Shale Directories Seminars
March 21, 2019
North Canton, OH
Upstream PA 2019
April 17, 2019
Penn Stater Conference Center
State College, PA
Appalachian Storage Hub Conference
June 6, 2019
Hilton Garden Inn
Southpointe, Canonsburg, PA
Latest facts and a rumor from the Marcellus, Utica, Permian, Eagle Ford, and Bakken Shale Plays
ExxonMobil, Chevron Ramp Permian Activity. (Wall Street Journal)Chevron, Chevron Corp. plans to significantly ramp up production in the oil field at the heart of the American fracking boom, the latest sign that the next era of shale drilling is likely to be led by the major oil companies. In the next five years, Chevron expects to more than double its production in the Permian Basin in Texas and New Mexico to 900,000 barrels of oil and gas a day, the company announced at an investor event Tuesday. That’s a nearly 40% increase from its previous forecast. “The shale game has become a scale game,” Chevron Chief Executive Mike Wirth said in an interview. “The race doesn’t go to the one who gets out of the starting blocks the fastest. The race goes to the one who steadily builds the strongest machine.”
Exxon Mobil Corp. is expected to disclose similar growth plans in the region at an investor meeting Wednesday. The company recently added 1.2 billion barrels of oil and gas to its total reserves, based in part on bullish Permian drilling plans. BP PLC, Royal Dutch Shell PLC and Occidental Petroleum Corp. are also focusing on the region. Big oil’s growing ambitions for the Permian follow a long-established pattern in the oil patch: Wildcatters and small exploration companies find ways to tap new reservoirs, then the big companies move in.
Utica 2018 Update. They used an array of drilling data to paint pictures of Ohio’s Utica Shale and the entire Appalachian Basin in twin presentations Thursday at the 72nd annual Ohio Oil and Gas annual meeting, sponsored by the Ohio Oil and Gas Association.
Kallanish Energy was in attendance at the conference, along with roughly 700 other attendees, all together in Ohio’s capital city.
Shumway, of Locus Bio-Energy Solutions LLC, outlined what happened in 2018 in Ohio’s Utica Shale in the Debrosse Memorial Report.
Crude production up an estimated 20% in 2018
Oil production in 2018 is expected to increase by 20% from 2017, reaching 23.4 million barrels (Mmbbl), and reversing a declining trend from 2015 to 2017, he said.
Ohio’s all-time oil production record was set in 1897, at 23.9 million barrels, and Ohio is likely to smash that record very soon, Shumway said.
Natural gas production is projected to increase 34% from 2017 to 2018, he said, from 1.8 trillion cubic feet (Tcf), to 2.4 Tcf in 2018.
Belmont County leads in completions
Those 2018 totals are based on production totals for three quarters and estimates for Q4 2018.
In 2018, Ohio’s Belmont County had the most well completions with 98. Monroe County had 95 and Jefferson County had 42. Ohio had 408 well completions in 2018, a drop of 9% from 2017. Of that total, 336 wells were producing in 2018. In addition, a total of 493 permits were issued by the state, a drop of 47% from 2017.
Of those completions, 70 were by Ascent Resources, 45 were by Gulfport, 39 by Antero Resources, 36 by Rice and 35 by Chesapeake.
Chesapeake drilled most Utica wells
Antero’s wells drilled increased by 77% in 2018, while most other companies showed declines, he said.
To date, Chesapeake has drilled the most Utica wells in Ohio with 688, followed by Ascent with 378, and Gulfport with 304.
The most linear feet were drilled in Belmont County: 1.85 million feet. It was followed by Monroe and Jefferson counties.
In 2018, energy companies drilled 6.5 million feet on 371 wells. That compares to 6.03 million feet drilled on 378 wells in 2017.
The top year for linear feet drilled in Ohio was 2016 with 7.95 million feet.
Ascent drills most linear feet
Ascent drilled the most linear feet in Ohio in 2018: nearly 1.3 million feet. Second was Rice with 775,323 feet, Gulfport with 764,456 feet, Eclipse with 716,216 feet and Chesapeake with 644,424 feet.
Energy companies are also drilling longer laterals across the Appalachian Basin, said Knobloch, president of Ohio-based Knobloch Petroleum Consultants.
