Testing Your Water – Advice for Landowners in the Marcellus Shale

WaterWorld (undated, accessed Feb 24)
Testing the waters

Drilling activity is tightly regulated everywhere it’s done, including Pennsylvania. Water supplies located near drilling are regularly tested to ensure the water is not being contaminated. If a resident lives within 1,000 feet of a well being drilled, the cost of testing is funded by the drilling company. Local testing company Benchmark Analytics from South Waverly, PA had these useful remarks for landowners in an article published on the WaterWorld website:

Many residents have contacted Benchmark to establish a "baseline" prior to gas drilling activity. The baseline tests are important to establish the water quality at a specific site prior to any gas well activity, [Laboratory Manager Kay] Shimer said. Natural gas producers are required to establish a baseline for any water source within 1,000 feet of a gas well, she said, though some companies test residents’ water within 1,500 or 2,000 feet. If people have any questions about whether they qualify for testing through a gas producer they should contact the well drilling company in their area, she said. The sampling and testing is done by an independent laboratory, she said, and Benchmark has completed some testing for gas producers.

Homeowners should not collect their own water samples, Shimer said; an independent third-party sampling agency or field technicians from a certified laboratory should do the sampling. Benchmark field technicians do some sampling, Shimer said, though gas producers typically hire independent agencies to sample water sources near their well projects.

Shimer also recommends landowners read the publication by Penn State University called Water Facts #28 – Gas Well Drilling and Your Private Water Supply (available for free download on the MDN Links & Resources page).

Atlas Looking for a Partner, Multi-Billion Dollar Deal Likely

Reuters News – via FOREXYARD (Feb 25)
Atlas looking for partner in Marcellus

Atlas Energy is looking for a partner to help fund its operations in the Marcellus Shale. Atlas currently holds leases on 266,000 acres, in mostly southwestern Pennsylvania. According to the Reuters story:

Bidders for the Atlas position should include large international integrated oil and gas companies as well as domestic independent oil and gas companies, the sources said.

Still, it was not clear how much the joint venture would bring in for Atlas.

As MDN recently reported, Mitsui & Co (from Japan) invested $1.4 billion in Anadarko Petroleum. Anadarko controls 100,000 acres in the Marcellus, so that works out at $14,000 per acre investment. It is rumored a similar price might be expected for Atlas. If that’s the case, we can expect a deal on the order of $3.7 billion. In 2008, Chesapeake Energy sold 32.5 percent of its interests to Statoil (from Norway) for $3.4 billion. Chesapeake at the time held rights to 590,000 acres.

Range Resources Will Drill 150 Horizontal Wells in PA in 2010

Range Resources Press Release (Feb 24)
Range Announces 2009 Results

Range Resources held an investors conference call today, and released a report on the health of the company for 2009, with predictions for 2010. In advance of the call, they issued a comprehensive press release detailing all of their operations. Below is the portion of the release dealing with Range’s drilling activities in the Marcellus Shale. Although originally the information below was in one large paragraph, MDN has formatted it to be more readable.

From the press release:

During the fourth quarter, the Marcellus Shale division continued to make outstanding progress. Most notably, we drilled and completed our first two horizontal wells in the northeastern portion of the play in Lycoming County, Pennsylvania. The average seven-day test rate for the first well was 13.3 Mmcfe per day, while the average seven-day test rate for the second well was 13.6 Mmcfe per day. These two wells are now shut-in awaiting pipeline hook-up. The pipeline to the first well is expected to be completed late in the fourth quarter of 2010 with the pipeline to the second well expected to be completed in 2011.

We also drilled our first horizontal Upper Devonian Shale well and our first horizontal Utica Shale well. The Upper Devonian well has been completed and is testing, and the Utica well has been drilled and cased and is awaiting completion.

Currently, Range’s net production in the Marcellus is approximately 115 Mmcfe per day. We have 31 horizontal wells that have been drilled, of which 26 are awaiting completion and five are awaiting pipeline hook up. In the southwest portion of the play, where we have drilled the majority of our wells and have been accumulating data for the past 2.5 years, the average estimated ultimate recovery for a Marcellus horizontal is 4.4 Bcfe gross.

Prior to August 2009, typical Range Marcellus wells had horizontal laterals that averaged 2,200 to 2,800 feet and were typically fraced with eight stages. Since then, we have been experimenting with longer laterals and more frac stages. The longer laterals range from 2,900 up to 5,000 feet and the higher frac stages range from nine stages up to 17 stages. As has been demonstrated in other shale plays, it appears that the longer laterals result in higher initial production rates, higher EURs and improved economics.

Currently we are running 13 drilling rigs in the play. Plans are to add more rigs in the fourth quarter and exit at 16 rigs. During 2010, we expect to drill and case 150 horizontal Marcellus Shale wells. For 2011, we plan to increase our rig count and exit the year with 24 rigs running. Finally, the build out of the Marcellus midstream infrastructure is progressing as scheduled. In the high Btu portion of the play, gross cryogenic processing capacity increased to 155 Mmcf per day in the fourth quarter of 2009, and an additional 30 Mmcf per day is expected to be added in mid-2010. Another 150 Mmcf per day has been requested for first quarter 2011, which will bring gross cryogenic processing capacity to 335 Mmcf per day. In the dry gas portion of the play, we have 160 Mmcf per day of pipeline tap capacity with 20 Mmcf per day of compression capacity in place currently. Plans are in place to steadily increase dry gas pipeline compression capacity to meet our needs.