Carbon Natural Gas Targets Chattanooga Shale in TN

Carbon Natural Gas Company, an independent oil and gas exploration and production company, owns, operates and develops oil and gas properties in the Appalachian, Illinois and Ventura Basin areas of the U.S. Most of the wells they own and operate are conventional. However, the company is dipping its toe into unconventional shale as well. Yesterday Carbon issued a press release to announce they have formed a subsidiary called Carbon Appalachian Company, with backing from two unnamed institutional investors. The new venture has access to a whopping $100 million to get them going, with $20 million of that going to the purchase of “natural gas producing properties and related facilities” located in Tennessee. Currently the existing wells just purchased by Carbon in TN produce a measly 3.6 million cubic feet per day (Mcf/d) of mostly natural gas. You paid $20M for that?! Aaahh, there’s more to the story. The acreage that comes with the wells is located in the Chattanooga Shale–a shale layer much shallower than the Marcellus or Utica. Carbon plans to drill horizontal wells in the Chattanooga. Which got us to thinking: How active is the Chattanooga? Who else is drilling there? Is there shale drilling in TN? We found some answers…
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EQT 2017 Forecast: Drilling 119 Marcellus, 81 UD, 7 Utica Wells

EQT is feeling bullish about natural gas drilling in the northeast for 2017. The company has just released its 2017 operational forecast. What do we notice? First off, they plan to spend $1.5 billion next year, most of which ($1.3 billion) will be used to drill and complete new wells. That’s a whopping 50% increase from spending $1 billion this year. The next thing we notice is what type of wells they intend to drill: 119 Marcellus wells (76 in PA and 43 in WV); 81 Upper Devonian wells, which will be drilled on the same pads as deeper Marcellus wells, but only in PA; and 7 “deep Utica” exploratory wells. EQT also reworked a midstream deal with Williams in the Ohio Valley. Below are the exciting details of what’s ahead for EQT in 2017, including a second announcement from EQT Midstream about what’s ahead for the pipeline subsidiary, including details on how much they plan to spend on the Mountain Valley pipeline project in the coming year…
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EQT Releases Data on Biggest Utica Well Ever; Dumping UD Drilling

changing courseOne week ago MDN brought you the news of EQT’s monster Utica Shale well drilled in Greene County, PA–the single highest producing on-shore shale well on the planet with initial production (IP) of 72.9 million cubic feet of natural gas per day (see EQT’s 1st Utica Well Shatters Record – 72.9 MMcf/d IP Rate!). Yesterday EQT provided an update on the well. It’s currently shut in while they get all of the pipelines connected and things ready to rock and roll. But before they shut it in, they flowed it for seven days and the average per day production was 27 million cubic feet per day (MMcf/d). It’s a truly astonishing well. Interestingly, this one, single well has changed the course of EQT’s drilling program. In the update (full copy below) they’ve announced the results from this well are so good, they are abandoning their Upper Devonian (UD) drilling program before it ever really got under way. They also announced they will drill a second Utica well in Greene County in August. Here’s the full update on the record-shattering Scotts Run 591340 dry Utica well and how it’s changed the direction of EQT…
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Expert Says Best to Extract from Marcellus/UD Layers at Same Time

In May, MDN told you about the Marcellus Shale’s “little brother” shale play in Pennsylvania and beyond–what is interchangeably called the Upper Devonian, or Burket or Geneseo shale play (see Upper Devonian Shale: Utica/Marcellus’ “Little Brother”). We also told you that so far approximately 85 wells have been drilled in the Upper Devonian. Gregory Wrightstone, owner of Wrightstone Energy Consulting, adds to our knowledge of the UD/Burket/Geneseo. Wrightstone will speak next week at Hart Energy’s Developing Unconventionals DUG East conference in Pittsburgh about the UD. Ahead of that, Wrightstone sat down with the Pittsburgh Tribune-Review and said some interesting things about the UD, including a comment that by drilling the Marcellus layer first (about 400 feet below the UD), drillers may be robbing pressure needed to efficiently extract gas from the UD later on–when and if they come back for that layer. It’s potentially better to go after both layers at the same time…
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Rex Energy Marcellus vs Upper Devonian – Which Produces More?