Pennsylvania leads in 10,000-foot laterals
Ohio has 328 wells with laterals that exceed 10,000 feet, with the greatest number in Belmont, Monroe and Jefferson counties, he said.
Pennsylvania has 346 laterals that exceed 10,000 feet, with the greatest number in Washington, Greene and Susquehanna counties.
West Virginia has 170 laterals that exceed 10,000 feet with most in Doddridge, Ritchie and Tyler counties.
Eclipse has drilled an Ohio well in Monroe County with a 20,720-foot lateral that’s the longest in Ohio, he said. EQT has drilled a well with a 20,010-foot lateral in Pennsylvania’s Greene County, the longest in that state.
Antero has drilled a 14,200-foot lateral in West Virginia’s Doddridge County, the longest in that state although it will soon be surpassed by an 18,000-foot lateral.
Cabot most productive
The best-producing wells in the Appalachian Basin remain the Cabot Oil & Gas wells in Susquehanna County, in northeast Pennsylvania, followed by wells in southwest Pennsylvania, he said.
Cabot “just has the horses up there,” he said.
The best producing wells by county in Pennsylvania are in Washington County, with, 489; Susquehanna, 1,321; Bradford, 1,191; Greene, 968; and Lycoming, with 806 wells, Knobloch said.
The companies with the most wells in the Appalachian Basin are: Chesapeake, with 1,537; EQT, 1,509; Range Resources, 1,175; Southwestern, 992; and Antero with 968.
At present, Ohio has 16 rigs working, West Virginia has 17, southwest Pennsylvania has 23 and northeast Pennsylvania has 19. Fourteen Appalachian Basin operators have only one rig at work, he said.
Encino’s Plan for Ohio. The Texas-based company was the center of attention Thursday at the 72nd Ohio Oil and Gas annual meeting, which drew 700 people to the capital city of Ohio.
Kallanish Energy attended the meeting.
A ‘coming-out party’
Encino held a sort of coming-out party at the three-day statewide meeting that will feature Vice President Mike Pence speaking at a noon luncheon today.
That’s because Encino last summer bought out Chesapeake Energy’s holdings in Ohio’s portion of the Utica Shale play for $2 billion.
Chesapeake was one on the first companies to move into the Utica Shale and it locked up significant leases to become the Utica’s biggest producer.
A major Utica player overnight
Overnight, that made Encino a major player in the gas-rich Utica Shale, with 933,000 acres and 920 horizontal wells drilled by Chesapeake since 2011. Those wells produce 600 million cubic feet per day (Mmcf/d) of natural gas.
CEO and president Hardy Murchison and chief operating officer Ray Walker spoke for roughly 30 minutes Thursday morning about the continuing transition and the company’s plans in what was their first public appearance in Ohio.
The first wells Encino plans to drill in 2019 will be wells originally planned by Chesapeake, Murchison said. It intends to operate two rigs and two completion crews in the Utica in 2019, although a third completion crew could be added, he said. Additional rigs are possible in the coming years, it has said.
Drilling the Utica’s wet and dry windows
The company plans to divide its 2019 capital spending between the Utica’s dry gas window and liquids-rich wet window, he said.
Encino will be different from Chesapeake because it intends to maintain “a steadier pace” in the Utica, according to Murchison. Chesapeake often switched rigs from dry gas areas to liquids-rich areas, depending on pricing.
Murchison said Encino on its first day of operating in Ohio completed a state record lateral 7,000 feet long, roughly 1,000 feet beyond the previous one-day state lateral drilling record. The company did not identify where that lateral was drilled.
Murchison admitted many people are unfamiliar with his privately-held, Houston-based company. It was founded eight years ago. After a slow start and a pivot after the 2015-2016 industry downturn, Encino knew it needed capital and began searching for a partner.
Investment from north of the border
That led the company to the Canadian Pension Plan Investment Board. The pension fund came onboard in 2017 with the goal of buying U.S. onshore shale assets. Encino put up $25 million and the pension fund put up $1 billion.
The pension plan looked at assets in the Eagle Ford Shale in South Texas and the Permian Basin in West Texas/southeast New Mexico, among others, before deciding on the Utica Shale investment Chesapeake wanted to sell, he said.
