100 feet. We are also focused on building our
field infrastructure in support of our expected levels of activity. Along with efficiency gains derived from our drilling
and completion program, these infrastructure investments are expected to be the primary drivers to reduce our average development
well costs.
Carrizo Oil & Gas CRZO - Carrizo Oil & Gas, Inc. (NASDAQ: CRZO) today announced that it has agreed to
enter into a joint venture with a subsidiary of Reliance Industries Limited ("Reliance"). In connection with the
joint venture, Reliance will acquire a 20% interest in approximately 52,200 net Carrizo acres in Pennsylvania considered highly
prospective for Marcellus Shale natural gas for total consideration of $65 million. Reliance will pay $13 million in cash
to Carrizo and will pay an additional $52 million to carry Carrizo's share of future drilling, completion, and seismic costs
("development carry"), subject to customary purchase price adjustments. Closing is expected by mid-September 2010.
- Dominion Resources D - Dominion Energy also made considerable progress in its infrastructure growth program. Dominion's Natural Gas Pipeline and
Storage business has a significant list of projects intended to relieve existing congestion within its market area, as well
as facilitating the development of the Marcellus
Shale formation. For example, on May 20, Dominion Transmission signed a binding precedent agreement with CONSOL Energy to
provide 200,000 decatherms per day of firm transportation service for Marcellus Shale volumes to the market hub at Leidy, Pennsylvania. This is referred to by us as the Marcellus Northeast Project and is expected to be in service by November 2012.
We
had also recently signed an agreement to provide 150,000 decatherms per day to move Marcellus Shale volumes to Craigs, New York. This project, too, is expected to be in service by November 2012.
- Continental Resources CLR - Continental Resources ( CLR ) now has exposure to the Marcellus Shale. We now own 88,000 net acres in the Lower Huron, Rhinestreet Marcellus plays and continue to build on our position. The bulk for this acreage is
located West Virginia, Ohio, and New York where the shales have at found debts of 1000 to 5400 feet. We're currently drilling
our first-four wells targeting Rhinestreet, then Lower Huron shales in Southeast, Ohio.
.
-
Marathon Oil MRO - Marathon Oil ( MRO ) is building a position in the Marcellus Shale ( Seeking Alpha ) - And
we’ve got four wells down in the Marcellus.
We’ll drill probably a dozen more this year. We got our first crack away. And we’re looking at well casts. And
I think you’ll see us pursue that play very similar to how we did the Bach, in terms of being measured, getting our
technical data before we get serious about it. But early indications are in terms of what we’ve seen from the
jobs, we like it. We have 70,000 acres there and I think we’ll continue to play against that. So we feel very good about
where we are.
Newfield Exploration NFX - Newfield Enters the Marcellus Shale - On October 14, 2009, Newfield announced the signing of a joint exploration
agreement with Hess Corporation in the Marcellus Shale play. The agreement covers up to 140,000 gross acres primarily in Susquehanna
and Wayne Counties, Pennsylvania. Newfield will operate the new venture with each company having a 50 percent interest. The
2009 portion of Newfield's Marcellus Shale activities will be funded within the Company's existing $1.45 billion capital budget.
Drilling operations are not expected to commence until 2010.
Consol Energy CNX - Consol Energy (CNX) Marcellus Shale Update - For drilling in the Marcellus and Utica shales, The company has drilled 58 wells in the Marcellus Shale in the first nine months of 2011. The geographic breakdown,
by region, is as follows: 36 in Southwest Pennsylvania, 16 in Central
Pennsylvania, and six in Northern West Virginia. The company now expects to drill
about 80-85 Marcellus Shale wells in 2011.
In Central Pennsylvania, CONSOL has finished
drilling and fracing all ten wells on the Hutchinson pad in northwestern Westmoreland
County. The table on the next page summarizes the peak daily production from the first five wells to be turned online.
CONSOL intends to provide 30-day rates for the wells on this pad in November.
The 10-well Hutchinson
pad, the company believes, is the industry's largest single pad drilled to date in the Marcellus Shale. The 10 wells were
drilled and completed for approximately $48 million, with drilled laterals cased and completed
totaling 41,200 feet. The longest of the 10 laterals was 5,517 feet. The pad had 138 continuous frac stages, which used 47
million pounds of sand and 47 million gallons of water.
This pad highlights CONSOL's competitive advantage in the Marcellus
Shale. With limited acreage expiration, CONSOL can efficiently drill wells on large pads, instead of drilling to hold acreage.
