Eclipse Resources planning Super Laterals in Utica Shale

Eclipse Resources’ Purple Hayes well in eastern Ohio is legendary, as was the song “Purple Haze,” written and sung by the late rock singer-guitarist Jimi Hendrix.

The Guernsey County well is the longest lateral ever drilled onshore in the U.S.

Officially known as Purple Hayes 1H, the well near Quaker City features a lateral that is 18,544 feet (5,640 meters) long in the Utica Shale play’s condensate window.

Longer laterals mean higher cost, more pay zone

The lateral was drilled in 17.6 days and hydraulically fractured (fracked) in 124 stages at a cost of $854 per lateral foot. The well cost $15.8 million.

With longer laterals meaning more pay zone for drillers, laterals are slowly growing in length around the U.S. Laterals currently tend to run roughly 6,000 feet in the Eagle Ford Shale, 9,000 feet in the Bakken Shale and 8,300 feet in the Haynesville Shale.

Oklahoma is discussing a change in state law to allow longer laterals. At present, companies can drill laterals up to two miles long in shale formations and one mile in other rock layers. Those limits would be erased if the change wins approval.

The longer laterals work in the Utica Shale and may or may not work elsewhere, Eclipse Resources officials say.

Perhaps the new norm

Super Laterals may be the new norm for Eclipse Resources. “We are sold on Super Laterals,” chairman, president and CEO Benjamin Hulburt told the American Oil and Gas Reporter.

The 24 wells his company intends to drill in 2017 will have average lateral lengths of about 13,300 feet. It is planning 11 wells, all with laterals that will average more than 15,000 feet. That plan includes two condensate wells that will have laterals that exceed 19,000 feet.

Longer laterals in the Utica reduce the cost per lateral foot to enhance returns, Eclipse officials say. They report their company’s cost per foot in the Utica is 44% lower than for non-operated wells.

Lowering F&D costs

The company said such laterals lower finding and development (F&D) costs. It said it has seen no degradation in the recovery rate per foot of completed lateral. In the past, less recovery per foot was reported from longer laterals. But that’s changed.

“The benefits to longer laterals in this play are significant, essentially increasing the before-tax internal rate of return of our wells by 6% per 1,000 feet of lateral in the dry gas, and 3% to 4% in the condensate area. This is especially beneficial given today’s low strip prices,” Hulburt told analysts and the media in an earnings call last fall.

The business case for Super Laterals is simple: spread drilling and completion costs over as many lateral feet of stimulated reservoir volume as possible, he said.

His company wants to get total well costs down to where the condensate portion of its acreage becomes attractive at oil prices in the mid $50s and higher, Hulburt added.

In 2017, Eclipse Resources is planning to drill 19 net (22 gross) horizontal wells and complete 19 net (20 gross) horizontal Utica Shale wells. In addition, the company will be drilling 1.9 net (2.0 gross) Marcellus Shale wells with 9,000-foot laterals being drilled to validate type curves.

Three of those Super Lateral wells will be in the Utica Shale’s dry gas area in Monroe and Belmont counties, and eight will be in the condensate area in Harrison and Guernsey counties.

Higher generation completions

By comparison, in 2013-2014, the company drilled its first 10 Utica wells with average laterals of 6,270 feet. They cost $2,400 per lateral foot and took 49 days to complete.

In conjunction with the longer laterals, Eclipse Resources is proud of its high-intensity completion operations known as Generation 3 completions. It relies on 100% slickwater, heavy doses of sand (up to 3,000 pounds per lateral foot), designer friction reducers and decreased stage spacing.

By comparison, the Purple Hayes well used 1,400 pounds of sand per foot.

Generation 4 completions, with further enhancements including diversion techniques and engineered flowback, will be used later in 2017, the company said.

Eclipse, based in State College, Pa., has leased about 112,000 acres in the Appalachian Basin with 41% in the Utica dry gas window and 38% in the Utica condensate area.

In full-year 2016, Eclipse Resources produced 229 million cubic feet-equivalent per day (MMcfe/d) in the Appalachian Basin, with 27% liquids.

It is projecting Q1 2017 production of 275-280 MMcfe/d. For full-year 2017, that’s expected to jump to 305-315 MMcfe/d, which would be a 37.5% jump in production from 2016.