US Fracking is Going Wider and Deeper
Energy companies explore lower shales for greater yields of gas & liquids
From an Article by Katelyn Ferral, Pittsburgh Tribune-Review, April 5, 2015
Low natural gas prices that have companies balancing spending cuts with promises of ramped-up production are driving some new development in the Utica and Point Pleasant shale, where deeper wells can yield more gas and liquids.
Range Resources, CONSOL Energy, and Rice Energy are among Marcellus shale producers reporting positive results from their Utica and Point Pleasant wells, and are expecting to drill more there despite budget cuts of up to 45 percent.
“It’s relatively early days in the Utica so I think companies are still trying to figure out the optimal drilling and production and fracturing techniques, but I think you’ll continue to see increasing production rates and ultimate recovery rates from these wells,” said Dave Yoxtheimer, a researcher at Penn State University’s Marcellus Center for Outreach and Research.
The Utica shale formation in Ohio and Pennsylvania runs between 2,000 and 6,000 feet below the more popular Marcellus. It sits just above Point Pleasant, another layer of shale rich in oil and gas liquids.
Deeper Utica wells typically have higher pressures than Marcellus wells, and can generate two to three times the gas. They’re also more expensive, sometimes several million dollars more than a Marcellus well, depending on the depth and the kind of fracking that’s required.
“Certainly, even in a low commodity price environment, you can still, in essence, make up the difference by just the sheer volume of gas you’re producing,” Yoxtheimer said.
Service companies that frack wells and operate equipment on well pads have lowered their prices in response to producers’ smaller budgets, making this is a less-expensive time to tap the Utica.
Discussing a new Greene County well last month, Dan Rice, CEO of Cecil-based Rice Energy, told analysts “the best time to test an expensive deep well like this one is in the deflationary cost service environment like the one we’re in.”
Deep Well Services, based in Zelienople, which specializes in tapping deep shale that emits gas at high pressures, said it cut prices for its clients but declined to disclose by how much.
“Every one of our customers has asked for a price reduction,” said President Mark Marmo. The company is active in Ohio’s Utica and business is up this year from last, he said. “We’re very busy, our April and May right now we’re booked just about at 100 percent,” he said. “There’s still a lot of activity that we see that’s going to happen in 2015.”
Houston-based Schlumberger, the world’s largest oilfield service company, lowered its hydraulic fracturing and completions cost because of pressure from drilling clients squeezed by low commodity prices. “We began to work actively with customers in all basins to help lower overall drilling and completions costs,” Patrick Schorn, president of operations and integration, said at an energy conference in Vail, Colo., last month.
Companies may be quicker to develop Utica wells in order to hold on to the land they leased before contracts expire, said Yoxtheimer. “There’s still to a certain degree more leasing activity and certainly more of a push to keep parcels held by production so the lease terms don’t expire,” he said.
The Utica and Point Pleasant have more opportunities than the Marcellus for a driller to hit oil as well as natural gas liquids and methane. Even at low commodity prices, a producer can recoup costs by selling oil along with other liquids, which can make Utica wells a more viable investment for companies.
“Suddenly the economics start to pan out,” Yoxtheimer said.
Cecil-based CONSOL Energy said this year it’s adding two Utica wells to Marcellus well pads in Westmoreland and Greene counties. It drilled four Utica wells from well pads in Monroe County, Ohio, late last year. The technique called “stacked pay” allows a company to more efficiently extract gas from acres it holds across both shale plays. “That’s going to open up entirely new frontiers for CONSOL,” CEO Nick DeIuliis said during the company’s latest earnings call.
Even when prices are low, the gas glut can be a deterrent. Houston-based Seneca Resources has drilled in the Utica shale in Tioga County, but said depressed prices are hurting the prospects for more. “Utica development, just as in the Marcellus, is dependent on firm transportation, and pipeline expansions are key to providing access to better prices that support future development,” said Rob Boulware, a spokesman for the company.
See also: www.FrackCheckWV.net
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UTICA shale oil & gas well activity in OHIO
Article by Danielle Wente, Shale Plays Media, April 2, 2015
Activity in Ohio’s Utica Shale region hasn’t changed much besides a slight increase in the number of wells drilled and in production. However, changes for a major company in the Marcellus and Utica Shale formations has once again cut costs.
Chesapeake Energy Corp. has cut its budget once again, this time by $500 million, shrinking it from $4.5 billion to $4 billion. Months after the previously announced budget cuts, the company is also set to decrease its rig count, except for in the Utica.