An interesting update from Rex Energy yesterday on production results for two of their wells in Butler County, PA. Rex drilled four wells on the Renick well pad–three of them in the Marcellus layer, one of them in the Upper Devonian layer. The well results reported were for one of the Marcellus wells and the Upper Devonian well. What is fascinating to MDN is that the initial production rates for the two wells–one Marcellus and one Upper Devonian are quite different. Question: Which layer do you think produced more natural gas–the Marcellus or the Upper Devonian?…
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Upper Devonian Shale: Utica/Marcellus’ “Little Brother”

lil brotherThe third shale play in the northeast–or more accurate the Appalachian region–is often referred to as the Upper Devonian layer. An article in Ohio Gas & Oil Magazine calls it “the little brother to Utica & Marcellus.” An apt description. The article is full of interesting facts. Fact #1: the more accurate name is the Burket/Geneseo Shale. Fact #2: 85 horizontal shale wells have now been drilled in the Burket/Geneseo. Fact #3: Early indicators are that Burket/Geneseo wells are not nearly as productive as Utica and Marcellus wells, but since the layer is stacked over top of the other two, why not drill it too? Here’s a few more interesting pickings about the Utica/Marcellus’ little brother…
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EQT’s 19-Well Pad with 22 Miles of Laterals & 770 Frac Stages

Last week EQT released their third quarter financial and operational update, which MDN chronicled (see EQT 3Q14: Revenue Up 12%, 91 New Wells Spud in Northeast). As often happens, the top brass from EQT held an analyst call to further spread the company message and to take questions from analysts who prepare reports read by investors. Sometimes you find a few gems in the prepared and off-the-cuff remarks in those calls. One such gem in the EQT call from last week is information about EQT’s drilling strategy–longer laterals–which are leading to a cheaper cost-per-foot (an average 6% cheaper). Another gem: EQT will drill a single pad in 2015 with 11 Marcellus wells and 8 Upper Devonian wells (a “stacked pay” well). If you add up the total length of all of the laterals that will be drilled, it adds up to 115,500 feet–nearly 22 miles! EQT will use 770 frac stages along those 22 miles of laterals. Ginormous well pad!…
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OH State Geologist: Upper Devonian Second Look, CO2 May Coax Oil

We have a couple of new names to throw at you when it comes to Ohio shale drilling: Huron and Rhinestreet. You may recognize another name instead: Upper Devonian (UD). Both the Huron and Rhinestreet are layers within the larger grouping called the UD. MDN has been talking about the UD for oh, maybe going on two years now. A number of drillers in the PA Marcellus are experimenting with the UD. Ohio drillers, a year ago, seemed pretty cool to the idea of drilling in the UD (see Ohio Drillers Not So Excited About Upper Devonian Shale). However, that now appears to be changing according to Ohio’s chief state geologist, Tom Serenko…
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Seneca Drills First Upper Devonian Well with Impressive Results

Seneca Resources, a wholly-owned subsidiary of Buffalo-based National Fuel Gas Company, reports drilling their very first Upper Devonian shale well in Lycoming County, PA. The results are impressive: a peak 24-hour production rate of 14.1 million cubic feet (MMcf) per day, and an average 8.6 MMcf per day during its first 30 days. The Upper Devonian (UD) is a number of shale layers lumped together under one umbrella name. The specific layer targeted by Seneca for their first UD well is the Geneseo rock layer.

Word of Seneca’s success in the UD comes as part of an operational update issued by National Fuel Gas yesterday. Another gem in the update: Seneca has just completed drilling a 9-well pad and is almost finished drilling a 6-well pad. Here’s the full update from Seneca with the exciting UD news…
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Rex Energy 3Q13: Continued NE Expansion, Including Upper Devonian

As the third quarter reports continue to flood in, we have an update from Rex Energy, one of our favorite smaller (but important) Marcellus/Utica Shale drillers. Rex Energy, an independent exploration and production (E&P) company headquartered in State College, PA issued their 3Q13 update on Tuesday, and company leaders conducted a phone call with analysts yesterday. Among the important gleanings: Rex is doing interesting and important drilling in the Upper Devonian Shale layer (above the Marcellus) with impressive results. They’ve reached almost 100 million cubic feet of gas production per day, a 39% increase over the same time last year. And Rex now has leases on 21,000 Utica Shale acres in Ohio.

An interesting tidbit from yesterday’s phone call: Rex co-founder and CEO Thomas C. Stabley says one of the secrets of Rex’s success has been to develop “quality midstream solutions” in each of their core areas. Here is the 3Q13 update issued by Rex on Tuesday, followed by (some of) the phone call transcript from yesterday:
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Rex Energy 2Q13: Revenue Up 83%, “Super Rich” Upper Devonian Well

Marcellus driller Rex Energy released its second quarter update yesterday. Operating revenue was way up–83% from last year this time. Gas production was up too–38% from this time last year. Rex has drilled 11 Marcellus wells so far this year, with plans to complete 19. They’ve also drilled 8 Utica Shale wells with plans to complete 11.

