CNX was fracking their Shaw 1G Utica well in Washington Township on Saturday, Jan. 26, when they detected “a strong drop in pressure” and stopped fracking (see CNX Hits Major Problem Fracking Utica Well Near SWPA Reservoir). Turns out the well was “communicating” (i.e. losing gas to) several nearby conventional wells.

At first it was thought there were four conventional wells affected, then the number went to seven, and then nine. Now CNX is looking at all conventional wells within a two-mile radius of the Shaw well because it’s possible more wells are impacted.

CNX and the state Dept. of Environmental Protection (DEP) are investigating how it could have happened–how fracking a single shale well could suddenly lose its gas/pressure to so many nearby conventional wells, all of which have had to be flared to relieve the pressure.

The Shaw well is located on Municipal Authority of Westmoreland County property, close to the 1,300-acre Beaver Run Reservoir which provides drinking water for some 130,000 people. Authorities have been testing the water frequently and there have been no impacts (so far).

CNX hired a well control team to “kill” the well, which means pumping it full of heavy mud. That happened yesterday afternoon.

Below are several reports, the most recent information we can find about the status of the well, and the impact this episode may have on CNX’s future Utica drilling program.

First an update with the latest happenings:

CNX Resources Corp. reported Tuesday morning that the operation to bring its problematic Utica Shale well in Westmoreland County under control was successful.

“While we continue to evaluate the cause of the initial pressure anomaly, we believe it is isolated to this well,” the company said in a statement. “As a precaution, we will continue to monitor the well for the next several days.”

Containing the deep, horizontal well meant pumping very heavy mud into the wellbore, a process that began Monday afternoon.

The problem began a week from Saturday, when CNX was fracking its Utica Shaw 1G well and lost pressure on it. Over the next week, the company discovered pressure spikes at nine nearby conventional wells, which it was flaring on Monday to relieve the pressure.

The company has expanded the search for pressure anomalies in nearby conventional wells to a 2-mile-radius from the farthest impacted well, Department of Environmental Protection spokeswoman Lauren Fraley said Monday. “This includes the discovery of an unpermitted private gas well,” she said.

This means that more wells could potentially be diagnosed as impacted, as the company works its way through the area.

It is still not clear what went wrong with the Utica well or how its problem ended up impacting wells thousands of feet away.

Ms. Fraley noted that no environment damage has been reported by field staff at the agency’s oil and gas, safe drinking water and air quality departments.

None of the impacted conventional wells are in the path of the Shaw 1G, which runs more than a mile in a southeast direction. Instead, the overpressured wells are to the north, west, and east of the Utica well.

Seven of the wells being flared belong to CNX, while two others are owned by two other operators.

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So far, the problems seem confined to shallow wells: “DEP has not received any reports of pressure anomalies at nearby Marcellus wells,” Ms. Fraley said.

CNX has been contacting residents, company spokesman Brian Aiello said, and has sent contractors to assess water quality at nearby private water wells, although the three property owners closest to the Shaw pad reported they had not yet heard from the water contractors at mid-day on Monday.

The flaring on Sunday night lit up the sky “like Armageddon,” said Washington Township resident Jeff Pope. The flames came from across the reservoir, some north of the Shaw pad and others to the southwest.

Mr. Pope has two main hopes for the situation: “One, that it’s nothing catastrophic, and two, that it slows them down.”

Mr. Pope wasn’t the only one anxious about another CNX Utica well pad that’s slated to be built next to Fox Road. “We’ve lived through all of this since it started in the early 2000s with these shallow wells,” he said.

On Sunday, a CNX official reached out to Robert “Butch” Shimizzi and told him there’s nothing to worry about with the shallow gas well that delivers heat to his home. But if it would put his mind at ease, the company offered to switch him to propane.

Mr. Shimizzi declined — at least for now — choosing to accept CNX’s assessment that he is safe.

Washington Township Supervisor Rich Gardner said CNX told him on Monday that “the problem is just about resolved.”

He didn’t know when the flaring would stop, but said “they believe the pressure (on the conventional wells) will be reduced later today,” Mr. Gardner said on Monday.

He stressed that there have been “no negative effects to residents,” that the Municipal Authority of Westmoreland County has been monitoring Beaver Run Reservoir and has noted no spills or impacts, and that “everything has been well controlled and contained.”

CNX asked county emergency management to establish a no-fly zone within a five-mile radius of the Shaw pad.

The limitation applies to all but “relief aircraft operations under direction of Westmoreland police” and is scheduled to expire on Tuesday at 6 p.m. (1)

The reservoir remains a concern, but so far there have been no issues:

The Municipal Authority of Westmoreland County has asked for an extra water sample from Beaver Run Reservoir after a gas well located near the water source recently lost pressure.

CNX Resources suspended fracking operations from its Shaw 1G well, a deep Utica well on the northwestern side of Beaver Run Reservoir, because of a “pressure anomaly” observed last week, the Canonsburg-based energy company said over the weekend.

The Municipal Authority serves more than 400,000 people in five counties. Beaver Run Reservoir provides water to about 130,000 people in northern Westmoreland County through the authority’s George R. Sweeney Treatment Plant. It also serves small portions of Armstrong and Indiana counties.

CONSOL Energy began establishing gas wells on seven pad sites near the reservoir in 2011.

Since then, the authority has contracted with Indiana University of Pennsylvania to do a quarterly analysis of water from the reservoir and runoff from the various well sites.

