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Appalachian Basin remains active for shale producers

by Erika Green

The Appalachian Basin remains a very busy place.

Nearly 2,300 drilling permits were issued in 2017 in the three-state basin, with 1,036 of those wells being spud, said energy consultant Timothy Knobloch.

That includes 1,377 Pennsylvania permits, 462 Ohio permits and 459 West Virginia permits, said Knobloch, president of James Knobloch Petroleum Consultants, of Marietta, Ohio.

In comparison, there were 1,178 Pennsylvania permits, 267 Ohio permits and 246 West Virginia permits issued in 2016, and only 771 wells were spud, he said.

Spuds jump, Pennsylvania in front

The wells spud in 2017 jumped 34.3% from 2016, Kallanish Energy has learned.

The Appalachian Basin has spud nearly 15,0000 wells: 10,123 in Pennsylvania; 2,750 in West Virginia; and 2,229 in Ohio, he said.

Final figures are not yet available, but it appears between 700 and 1,000 wells were drilled in the Appalachian Basin in 2017, Knobloch said.

Pickup in activity

There are 11,600 horizontal wells in the basin that are producing, he said.

Drilling is picking up as oil and gas prices rise and pipelines are completed to get Appalacvhian Basin natural gas to markets, he said.

Knobloch spoke about the revolutionary energy boom that continues in the basin at the recent three-day Ohio Oil and Gas Association’s winter meeting.

Activity ‘impossible to predict’

The Marcellus and Utica shales in the basin are expected to produce 35% of the natural gas in the U.S. by 2020.

What’s happened in the three-state region in the last 10 years would have been almost impossible to predict, he said. “There’s been a revolution the Appalachian Basin,” he said. “We’ve come a long way from 2008.”

The most productive Appalachian Basin wells are in northeast Pennsylvania, mostly developed by Cabot Oil & Gas, Knobloch said.

He called them “just tremendous wells … historic wells” in Bradford and Susquehanna counties.

The three counties in the basin with the most wells drilled are all in Pennsylvania: Washington with 1,405 wells; Susquehanna with 1,206 wells; and Bradford with 1,129 wells, according to Knobloch.

The rest of the Top 10 counties are: Pennsylvania’s Greene, with 860; Lycoming with 769, and Tioga with 642; Ohio’s Carroll County with 457; West Virginia’s Doddridge with 416 wells; Pennsylvania’s Butler with 405; and West Virginia’s Wetzel with 350 wells.

Chesapeake with most wells in basin

The three companies with the most wells in the basin are Chesapeake Energy with 1,507, EQT with 1,342 and Range Resources with 1,126, he said.

The rest of the Top 10 companies are: Southwestern, 823 wells; Antero, 700 wells; Cabot, 579 wells; Repsol, 517 wells; Seneca, 411 wells; SWEPI, 409 wells; and Chevron, 389 wells.

A total of 105 other companies had 4,463 wells.

King Marcellus

Of the 11,600 wells in production, 73% are in the Marcellus Shale and 17% are in the Utica Shale, he said. Other formations like the Upper Devonian, Burket and Lower Huron make up 10%, he said. Those formations will become bigger in the future, Knobloch added.

The most active players by drilling rigs in the three states are Southwestern with seven rigs. Range Resources and Rice Energy (now part of EQT) both have six rigs active, Antero Resources and Ascent Utica each have five active rigs, while Cabot, Chesapeake and EQT each have three active rigs.

Those eight companies together have 38 of the 74 rigs in the basin. In all, 26 other companies have 36 other rigs in Appalachia, Knobloch told the 900-person audience at the Ohio meeting in Columbus, Ohio.

Laterals keep growing

The average Appalachian Basin lateral is 9,013 feet long, Knobloch said. That is up from 7,392 feet in 2016, and 6,441 feet in 2015. Before 2011, the average lateral in the three states was 3,629 feet, he said.

Appalachian drillers have also reduced stage lengths down to 180 feet, Knobloch added. Drillers, he said, “have landed better and are staying in their lanes better” and are using more sand and more water to get better results.

Super pads are giant

The newest trend is the development of super pads in the Appalachian Basin, according to Knobloch. Pittsburgh-based EQT, for example, has a dozen sites where it is developing 20 to 40 wells off a single pad.

The laterals extend out 10,000 to 15,000 feet and reach multiple formations from a 10-acre pad, he said.

It can cost $250 million to develop such a super pad, according to estimates. That includes the Big Sky pad in Washington County, Pa., with 26 permitted wells, plus the Strope in Greene County, Pa., with 28 wells, the Prentice in Allegheny County, Pa., with 37 and the Cougar in Washington County with 30 wells, according to Knobloch.

Such super pads require a tremendous amount of planning and will take up to three years to fully develop, he said.

EQT has said it’s averaging 17 to 18 wells per pad. Antero Resources has said it’s averaging nine to 10 wells per pad, up from three to four wells per pad a few years ago.

Range Resources has built pads that can accommodate up to 20 wells, even though five or fewer wells may have been developed, to date. The company may return in the future to those pads to develop additional wells, according to president and CEO Jeff Ventura, during a recent earnings call.

Super pads also found in Permian

Such super pads are also being developed in the Permian Basin in West Texas and New Mexico, where Encana had built a mega pad for 64 wells. It is the length of eight football fields and the width of two football fields. More than 50% of the planned wells have already been drilled on that pad.

In 2017, there were nearly $9 billion in mergers and acquisitions in the Appalachian Basin, Knobloch said. Those 11 deals covered 934,445 acres. The biggest deal was the $8.2 billion EQT-Rice Energy merger.

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