Below are the details of Rex’s drilling in both the Marcellus and Utica–along with details about their newly completed “super rich” Upper Devonian well. Select portions of the Rex 2Q13 update:
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Stone Energy Update: On Track to Drill 30 Marcellus Wells in 2013

Stone Energy is an independent driller with operations both off- and on-shore. Last December MDN told you about Stone’s plan to start spending 33% of its $650 million exploration and production budget for 2013 on drilling in the West Virginia Marcellus Shale (see Stone Energy 2013 Plans: Spend 33% of Budget on Marcellus). Plans were to drill 28-32 new Marcellus wells this year. According to Stone’s second quarter 2013 report released yesterday, they’re right on track. So far they’ve drilled 16 wells and are on track to complete up to 30 Marcellus wells by the end of this year.

In yesterday’s update, Stone CEO David Welch reiterated the company’s strategy is to move away from drilling in the relatively shallow Continental Shelf area of the Gulf of Mexico (less than 1,000 feet of water), and drill more in both the deep water Gulf region as well as in the Marcellus. Welch said their strategy continues to benefit the company with rising production numbers, particularly from the Marcellus wells drilled. We also learn from yesterday’s update that Stone has drilled a test well in the Upper Devonian Shale and expects to bring it online later this year. Select portions of yesterday’s 2Q13 update:
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Different Strokes for Different Upper Devonian-Drilling Folks

Different drillers have (surprise!) different opinions when it comes to whether or not drilling in the Upper Devonian Shale (UD) layer is a good idea to do now or later. They all seem to indicate the UD will get drilled, it’s only a question of when.

The three different strategies of EQT, CONSOL and Range Resources with respect to the UD:
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5th Upper Devonian Driller + Maps of Best UD Spots to Drill

out of the blueIt seems as if “out of the blue” the Upper Devonian Shale (UD) has popped up on the radar screen–quite suddenly and in quite a big way. The Upper Devonian is located a few hundred feet above the Marcellus Shale layer in the northeastern U.S. Over the past few weeks, MDN has highlighted stories of drillers expanding their UD drilling programs–including CONSOL, Rex Energy, Range Resources and EQT Corporation (see EQT 4th Driller to Target Upper Devonian Shale Layer). Courtesy of a sharp MDN reader, we can add a fifth UD driller to the list: Chesapeake Energy. Todd Sigler reports that Chesapeake has drilled an Upper Devonian well in Hancock County, WV and has several Upper Devonian permits in extreme western Beaver County, PA.

Todd also pointed us to two excellent drilling presentations about the UD, one from Range Resources and one from Rex Energy, which we’ve embedded below. The Range presentation includes a good backgrounder on the UD and a great series of maps showing where the best places to drill in the UD can be found–currently–based on our knowledge and experience so far. The Range presentation also discusses how Range (and others) are adopting a “stacked play” strategy of drilling the Upper Devonian, Marcellus and Utica layers–all in the same well bore. How cool is that?!
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More Interesting Facts about the Upper Devonian Shale

Some more interesting facts are coming to light about the new shale kid on the block: the Upper Devonian Shale. A recent AP article says Upper Devonian (UD) wells are a lot cheaper to drill than Marcellus and Utica wells because they are closer to the surface. And, surprise! UD wells are usually fracked using hydrogen, not water and chemicals–at least UD wells drilled in West Virginia. That is a revelation.

Will we now start to see more UD wells drilled in the northeast? That will depend on the commodity price of natural gas, because UD wells typically yield dry gas (methane) and not wet gas (with liquids and/or oil)–at least so far. If the price is right to make dry gas drilling profitable, you can expect to see the UD getting more attention…
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Ohio Drillers Not So Excited About Upper Devonian Shale

It seems some drillers have become excited about the Upper Devonian Shale in southwestern Pennsylvania and West Virginia (see today’s companion story: 5th Upper Devonian Driller + Maps of Best UD Spots to Drill). However, it also seems that the UD isn’t all peaches and cream–especially for drillers in eastern Ohio. Akron Beacon Journal reporter Bob Downing reports the UD in Ohio has so far been pretty lackluster.

Surprisingly, there have already been 125 UD wells drilled in Ohio over the past two years, most of them vertical-only wells. An update on UD drilling in Ohio:
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