Philadelphia operator Atlas Energy Resources LLC said it has determined that it could ultimately recover 4 to 6 tcf of natural gas from the Devonian Marcellus shale on its properties mostly in southwestern Pennsylvania.
Atlas Energy controls 483,000 acres in Pennsylvania, New York, and West Virginia and is aggressively adding land.
After reviewing the length of its hydraulic fracs, the company said it believes it will be able to develop the formation with vertical wells on 40-acre spacing. That would give it 4,000 to 6,000 potential locations in southwestern Pennsylvania, where it is concentrating on 224,000 acres and where it has drilled all but one of its Marcellus wells.
Almost all of the southwestern Pennsylvania acreage has ample pipeline capacity that is controlled by the company’s affiliate, Atlas Pipeline Partners LP.
Atlas Energy has drilled 27 vertical wells to date, 21 of which are producing into a pipeline. The other six are to be connected shortly. The company believes it has largely delineated its acreage.
Analysis by consulting engineers implies finding and development costs of about $1/Mcf, said Richard D. Weber, Atlas Energy president and chief operating officer.
Weber said, “While the finding and development costs of our vertical drilling program compare favorably with the reported results from horizontal drilling of other shale operators in the Appalachian basin and elsewhere, we believe that our horizontal drilling program has the potential to even further enhance our economic returns from the Marcellus shale.”
Atlas Energy, which has drilled one horizontal Marcellus well in southwestern Pennsylvania with an industry partner, plans to drill at least four more horizontal wells in 2008.
Consulting engineers Wright & Co. Inc. assigned 961 bcf/well of proved reserves to Atlas Energy’s first 14 southwestern Pennsylvania Marcellus wells, including five initial wells to which the company applied first-generation completion techniques.
For the nine later wells where the company used advanced drilling, completion, and production techniques, the consultant assigned reserves that averaged 1.3 bcf/well and were as high as 1.8 bcf.
Since adopting the advanced techniques, the company’s initial 24-hr rates into a pipeline have averaged 1.3 MMcfd and have been as high as 2.6 MMdfd.
“Based on published reports, to the company’s knowledge, these are the best initial daily production rates of any vertical wells in the Marcellus play. In response to these results, Atlas Energy plans to drill and complete at least 150 vertical Marcellus shale wells over the next 18 months,” the company said.