ShareThis Page

Drillers share keys to boosting efficiency at DUG East conference in Pittsburgh

| Wednesday, June 24, 2015, 11:21 p.m.

Building more pipelines out of the Marcellus shale won't bring enough relief to natural gas companies struggling with low prices, an analyst told industry leaders gathered in Pittsburgh on Wednesday.

Demand from power plants and other big customers won't keep pace with all the new supply coming out of the region over the next few years until exports of liquefied natural gas ramp up, said Kathryn Downey Miller of Denver-based BTU Analytics.

“Don't expect demand to increase greatly until LNG shows up in 2019 to 2020,” she told the seventh annual Hart Energy Developing Unconventionals DUG East conference, Downtown.

Until then, the producers with the best locations for drilling and lowest costs have the upper hand, Miller and others said.

“Can you control your costs ... and have a sufficiently sized balance sheet to offset the bad with the good?” Paul Morgan of Stratus Advisors said.

Leaders of several companies made their case for why they are in the best position. Despite the large size of the Marcellus and Utica shales, Derek Rice, executive vice president of Cecil-based Rice Energy, estimated “about 20 percent of the fairway is economic.”

Range Resources Corp. and Consol Energy Inc. touted well-placed lease locations that allow them to hit multiple layers of rock — Upper Devonian, Marcellus and Utica — from a single well pad.

“There's a lot of efficiencies to having them stack up like that,” said Jeff Ventura, CEO of Fort Worth-based Range.

State College-based Eclipse Resources Corp., a relative newcomer to the shale, is focused on the Utica in Ohio. It found success by extending the horizontal length of its wells by more than 1,000 feet during the past year and using more sand in fracking while cutting costs by 23 percent, said CEO Benjamin Hulburt.

“We think we're far from over in optimizing this,” he said.

Ryan Horvat, an analyst with New York-based ITG Investment Research, said analysis of wells shows per-foot production drops very slightly as those horizontal “laterals” are extended, so “it makes sense to drill out as far as you can.”

Companies have found limits, though.

“We're more comfortable with about 10,000 feet,” said Craig Neal, a vice president at Consol who said the Cecil-based gas and coal company extended one well more than 14,000 feet at Pittsburgh International Airport. The average in the Marcellus is about 5,000 feet.

Malcolm Yates, a manager for fracking contractor Schlum­berger, raised a note of concern over longer wells drilled more closely together and drilling into different horizons from pads that have older Marcellus wells.

Such practices raise the risk of crossing paths with or diminishing results from older wells, he said. “We need to understand the consequences.”

Companies are experimenting with how much space to leave between wells. Several companies said they leave 500 to 750 feet, depending on the formation.

“That's something we're trying to figure out. You need to see, how much are these wells communicating?” Rice said.

David Conti is a staff writer for Trib Total Media. He can be reached at 412-388-5802 or dconti@tribweb.com.

TribLIVE commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.