Marcellus E&P, transportation programs ramp up

March 1, 2010
Focus on the Appalachian basin Marcellus shale gas play deepens.

Focus on the Appalachian basin Marcellus shale gas play deepens.

Ultra Petroleum Corp., Houston, plans to drill more than 110 Marcellus wells in 2010 compared with 37 gross (22.5 net) wells in 2009.

Mitsui E&P USA LLC will earn a 32.5% interest in 100,000 net acres held by Anadarko Petroleum Corp. in the play in north-central Pennsylvania for $1.4 billion.

And Tennessee Gas Pipeline Co., a wholly owned unit of El Paso Corp., Houston, executed binding, 20-year term agreements with Chesapeake Energy Marketing Inc. and Statoil Natural Gas LLC for 100% capacity on its Northeast Upgrade Project in the Marcellus shale.

Ultra Marcellus outlook

Ultra had placed 13 wells on production by the end of 2009 at rates averaging 7.5 MMcfd. Laterals at those wells average slightly more than 3,800 ft.

Initial production rates at the horizontal wells completed so far have ranged from more than 3.4 MMcfd to 10.4 MMcfd, including two wells that are exceeding 7.5 MMcfd after 30 days.

First 30 days' production averaged more than 3 MMcfd at the company's first six wells and more than 5.7 MMcfd at its next seven wells. The company's first production in the Marcellus program began in July 2009.

Preliminary estimated ultimate recoveries affirm Ultra's 3.75 bcf of gas equivalent type-curve, and some preliminary EURs exceed 6 bcf of gad equivalent. The cost to drill and complete a horizontal Marcellus well in 2009 was $3.5 million.

Ultra's four interconnects to major interstate pipelines remain well ahead of the drilling campaign. By midyear 2010, capacity is expected to exceed 560 MMcfd.

The company began 2009 with 288,000 gross (152,000 net) acres in the Marcellus. Through a combination of land acquisitions, trades, and swaps, Ultra increased its holdings to 326,000 gross (169,000 net) acres by yearend 2009.

An acquisition announced in late 2009 and to have been completed in late February will expand its holdings to 486,000 gross (249,000 net) acres. To its core position in Tioga, Bradford, Lycoming, and Potter counties in north-central Pennsylvania, Ultra will add acreage in Lycoming, Clinton, and Centre counties.

Mitsui joins Anadarko

Mitsui will earn the interest by funding all of Anadarko's share of Marcellus development costs in 2010 and 90% of costs after that, completing its funding obligation by about 2013. The agreement, subject to regulatory approvals, is to close on Mar. 15 and is effective Jan. 1.

Mitsui will also have the option to buy 32.5% of Anadarko's existing wells and additional acreage acquisitions by reimbursing a proportionate share of Anadarko's prior expenditures, currently estimated at $100 million.

Anadarko said its fairway position in the Marcellus has a gross unrisked resource potential of more than 30 tcf and spans more than 715,000 gross acres. The companies said more than 4,500 wells are likely to be drilled within 10 years.

Mitsui projected net peak production at 360-460 MMcfd, $3-4 billion in project costs, and a 60-year production life.

Anadarko's acreage extends from Bradford and Sullivan counties on the northeast across Tioga, Lycoming, Potter, Clinton, Centre, and Clearfield counties to the southwest.

Pipeline expansion

The Tennessee gas project will provide 636 MMcfd of incremental firm transportation capacity from TGP's 300 Line in Pennsylvania to an interconnect in New Jersey for shipment to Northeast markets.

El Paso expects to file its Northeast Upgrade plans with the US Federal Energy Regulatory Commission in spring 2011 to meet a scheduled Nov. 1, 2013, in-service date. El Paso held an open season in February to gauge additional shipper interest with final capacity to be awarded in March 2010.

The project will cost about $400 million.

Williams Cos. Inc. entered joint ventures in 2009 with both Rex Energy Corp. and Atlas Pipeline Partners LP fortifying its position in the Marcellus shale (OGJ Online July 9, 2009 and Apr. 2, 2009).

More Oil & Gas Journal Current Issue Articles
More Oil & Gas Journal Archives Issue Articles
View Oil and Gas Articles on