Larger pads, the company believes, should result in lower unit operating costs, while minimizing the number of permits needed
for pads, gathering systems, and stream crossings.
Central Pennsylvania Gas Ops currently has one rig drilling on the
8-well Aikens pad in Westmoreland County.
In Southwestern
Pennsylvania, CONSOL continues its full-scale development drilling at several Nineveh
pads in Greene County. Wells completed include the 5-well NV-29 pad, the 6-well NV-15 pad,
and the 2-well GH-35 pad. Across the 13 wells, 24-hour rates ranged from 2.9 MMcf - 7.2 MMcf, with a mean rate of 4.2 MMcf.
There were 122 continuous frac stages for these three pads.
Southwest Pennsylvania Gas Ops currently has two rigs drilling
in Greene County, Pa. and a third rig drilling on the SHL-1 pad in the company's Majorsville
area, in Marshal County, W. Va. The SHL-1 pad is CONSOL's first pad in what is believed to be the liquids-rich portion of
the Marcellus Shale play.
In Northern West Virginia, CONSOL began flowing production
from two wells drilled on the Phillipi pad in Barbour County. The Phillipi 1A had a 24-hour
rate of 4.2 MMcf, while the Phillipi 1C produced at 3.2 MMcf.
The rig operating in Northern
West Virginia has now moved back to Upshur County to drill a second Alton
pad, this one containing six wells.
- Petroleum Development Corp PETD - Petroleum Development PETD Marcellus Shale - PDC's Marcellus joint venture recently initiated its second-half 2011 drilling
program of nine horizontal Marcellus wells. Completions are expected to begin in September and will continue throughout the
remainder of 2011. Production growth in the Appalachian Basin from this nine well program is expected to be significant as
the Company moves through the third and fourth quarters of 2011. Based on results of the initial six wells in this play, the
Company anticipates reserves from its Marcellus drilling program to increase from a range of 3 to 5 Bcfe per well, to a range
of 3 to 6 Bcfe per well. Operating plans for the nine well program in the second-half of 2011 are to drill 4,000 to
6,000 foot horizontal laterals with 12 to 18 stages per well, for a total drill and complete cost of approximately $5.2 to
$6.4 million. Overall, the most recent horizontal completions contributed to a 118% improvement in Appalachian production
in the second quarter of 2011 compared to second quarter 2010.
Barton R. Brookman, Senior Vice President — Exploration
and Production, commented, "We are very pleased with our operating team's execution in the development of both the horizontal
Niobrara and Marcellus Shale programs.
Noble Energy (NBL) - Noble Energy (NBL) enters the Marcellus Shale Natural Gas Field - And finally, we announced and closed in the quarter
the acquisition of a very significant position in the Marcellus
Shale to the formation of a joint venture with CONSOL Energy. As a result, we now find ourselves rapidly speeding toward a
significant inflection point in our growth profile. An inflection point that's driven by accelerating Niobrara drilling, the
new and rapidly growing Marcellus production,
as well as the pending startups of Aseng in West Africa, as well as Raton South in Galapagos in the Deepwater Gulf of Mexico.
- Trans Energy TENG - Trans Energy is very active in the Marcellus Shale and has announced in Jan 2009 a Marion County, WV well. TENG announced
that its Blackshere #101 well in Marion County, West Virginia was successfully fraced on December 29th and is currently
awaiting connection to a sales line. The Blackshere #101 is completed in the Marcellus shale, a prolific new “resource
play” in Appalachia, similar to the Barnett, Fayetteville and Haynesville shales which have grown to become a significant base of hydrocarbon reserves in the United States. James K. Abcouwer,
President and CEO of Trans Energy, said “This fourth Marcellus well is located in Marion County which is the county
to the east of our existing Marcellus wells and is a step out of what we consider our proven area. We are delighted
with its initial indications. We are optimistic that the positive results from our three vertical wells in Wetzel
County and now with our most recent completion in Marion County can be replicated throughout our acreage position in northern
West Virginia. We’re now beginning a horizontal well program in yet another significant step forward for Trans
Energy to properly develop its acreage position. We’re pleased to have achieved this sizeable acreage position
centered on the Wetzel-Marion-Doddridge Counties area, which looks to be one of the most – if not the most
– prolific part of the Marcellus resource in Appalachia.”
Encana ECA - Encana has recently entered the Marcellus Shale
- More to come in the following months ahead.