The reasoning for the company keeping its rigs the same in the Utica is due to its improved well stimulation. After running tests, Chesapeake has been able to adjust cluster spacing within the wellbore. Even though it is complicated, by shrinking the space between the different stages of fracking, the company has increased the flow of gas and natural gas liquids, along with increased well performance.
The following information is provided by the Ohio Department of Natural Resources and is through the week ending on March 28th.
DRILLED 334, DRILLING 246, PERMITTED 454, PRODUCING 834
TOTAL 1,868
Four horizontal permits were issued during the week that ended March 28, and 27 rigs were operating in the Utica Shale.
Top 10 Counties by Number of Permits —
1. CARROLL: 475, 2. HARRISON: 333, 3. BELMONT: 229, 4. GUERNSEY: 176, 5. MONROE: 174, 6. NOBLE: 164, 7. COLUMBIANA: 131, 8. JEFFERSON: 55, 9. MAHONING: 30, 10. TUSCARAWAS: 20
Top 10 Companies by Number of Permits —
1. CHESAPEAKE: 771, 2. GULFPORT: 213, 3. ANTERO: 154, 4. AMERICAN ENERGY UTICA: 146, 5. ECLIPSE RESOURCES: 110, 6. HESS: 73, 7. CNX GAS: 59, 8. REX: 41, 9. XTO ENERGY: 40, 10. HILCORP ENERGY: 38
See also: http://www.FrackCheckWV.net
Cabot’s Wood County, WV Utica Well – Vertical or Horizontal Miss?
Editor Jim Willis, Marcellus Drilling News, November 2014
Several years ago MDN editor Jim Willis took a tour of several Cabot Oil & Gas well sites in Susquehanna County, PA. One of the sites was a completed well pad with four producing wells, located not far from Carter Road in Dimock (yes the infamous Carter Road memorialized in Gasland). As we stood on the pad, a pad not visible a few hundred feet from the road, Jim’s tour guide (Bill desRosiers) made this statement: “Cabot has over 3,000 vertical gas wells in West Virginia. You see these four horizontal wells? These four wells produce more natural gas in one day than all 3,000 of those vertical wells in West Virginia.” Jim’s jaw hit the ground. He immediately thought (still thinks): That is the power and miracle of horizontal hydraulic fracturing! So it sparked our interest when we spotted a story from Wood County, WV about a well drilled by Cabot this past August in WV–a well that Cabot immediately plugged. It was a “miss” for Cabot. Our questions: Was it a vertical-only well? Or was it intended to be a horizontal Utica well?…
Here’s the story that caught our interest:
A Wood County well drilled beneath the Marcellus shale formation has been plugged after it was determined to be not viable for the operator, state regulators said.
A nearly 9,000-foot-deep well was drilled by Cabot Oil and Gas Corp. on property off Larkmead Road in the Lubeck area in August. It was believed by some to be the first well targeting the Marcellus and Utica shale formations, but the actual target, according to West Virginia Department of Environmental Protection records, was the Point Pleasant formation, beneath the Marcellus.
DEP records show the well was completed on Aug. 27. Two days later, Cabot applied for a permit to plug the well.
“After taking side core samples, Cabot determined the well was not viable for its intended purpose,” DEP spokeswoman Kelley Gillenwater said in an email Thursday afternoon.
An inspector said the well is now classified as “plugged under continuous operation,” Gillenwater said, which notes the company still has a lease on the property. However, the company does not appear to be doing anything else with it at the moment.
“They actually moved the rig that they were using to another county,” Gillenwater said.
The oil and natural gas industry in the region is booming thanks to advances in technology allowing producers to access the deep-underground Marcellus and Utica formations through horizontal drilling and hydraulic fracturing techniques.
However, Gillenwater noted Cabot’s intentions were always for the Lubeck-area well to be a vertical one.
The inspector who oversaw the well indicated it could be made into a horizontal well if someone acquired the rights to do so, Gillenwater said.(1)
The story above raises more questions than it answers. Was this always supposed to be a vertical-only well? Or was Cabot drilling with an eye on possibly turning it horizontal (which seems more likely to us)? We’ve floated those questions to Cabot and have yet to hear back. We’ll post the answers when we receive them.
Meanwhile, WV officials have been in a hurry to say just because one well was plugged doesn’t mean there is no future for drilling Utica wells in Wood County (2).
