Shell’s Marcellus Shale Exploration & Drilling Strategy in PA – Drill the Edges First

An article about Shell’s activity in the Pennsylvania Marcellus Shale, particularly along the western fringes of the Marcellus in Butler and Lawrence Counties (PA), reveals interesting insights about their strategy:

Shell plans to bring in a drill rig dedicated to the region next year. If things go well, it could add nine more. The company will spend two to four years determining how rich the land is with gas, and whether to drill here before tapping other oil and gas fields around the world, [Bill] Langin said.

Langin [a geologist] is in charge of Appalachian exploration for Royal Dutch Shell plc, which holds the mineral rights to about 100,000 acres in the two counties and more land in northern Pennsylvania.

Langin, 34, of Moon is not a wildcatter looking to drill in the sweetest spots he can find. His job is to drill in outlying areas, looking for data, zoning in on targets he cannot see. He asks: Where can Shell drill in its Appalachian holdings and profit?

Shell continues to lease land in Butler and Lawrence counties, adding about 30,000 acres to the 70,000 it bought from East last year, Langin said. Its big-picture exploration methods not only help the company gauge and manage holdings, but help its officials to decide where to lease land, said Badie Morsi, director of the University of Pittsburgh’s Petroleum Engineering Program.

It’s difficult to determine how much gas the Marcellus shale will produce in a given location. Pressure and natural fractures vary, Morsi said, meaning drillers can only approximate reserves.

"It’s very difficult to make generalizations," Morsi said. "It depends upon your luck. You’re shooting in the dark at 10,000 feet. It’s not a known thing where you go in and grab it."*

So why drill along the edges first, instead of in the middle of the “fairway”?

It’s common for multinational corporations such as Shell to take the time for advance work, Morsi said. If they drill edge areas first, the production there can indicate how much gas is inside the circle, he said.

That helps companies to plan efficiently for infrastructure costs, such as pipelines and compressor and processing stations, Langin said. They know the gas is there, but they must figure out how much is there and how hard it is to extract — then they can determine how high gas prices must be before drilling would be profitable.*

The article also mentions that Shell is targeting the Utica Shale layer as well.

*Pittsburgh Tribune-Review (Jul 12, 2011) – Shell seeks best drilling sites in Butler, Lawrence gas fields