Stone Energy SGY - Stone Energy (SGY) Appalachian Basin (Marcellus Shale Play). In West
Virginia, the third-party Caiman pipeline is projected to be tied in during the fourth quarter with volumes from 11
wells in the Mary field. The late December exit rate from Appalachia is projected to be 30-40 MMcfe per day, including liquids.
Current projections now call for 25 horizontal wells to be drilled in 2011, utilizing one horizontal rig and one top-hole
rig (up from previous guidance of 21-24 wells). Up to 16 wells are expected to be fractured during 2011. Current net production
from the Katie area in northeast Pennsylvania and Heather/Buddy area in West
Virginia is approximately 15 MMcf per day.
Pioneer Drilling PDL - During the second quarter, we established an Appalachian
drilling division to focus on operations in the Marcellus Shale. We currently have one drilling rig
operating in our Appalachian division, with a second rig expected to begin operating by late August
2009. In addition, we launched wireline operations in the Marcellus Shale play.
StatOil STO - On 26 March Statoil signed an agreement with Chesapeake which added approximately 59 thousand net acres to Statoil's current
600 thousand net acre position in the Marcellus shale gas play.
Williams Company WMB - Williams Company WMB Marcellus Shale - In the Marcellus shale, the company is currently operating four rigs and expects
to increase its level of drilling activity to eight or nine rigs by the end of 2012. In Susquehanna County, the company has
approximately 70 MMcf/d of production waiting on the expected September 2011 completion of the
Laser pipeline.
Gastar Exploration GST - Gastar Exploration (GST) Marcellus Shale - In Marshall County, West Virginia, we currently
have two drilling rigs working in our Marcellus West area. By year-end 2011, we expect to have
nine horizontal Marcellus wells on sales and 10 horizontal Marcellus wells drilled and awaiting completion. All of our Marcellus
Shale wells drilled in Marshall County are part of our joint venture with Atinum Partners
Co, Ltd. (the "Atinum Joint Venture"). After all drilling and completion costs have been incurred, our working interest
in these wells will range from 40% to 50%.
In mid-August 2011, we began producing the Wengerd
1H and 7H horizontal wells at an initial combined 30-day average gross sales rate of approximately 7.1 MMcf per day of natural
gas, 176 barrels of condensate and 347 barrels of natural gas liquids (“NGLs”). On September
23, 2011, the pipeline operator shut in the pipeline due to weather-related damage to the natural gas and condensate
gathering system. While the pipeline was being repaired, we installed tubing into the two Wengerd wells that would enable
us to improve NGLs and condensate recovery and returned them to production on October 21, 2011.
Initially, production was restricted due to excessively high line pressures following the pipeline repair, but this matter
was recently resolved. The two wells’ most recent combined four day average gross sales rate is 8.1 MMcf per day of
natural gas, 200 barrels of condensate per day and 490 barrels of NGLs per day.
Also in Marshall
County, we have completed fracture stimulation operations on the Corley pad (four
horizontal wells), with first sales anticipated in mid-November 2011. Currently, we are commencing
fracture stimulation operations on the three-well Simms pad with first production anticipated
mid-December 2011. As of September 30, 2011, drilling operations
have been completed on the Hendrickson 1H, 2H and 4H wells, and we completed drilling operations on the Hendrickson 3H and
5H wells in late October 2011. Fracture stimulation operations on all five Hendrickson wells
are anticipated to commence in March 2012, and first sales are anticipated in the second quarter
of 2012. Currently, we have commenced drilling operations from the Hall pad (three wells) and the Burch Ridge pad (five wells),
and we expect to commence drilling operations on the Accettolo pad (three wells) prior to year end.
On our Marcellus
East position in Preston County, West Virginia, we have drilled one horizontal well to test
this acreage, which is 100% owned by Gastar. In August 2011, we completed the Hickory Ridge
2H horizontal Marcellus well, a 2,500-foot lateral completed with a 10-stage fracture stimulation, and we are currently flowing
back completion fluids. First sales from the Hickory Ridge 2H are anticipated by year end. Our focus for the remainder of
2011 and through 2012 in the Marcellus East acquisition area is to perform a 3-D seismic survey over a portion of the acreage,
with no additional wells currently planned during that time frame.
In Butler County, Pennsylvania,
Gastar and Atinum have been participating in seven wells with Rex Energy as operator. Three wells are expected to be on sales
by year-end, with the remaining four wells expected to go online in early 2012.
