East coast proximity a boost to Marcellus shale producers

Aug. 5, 2013
The Marcellus shale play runs through northern Appalachia, primarily in Pennsylvania, West Virginia, New York, and Ohio.

The Marcellus shale play runs through northern Appalachia, primarily in Pennsylvania, West Virginia, New York, and Ohio. It is part of the Devonian black shale and the thickness of the gas-producing rock is as much as 900 feet. The formation runs an estimated 600 miles north to south, and is estimated to hold as much as 500 trillion cubic feet of natural gas, about 50 tcf of which is recoverable using current technology. It is one of the richest gas fields in North America. The proximity to customers in Eastern urban centers is part of what makes the Marcellus so desirable to energy companies.

Here is a synopsis of recent activity in the Marcellus shale play.

Magnum-Hunter spuds on 18-well pad

Houston-based Magnum Hunter Resources Corp. has spudded the first well on its Stalder pad in eastern Monroe County, Ohio. The pad has been designed and permitted to drill as many as 18 wells, 10 to the Marcellus shale and eight to the Utica shale, using the company's new Schramm T500XD robotic drilling rig. The first well will test the Marcellus and the second the Utica. Magnum Hunter's Triad Hunter LLC subsidiary is the operator with a 50% working interest in the drilling unit. The development plan is to drill both Utica and Marcellus wells first, then fracture stimulate them, and subsequently test them in the fourth quarter of 2013. The company's Eureka Hunter Pipeline LLC unit is laying a 20-in. high-pressure gas line to the Stalder pad. First deliveries are anticipated in October.

Cabot adds sixth rig to Marcellus operation

Cabot Oil & Gas Corp. has added a sixth rig in its Marcellus Shale drilling program to establish an early start to its 2014 program. Additionally, the company reported continued success from its step-out drilling in the Marcellus and impressive results from its Eagle Ford drilling program, where its most recent wells have outperformed the average results for the program. In the Marcellus shale play, Cabot is currently producing 1.2 billion cubic feet (Bcf) per day of gross natural gas from 226 producing horizontal wells. Its current Marcellus daily production rate represents a 15% sequential increase from the company's first-quarter exit rate.

Southwestern closes Marcellus acquisition

Houston-based Southwestern Energy has closed its recently announced acquisition of approximately 162,000 net acres in the Marcellus shale play in Pennsylvania. The properties were acquired from Chesapeake Energy Corp. and its partner for approximately $93 million, excluding purchase price adjustments. Southwestern has financed the acquisition with its revolving credit facility.

Constitution Pipeline seeks FERC approval

Constitution Pipeline Company LLC, a limited liability company owned by subsidiaries of Williams Partners LP, Cabot Oil & Gas Corp., Piedmont Natural Gas Co. Inc., and WGP Holdings Inc., has filed an application with the Federal Energy Regulatory Commission (FERC) seeking approval to construct a 122-mile pipeline connecting domestic natural gas production in northeastern Pennsylvania with northeastern markets by spring 2015.

The Constitution Pipeline has been designed to transport up to 650,000 dekatherms of natural gas per day (enough natural gas to serve approximately 3 million homes) from Williams Partners' gathering system in Susquehanna County, PA, to the Iroquois Gas Transmission and Tennessee Gas Pipeline systems in Schoharie County, NY. The capital cost of the project is estimated to be $683 million. Since last spring Constitution Pipeline Company has been involved in the FERC pre-filing process, soliciting input from citizens, governmental entities and numerous other interested parties to identify and address issues with the proposed pipeline alignment. The pipeline route filed with the FERC this month reflects changes to more than 50% of the original pipeline alignment – most as a direct result of stakeholder input.

The 30-inch underground transmission pipeline would stretch from Susquehanna County, PA, into Broome County, NY, Chenango County, NY, Delaware County, NY, and terminate in Schoharie County, NY. Williams Partners owns a 41% share of Constitution Pipeline and, through its affiliates, will provide construction, operation and maintenance services for the new pipeline. Through their subsidiaries, Cabot owns a 25% share, Piedmont Natural Gas owns a 24% share and WGL owns a 10% share of the company.