(1) Parkersburg (WV) News and Sentinel (Nov 14, 2014) – Wood County gas well plugged
(2) Parkersburg (WV) News and Sentinel (Nov 15, 2014) – Plugged well not a bad sign
Gastar Appalachia — (9/8/2014)
We recently completed our first Utica Shale well, the Simms U-5H, to a total vertical depth of 11,500 feet and drilled a 4,400-foot lateral and completed it with a 25-stage fracture stimulation. The Simms U-5H well initial 48-hour gross sales rate was 29.4 MMcf/d with flowing casing pressure on a 30/64ths choke of approximately 6,700 psi. We estimate that we have 58.5 net remaining potential drilling locations in areas that are prospective for the Utica Shale.
This Simms U-5H well is in Marshall County, West Virginia, and is Gastar’s first Utica/Point Pleasant well. The well lateral length is 4,447 feet and was completed with 25 hydraulic fracturing stages that used approximately 10.6 million pounds of sand proppant. Gastar has a 50% working interest (“WI”) in the Simms U-5H well (43.2% net revenue interest (“NRI”).
Stone Energy reports successful Utica gas well in West Virginia
From Stone Energy, WorldOil.com, December 9, 2014
Lafayette, Louisiana — Stone Energy’s Pribble 6HU well in Wetzel County, West Virginia, has produced approximately 30 Mmcfd of gas from a 3,605-ft lateral.
This test flow calculates to a rate of approximately 8 Mmcfd per thousand feet of lateral length, based on the total effective lateral length of 3,605 ft for the test well. The gas well performed for the last 24 hours of a 5-day test period on a final choke size of 28/64 in. with 6500 psi of flowing casing pressure.
Stone Energy owns a 90% working interest in the well. “The results from the Pribble 6HU well confirm the high potential of the Utica shale underlying our current liquids-rich Marcellus acreage position,” said David H. Welch, Chairman, President and Chief Executive Officer, adding that the well represents one of the highest Utica tests announced in the area.
“We have contracted a new dual-purpose Utica/Marcellus drilling rig with delivery expected in late 2015, and our Appalachian team will be establishing a development program for this exciting new play. Our Utica acreage position of almost 30,000 acres in the Mary field should allow for a multi-year development program.”
The Pribble 6HU well was completed in the Point Pleasant formation with 17 fracture stages, with approximately 210 ft of spacing between each stage and approximately 375,000 lb. of proppant per stage. The Pribble 6HU was drilled to a true vertical depth of 11,350 feet.
EQT plans Utica Shale well in West Virginia this year
From an Article by Jim Ross, State Journal, Updated: March 14, 2015
EQT Corp. plans to drill a test well in the Utica Shale region of Wetzel County WV early this year as a follow up to a similar well it is drilling in Greene County, PA.
The company had to halt work on the Greene County well when gas pressures were too much for the drilling equipment. Other equipment has been brought in to finish the well, company executives told analysts last week following release of quarterly and annual earnings.
As prices for natural gas have fallen, EQT is cutting back its drilling in the Marcellus Shale region of West Virginia and Pennsylvania. Because of yields in the Utica Shale region in Ohio, the company wrote off its investment there, leading to a $162 million charge against earnings in the fourth quarter.
EQT reported a net loss of $14.7 million in the fourth quarter, in part because of the write off of the Ohio assets. The company reported net income of $155.2 million in the fourth quarter of 2013. Net income for 2014 was $387.96 million, down slightly from $390.57 million the year before.
With prices for gas falling, EQT plans to reduce its Marcellus drilling this year by 59 wells to 122. In December the company announced plans for $2.5 billion in capital expenditures. Because commodity prices have fallen since then, EQT last week revised its 2015 capex to $2.05 billion.
“Until recently, the northern WV development had a slightly higher return than our southwestern PA even though the PA wells were a bit more productive because of the liquid uplift,” Steven T. Schlotterbeck, executive vice president and president of EQT exploration and production, said in last week’s conference call with analysts. “The current liquids market, that’s flip flopped a little bit.
“So the southwestern PA dry gas area is back on top with northern West Virginia a close second, but pretty much pulling back everywhere else.”
EQT has 171 wells in the wet gas area of West Virginia, and it plans to add 53 more this year. That region includes Ritchie, Tyler, Wetzel and Doddridge counties and western Monongalia County. Wells in that region cost an average of $6.4 million to develop.