“The Utica checked every (investment criteria) box,” he said. “Chesapeake had done a great job assembling the Utica acreage.”
Walker liked Encino’s business plan
Walker, a long-time Range Resources executive, who retired less than a year ago as chief operating officer, said he was attracted to Encino in his retirement in large part because of its “great business plan.”
The Utica, he said, “is an exciting asset. There is nowhere to go but up for the next several years.” The Utica is attractive for “multiple, multiple years, if not decades,” Walker added.
Encino is changing its completion designs from what Chesapeake did in the Utica, according to Walker. It is also looking at increasing lateral lengths in the play in eastern Ohio.
Like the Marcellus and other plays, the Utica is not the same everywhere and that is important to remember, Walker said. Drillers are tweaking what they are doing in the Utica and there is a need for improved communications and cooperation between companies, he said.
Encino is a company that likes data, Murchison said.
EQT Names New COO. EQT Corp. announced Thursday three-decade industry veteran Gary E. Gould has been appointed executive vice president and chief operating officer, effective on an undisclosed date in April.
Gould’s appointment fulfills a pledge by company president and CEO Rob McNally, who said a COO would be in place by March 31, when he revealed the company’s plans for 2019 via a late January press release and conference call.
“Gary has extensive operating experience in unconventional oil and gas, including work in the Marcellus, and a proven track record of driving operational efficiency and lowering costs to achieve superior results,” McNally said.
“We are confident that Gary will make invaluable contributions to our success as we transition to manufacturing mode, position EQT as a leading low-cost production company and create both near-and long-term value for our shareholders.”
Gould has more than 30 years of experience in the oil and gas industry, including over 20 years working in many of the largest unconventional resource plays in the U.S., such as the Marcellus, Barnett, Fayetteville, Bakken, SCOOP and STACK.
Since 2013, Gould has worked at Continental Resources, since 2015, as senior vice president, Production and Resource Development. Prior to joining Continental, Gould worked for Chesapeake Energy, most recently as vice president/director of Reservoir Technology. He led the company’s Marcellus operations in northern West Virginia/southwest Pennsylvania.
He also had been employed for various periods of time at Kinder Morgan, ConocoPhillips and Burlington Resources, Kallanish Energy reports.
“EQT is one of the premier natural gas producers in North America, with a strong financial position, dedicated leadership, and a world class asset base,” said Gould.
SWN on the Move in Appalachia. Southwestern Energy has completed its divestment in the Fayetteville Shale and its moving forward in two areas of the Appalachian Basin, Kallanish Energy reports.
On Dec. 3, Southwestern closed on its $1.65 billion sale to Oklahoma-based Flywheel Energy of its Fayetteville Shale assets in Arkansas.
It is balancing its drilling between Appalachian dry-gas and wet-gas windows, or areas. The independent producer reported it grew its Appalachian production by 21% in 2018, to 702 billion cubic feet-equivalent (Bcfe), and liquids production jumped 40%, to 63,100 barrels per day.
“We carry strong momentum into 2019, refocused, re-engineered and re-energized as a leading Appalachian Basin operator, with a flexible, high-value natural gas and natural gas liquids portfolio, supported by a net debt/EBITDA radio of less than 2X,” said president and CEO Bill Way, in a statement issued last week.
The company reported a 23% higher weighted average realized price in the Appalachian Basin of $2.82 per thousand cubic feet-equivalent (Mcfe), net of transportation. It generated a $1.66 Mcfe margin in Appalachia, an increase of 43%, it said.
Overall company production in 2018 was 946 Bcfe, up from 897 Bcfe in full-year 2017.
Quarterly profit rises
Southwestern reported fourth-quarter 2018 net income of $307 million, or 54 cents a share, compared to net income of $267 million, or 53 cents/share in Q4 2017. For Q4 2018, adjusted net income was $176 million, a 179% increase compared to the year-ago quarter.
For full-year 2018, the company reported net income of $535 million, or 93 cents/share. That compares to net income of $815 million, or $1.64 cents/share in full-year 2017. It reported full-year 2018 adjusted net income was $590 million, over $370 million more than in 2017.