IUP chemistry professor Nathan McElroy, co-director of the Beaver Run Project , said a water sample was obtained Sunday, and the majority of the analysis should be done by the end of the week.

“It’s my understanding that MAWC just wanted to make sure that (the well anomaly) would not have an impact on the surface water quality,” McElroy said.

As of late Monday morning, CNX had been in contact with 130 area residents “to make them aware of our efforts and to answer any questions they may have,” company spokesman Brian Aiello said.

CNX said in a statement over the weekend that there was “no immediate impact to the local community or the environment.”

The Municipal Authority said in a statement over the weekend that there was no impact to the reservoir.

“Our water quality surveillance is increased any time there is any activity on our property. It is very comprehensive and has not noted any changes,” the statement said.

The seven well pads on authority property have 45 Marcellus wells and seven Utica wells, Aiello said. The Shaw pad was “spud” in July 2018 and completed Jan. 5. Fracking began the following day but was suspended after the pressure anomaly, he said.

In response, CNX has begun to remediate the well and “arrest the subsurface flow of gas,” the company statement said.

Company personnel and consultants “are monitoring existing nearby gas wells and are continuing to manage any potential gas communication to those wells,” the statement said.

Washington Township supervisors released a statement Monday reiterating what CNX and the Municipal Authority said about a lack of impact to the reservoir. They said the air quality in the area also is being monitored.

“CNX personnel are flaring some of the wells on and near the property and are actively monitoring many of the smaller shallow wells surrounding the Municipal Authority,” the supervisors said.

The supervisors said CNX and (Great White Well Control) are “working diligently to alleviate the well site issues, including having all the tributaries and sites diked and pumps on scene to insure that if any water does come from the wells that it should not reach the reservoir.”

McElroy said that in the eight years of analysis provided by the IUP Beaver Run Project, no changes in water quality have been detected due to drilling activities. He said it’s up to the Municipal Authority to interpret the data provided by IUP.

Karen Cardinale, who lives in nearby Bell Township, said she has seen flaring activity from wells off Route 380 since late last week.

“People are wondering what the heck’s going on,” she said.

The Mountain Watershed Association said on its Facebook page that it has been organizing concerned residents but that “more can be done to protect the thousands of people who rely on this drinking water source.” (2)

Finally, what might this episode mean for CNX? Just last week CEO Nick DeIuliis said the company was on the cusp of committing major money to its Utica drilling program. Will that now change?

Last week’s problem at a Westmoreland County well comes at a pivotal time for CNX Resources Corp. and its deep Utica drilling program. CNX is close to a decision on whether to commit more resources to the deep Utica program, and there could be billions of dollars riding on the choice.

CNX (NYSE: CNX) disclosed Thursday there was a recent drop in pressure at the Shaw 1G well in Washington Township, Westmoreland County. It happened when the well was being hydraulically fractured, a necessary step before the well starts drawing market-ready natural gas from the shale layer about a mile underground. CNX late last week began remediation efforts, which includes using cement to stop the flow of gas and flaring nine conventional gas wells near the Shaw pad where gas from the Shaw well had seeped in.

That’s a concern for Canonsburg-based CNX, which has been the pioneer in the deep Utica Shale in that relatively unheralded part of the Appalachian natural gas basin. CNX drew the second-biggest amount of natural gas in the basin for its deep Utica Gaut well a few years ago, and has been analyzing data and working hard since then to bring the costs down to see whether gas wells in that region could be cheaper to drill in money and time.

CNX has been drilling and testing deep Utica wells in the region for several years but have been careful to not overcommit until all the facts are in. CEO Nick DeIuliis told analysts on Thursday’s quarterly conference call that a decision could be worth billions in capex spending for CNX, which had $1.8 billion in revenue in 2018.

“We are on the cusp of making some major decisions with respect to the Utica program,” DeIuliis said Thursday. CNX declined comment on Monday but the driller has last week has been optimistic about its efforts in the deep Utica.

The Deep Utica has been successful so far. The initial Gaut well had cost around $29 million, far and away more costly than the typical Marcellus well, but more recent wells cost about $14 million each. Just on Thursday in a conference call with analysts, CNX said it was targeting a well cost on the newer deep Utica wells of $12.5 million. Fracking costs are also coming in line with Marcellus wells, CNX said.

Fracking at the other three wells on the Shaw pad has also been stopped as a precaution.

“From what we gather this is an isolated issue specific to the Shaw well and should not impact CNX’s or our future Utica development,” said Christopher Doyle, CEO of Huntley & Huntley Energy Exploration, which has nearby operations and is planning to put a drilling rig in the area sometime in 2019.

Sameer Panjwani, director of energy investment bank Tudor Pickering Holt & Co., agreed there hadn’t been a lot of detail disclosed about the well’s problems. He said that a serious issue with a well in that region could impact the economics of the entire Deep Utica Westmoreland program, especially if the results aren’t as repeatable as previously expected.

“I don’t think it really impacts their plans. More so it impacts investor confidence around the potential of the Utica,” Panjwani said. “Now, if you’re having operational issues, it makes it a little harder to believe in the viability of that asset.” (3)

(1) Pittsburgh (PA) Post-Gazette (Feb 4, 2019) – CNX says Utica well now under control, after more shallow wells saw pressure spikes

(2) Pittsburgh (PA) Tribune-Review (Feb 4, 2019) – Gas well pressure issue leads to testing of water supply for northern Westmoreland County communities

(3) Pittsburgh (PA) Business Times (Feb 4, 2019) – Utica well issue comes at a crucial time in CNX’s plans