The company has 50 wells in the dry gas region of Harrison, Taylor, Marion and Monongalia counties in WV, with plans to add nine more this year. Those wells cost $6.3 million to develop.
EQT also plans to drill five test wells in the Utica Shale in WV and PA. Work on the Wetzel County well should begin in the first quarter of this year, company officials said. EQT owns about 400,000 acres in the Utica region.
Whether the other three wells are drilled depends on what the company learns from its test wells in Greene County, PA, and in Wetzel County WV, Schlotterbeck said.
“We don’t have a lot of direct geologic data,” he said in last week’s call with analysts. “These are our first tests, so we’re going to gather a lot of data. And depending on what we see, we’ll determine where we need to go.
“So, first one, southwestern Pennsylvania. Second one, northern West Virginia. And beyond that will be determined by those first two. … With these kinds of wells, it’s hard to predict, but in early spring, we would hope to start getting some results.”
Utica Shale wells can cost $12 million to $17 million each to develop, as they must go deeper than Marcellus wells. EQT’s Utica wells will be about 13,500 feet deep.
EQT Production achieved record production sales volume of 476.3 billion cubic feet equivalent for 2014, representing a 26 percent increase over 2013. About 79 percent of total production sales volume was from horizontally drilled Marcellus wells.
Magnum Hunter has ‘monster’ on its hands with biggest Utica well – ever
From Tom Knox, Columbus Business First, September 25, 2014
Magnum Hunter Resources Corp. announced results of a well on its Stewart Winland pad in Tyler County, WV, north east of Marietta. It’s a certified monster, the biggest in the Utica shale play so far and, the company says, one of the biggest in U.S. shale, period.
The 1300U well was placed in production last week, and produced 46.5 million cubic feet of natural gas a day. Production from the Utica shale keeps expanding. This time, it’s south and east of its mainstay in eastern Ohio. A few weeks ago, Royal Dutch Shell Plc’s results in north-central Pennsylvania showed potential for the play even farther east and north.
“We think this well is on the equivalent of the Rice well,” Evans told CNBC host Jim Cramer. He was referencing Pennsylvania-based Rice Energy Inc., which at the time had the top-producing natural gas well, at 41.7 million cubic feet of natural gas a day, in Belmont County.
Magnum Hunter is an early adopter of tapping West Virginia’s Utica play. This well was only the second drilled in the state; Chevron Corp. drilled the first in Marshall County earlier this year.
The news is good for Houston-based Magnum Hunter, which has 200,000 acres in the Utica and Marcellus plays in Ohio and West Virginia, 43,000 of which overlap in so-called “stacked pays,” of which the company also is an early adopter.
“We believe that this new discovery on the Stewart Winland pad announced today represents the greatest flow rate and one of the highest sustained flowing casing pressures of any Utica well drilled in the entire play of Ohio and West Virginia,” Evans said in a statement, where he called the well a “monster.” “Additionally, it is one of the highest flow rate gas wells ever reported in any shale play located in the U.S.,” he said.
One caveat on the well: It’s almost entirely dry gas. The well is about 98 percent methane and just 1.52 percent ethane. Ethane is the valuable liquid that Gulf Coast petrochemical facilities need and is leading to much of the pipeline activity taking fossil fuels from Appalachia to the Gulf Coast.
Three other wells on the Stewart Winland pad have tapped into the Marcellus shale and are ready for sales.
Houston-based oil and natural gas developer sells Utica mid-stream stake for $575 million
HOUSTON – EV Energy Partners will sell its 21 percent stake in a system of natural gas gathering and compression facilities in eastern Ohio for $575 million, it announced Monday morning.
EVEP, a Houston-based upstream master limited partnership, is selling its stake in the project to a subsidiary of Williams Partners LP for cash. EVEP has assets throughout the country, including the Utica Shale, Barnett Shale, Permian Basin and elsewhere. It’s the MLP affiliated with EnerVest Ltd.
The other members of the Ohio project, M3 Midstream and Access Midstream Partners, have the right to agree to acquire EVEP’s interest in the project for the same price. If that happens, the buyer would change, but the purchase price wouldn’t.
In a statement, EVEP said it’s spent $294 million on the project, known as Utica East Ohio Midstream, so far. The deal will likely close in mid-July, EVEP said. It will use the proceeds of the deal to repay outstanding debts from its revolving credit facility, saving the remainder for future activities it didn’t disclose.
Last year, EVEP sold its stake in another set of midstream assets, Cardinal Gas Services LLC, for $162 million.