Capital spending dropping in 2019
It reported net cash provided by operations of $1.22 billion in full-year 2018 and net cash flow of $1.35 billion. It generated $100 million in free cash flow above its $1.25 billion in capital spending.
That $1.25 billion included $1.1 billion on Appalachian Basin wells and $60 million on a water project in southwest Pennsylvania. It drilled 106 wells, completed 119 wells and placed 138 wells to sales in 2018.
In 2019, Southwestern plans to spend between $1.08 billion and $1.18 billion on capital spending.
Southwestern’s production in northeast Pennsylvania increased by 16%, to 459 Bcfe, mostly due to increased Tioga County production. It drilled 41 wells, completed 54 wells and placed 60 wells to sales in 2018.
In Q4 2018, the company drilled six wells, six completions and turned eight wells to service. That included one well with a 16,200-foot lateral, a company record.
Production in southwest Pennsylvania and West Virginia increased by 33%, to 243 Bcfe and included 63,100 barrels of liquids, 57% of production volume. The company drilled and completed 71 Marcellus Shale wells and brought 76 wells online in 2018.
Longer laterals planned
In Q4 2018, the company drilled nine wells in that region, completed five and placed 17 to sales, including two Upper Devonian wells.
The company also reported that it is drilling longer laterals. They will increase from about 7,500 feet on average in 2018, to 10,000 feet in 2019.
It also expects to make major cuts in well costs with two completed water projects in Tioga County in Pennsylvania, and in West Virginia. Those projects will reduce well costs from $400,000 to $700,000 per well, according to Southwestern.
The Texas-based company has reduced its debt by $2.1 billion and has repurchased 44 million shares of stock for about $200 million.
Pin Oak Energy Partners Buys Midstream and Production Assets. Pin Oak Energy Partners said Monday it’s closed on two deals for producing and midstream assets located in north-central Pennsylvania.
Ohio-based Pin Oak Energy acquired from an undisclosed seller producing Marcellus Shale and conventional assets in Elk County, Pennsylvania, for an undisclosed price, Kallanish Energy reports.
As part of the deal, Pin Oak also acquired a 12-mile midstream gathering system capable of delivering peak volume of 25,000 million British thermal units per day (Mmbtu/d) to an unnamed large industrial end-user. Pin Oak Midstream, a Pin Oak Energy affiliate, will operate the gathering assets.
In addition, the company signed an agreement with the seller covering the development of over 20,000 net acres in Elk County prospective for both Marcellus and Utica Shale play natural gas.
Pin Oak also closed a deal with Appalachian Midstream Partners (Amp) for the purchase of Somerset Gas Gathering of Pennsylvania (Sgg). No purchase price was given.
Somerset Gas owns and operates a 72-mile intrastate midstream pipeline that extends from the Lewis Run delivery point in McKean County, Pennsylvania; to the TransCo Leidy Hub interconnect in Clinton County.
“The Elk County deal provides a direct line of sight to future development drilling plans for the company, while both the Elk County and AMP deals add to Pin Oak Midstream’s growing portfolio of midstream assets,” said Christopher Halvorson, Pin Oak CEO.
Existing volumes transported for delivery into Sgg’s interconnects with Tennessee Gas Pipeline and National Fuel Gas. Operation of the pipeline system will be managed by Pin Oak Midstream.
PA NatGas Has Exceptional Growth. Natural gas production in Pennsylvania for 2018’s final quarter and the full year featured double-digit percentage growth and, for the years 2011-2018, growth in production, production per well, and number of producing wells.
The data, from the state Department of Environmental Protection (Dep), was presented Tuesday by the Pennsylvania Independent Fiscal Office, Kallanish Energy reports.
During the final three months of last year, natural gas production from horizontal wells jumped 17.8% year-over-year, to 1.65 trillion cubic feet (Tcf), from 1.40 Tcf in the year-ago quarter. The wells were tapping primarily the Marcellus and Utica Shale plays.
Combined with the small production volume via vertical wells, total fourth quarter production increased 17.7%, to 1.65 Tcf; from 1.40 Tcf. (All numbers are rounded.)
Pa. Horizontal Well Production
(Source: Pa. Dep)
For all of 2018, total gas production from horizontal wells jumped 14.2%, to 6.12 Tcf, from 5.35 Tcf in 2017. Production from 2011 to 2018 leaped a whopping 483%, to 6.12 Tcf, from 1.05 Tcf.
For the last nine quarters dating back to 2016’s fourth quarter, horizontal well production jumped 29.1%, to 1.65 Tcf, from 1.28 Tcf. There has been a quarter-over-quarter increase in horizontal well production in eight consecutive quarters.
Also growing each quarter since the final three months of 2016 was average horizontal well production, the Ifo reported. From the final quarter of 2016, through the same three months of 2018, average production per horizontal well skyrocketed 57.0%, to 481 million cubic feet (Mmcf), from 307 Mmcf.
The increase in average production per horizontal well from the third quarter of last year to the end of 2018, rose 49 Mmcf, or 11.3%, from 432 Mmcf, to 481 Mmcf.
Ifo reported each point in the average production per well data represents horizontal wells spud at least three quarters before the reporting period, and no earlier than 12 quarters before that date, and produced above 90,000 cubic feet per day.
Looking at full-year data, in addition to strong production volume growth, average production per well likewise rose. From 2011 to 2018, volume increased at an average rate of 28.6% per year. From 2011 to 2018, volume rose to 1.67 Bcf, from 672 Mmcf.
The number of producing wells also continued to rise, from 1,768 wells in 2011, to 8,736 producing wells in the fourth quarter of 2018, up 25.6% annually during the period.
Four counties in 2018 comprised 68.4% of total statewide natural gas production in Pennsylvania, the U.S.’s second-largest state in terms of total state production.
Data from the state Department of Environmental Protection was presented Tuesday by the Pennsylvania Independent Fiscal Office (Ifo).
Pa. counties with most NatGas production
Big Win for Mountain Valley Pipeline. A Virginia regulatory board has decided not to revoke a permit that allows the Mountain Valley Pipeline to be built across streams, Kallanish Energy reports.
That action came last Friday from the Virginia State Water Control Board in a special meeting. The seven-member board voted to uphold the water permit.
“This was a unique situation that required time to ensure the proper legal process was and continues to be followed,” said board chair Heather Wood, in a statement. “Any other action today would have jeopardized the commonwealth’s oversight of the project.”
Last December, the state board had voted to reconsider the water permit. That action came after Virginia Attorney General Mark Herring and the state Department of Environmental Quality sued the pipeline for more than 300 violations between June and mid-November, mostly related to improper erosion control and storm water management along 100 miles of the line
Virginia could have allowed the pipeline to be built under federal supervision, but had decided to issue its own permits and to add 16 of its own protections.
The $4.6 billion Mountain Valley Pipeline should be operational in the fourth quarter of 2019, according to Mountain Valley Pipeline LLC. The 303-mile pipeline to move Appalachian Basin natural gas to markets in Virginia and the Carolinas was roughly 70% complete on Dec. 31.
Construction has been halted at times by the Federal Energy Regulatory Commission, a federal appeals court and the U.S. Army Corps of Engineers.
At present, work cannot proceed on 160 miles in West Virginia after a federal permit for stream and wetland crossings was suspended last October after a legal challenge.
The 42-inch pipeline system will run from northwestern West Virginia to southern Virginia, flowing 2 billion cubic feet per day from the Marcellus and Utica shales. There are plans to extend the pipeline south into North Carolina.
The pipeline is owned by joint-venture partners EQT Midstream Partners, NextEra US Gas Assets, Con Edison Transmission, WGL Midstream and RGC Midstream.
Serious Problem for Atlantic Coast and Mountain Valley Pipelines. Two proposed long-haul natural gas transportation projects—the Atlantic Coast Pipeline (ACP) and the Mountain Valley Pipeline (MVP)—are now in peril. That’s the result of a decision by the U.S. Court of Appeals for the Fourth Circuit in Richmond, Virginia in late February. The court didn’t just reject U.S. Forest Service permits for the ACP to cross the Appalachian Trail. They ruled the Forest Service lacks the authority to permit any pipeline crossing the A.T., without an act of Congress. If that stands, it invites a fresh challenge to the MVP project, which is also attempting to transport gas from Appalachia to the Southeast US. The ACP’s lead developer and 48 percent owner Dominion Energy (D) will file an appeal with the US Supreme Court “in the next 90 days.” If that fails, management will have to decide whether to seek an unlikely exemption from Congress, substantially re-route the pipeline or cancel the project entirely.
FERC Plans Environmental Assessments. The Federal Energy Regulatory Commission plans an environmental assessment for two pipeline expansions in Pennsylvania that combined would move natural gas from the Marcellus and Utica shales to markets in the Northeast and Mid-Atlantic. The decision to opt for an EA can mean a somewhat shorter review at FERC, in comparison to a full environmental impact statement. The projects include Transcontinental Gas Pipe Line’s Leidy South Project and National Fuel Gas Supply’s FM100 project.
VV Eureka Resources owns and operates three centralized treatment/recycling facilities that process flowback/produced waters (i.e. wastewater) from the Marcellus Shale. Two of the facilities are located in Williamsport (Lycoming County), PA, and one in Standing Stone Township (Bradford County), PA, near Towanda. Eureka has just announced a joint venture to use high tech to recover lithium from the Marcellus wastewater they process.
Some of Eureka’s treated wastewater is turned into drinkable fresh water. Some of the minerals that Eureka pulls out of the wastewater are turned into road salt. And some of the minerals are turned into salt used for swimming pools.
Now Eureka is partnering with MGX Minerals Inc. to use MGX’s technology to pull lithium–yes the lithium used in batteries–out of Marcellus wastewater. And sell it.
MGX Minerals Inc. and Eureka Resources, LLC have signed a Letter of Intent to form an exclusive joint venture to recover lithium from water produced at non-conventional oil and gas sites across the Marcellus and Utica shale formations in the eastern United States.
Deep natural gas reserves located in the Marcellus and Utica shale account for approximately 40% of all natural gas produced in the United States. The oil and gas operations in this region also generate large volumes of produced water.
Eureka uses advanced treatment technology to convert 10,000 barrels per day of this produced water into valuable co-products, including fresh water, high-purity sodium chloride and calcium chloride. Through this joint venture, Eureka will begin extracting lithium as well.
MGX has developed a rapid lithium extraction technology that eliminates or greatly reduces the physical footprint and investment needed for large, multi-phase, lake-sized, lined evaporation ponds. Its technology also enhances the quality of lithium extraction and recovery across a complex range of brines as compared with traditional solar evaporation. This technology can be used on oil and gas produced water, natural brine, lithium-rich mine brine and industrial plant wastewater.
“We are extremely pleased to partner with Eureka,” stated MGX president and CEO Jared Lazerson. “The joint venture will look not only to install an initial rapid recovery system immediately, but views this as the first step in executing the strategic vision of Petrolithium. The extraction of lithium from oil and gas well sources is a broad paradigm shift for the energy sector. There may be a lot of lithium in the eastern U.S. Our clean technology unlocks this potential. Our joint venture plans to install multiple lithium rapid recovery systems at wastewater treatment facilities across the Marcellus and Utica shale formations.”
“This agreement marks a significant step forward in keeping Eureka in the forefront of advanced produced-water treatment. Through this joint venture, we can help meet the growing need for lithium while simultaneously making a positive environmental impact,” said Dan Ertel, president and CEO of Eureka Resources. “We are pleased to partner with MGX, which brings proven technical and commercial lithium extraction expertise to our business model.”
PA Permits February 28, to March 7, 2019
County Township E&P Companies
- Bradford Wilmot Chesapeake
- Bradford Wilmot Chesapeake
- Lycoming Eldred Inflection
- Potter Allegany JKLM
OH Permits for week of March 2, 2019
County Township E&P Companies
- Belmont Pultney Gulfport
- Belmont Colerain Ascent
- Belmont Colerain Ascent
- Belmont Colerain Ascent
- Belmont Colerain Ascent
- Jefferson Ross EAP Ohio
- Jefferson Cross Creek Ascent
- Jefferson Cross Creek Ascent
- Jefferson Cross Creek Ascent