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EIA: Horizontal Drilling Boosts Gas Production in Pennsylvania, USA

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The U.S. Energy Information Administration (EIA) said in a report that between 2009 and 2011, Pennsylvania’s natural gas production more than quadrupled due to expanded horizontal drilling combined with hydraulic fracturing.

This drilling activity, which is concentrated in shale formations that cover a broad swath of the state, mirrors trends seen in the Barnett shale formation in Texas.

Historically, natural gas exploration and development activity in Pennsylvania was relatively steady, with operators drilling a few thousand conventional (vertical) wells annually. Prior to 2009, these wells produced about 400 to 500 million cubic feet per day of natural gas. With the shift to and increase in horizontal wells, however, Pennsylvania’s natural gas production more than quadrupled since 2009, averaging nearly 3.5 billion cubic feet per day in 2011. Natural gas wells accounted for virtually all (99%) of the horizontal wells started over this period.

Drilling programs in Pennsylvania’s shale formations, like those in other, more established plays such as the Barnett and Eagle Ford in Texas, are migrating to more liquids-rich areas due to the price premium of crude oil and natural gas liquids. The effect of low natural gas prices is apparent in Pennsylvania’s 2012 well count for the first third of the year. From January through April, drilling began on 618 new natural gas wells; over 700 new natural gas wells were started over the same period in 2011. In contrast, 263 new oil and “combination” (oil and natural gas) wells were started in Pennsylvania from January through April 2012, well above the 164 new wells that began drilling during the corresponding period in 2011.

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US Shales: Whether its a Revolution of Evolution, Shale Gas Delivers

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Shale gas enhancing energy supply, security

Whether you call it revolution or evolution, one thing is clear: Shale natural gas is producing jobs and economic benefits across the nation.

This week, shale gas was the focus of a major conference in Houston involving industry representatives, government officials and academics who gathered to discuss the technologies and future of this increasingly important source of energy.

For most of the nation, the contributions of shale gas may seem like a revolution. Shale gas has created thousands of new jobs, meant millions of dollars in new government revenues and enhanced energy security for America.

Of course, those of us who work in and around the energy industry understand that shale gas has been more of an evolution than a revolution.

The technologies used to develop these natural gas supplies aren’t new. Our industry began directional drilling in the 1920s, leading to substantial use of horizontal drilling in recent decades. And we have used the process of hydraulic fracturing since the 1940s. In that time, the industry has safely drilled more than a million wells.

The transformative impact of shale gas is challenging us all to think in new ways.

Not long ago many worried about a natural gas supply shortage in the U.S. But as President Obama recently stated, a “century’s worth … [lies] in the shale beneath our feet.” A decade ago gas from shale accounted for less than 2 percent of U.S. natural gas production. Today it is nearly 30 percent and growing.

As our nation considers this potential, we are reminded of the importance of reliable, affordable energy to our economy – especially during challenging economic times. Affordable supplies of natural gas – driven by the increase in shale production – have helped reinvigorate the domestic petrochemical industry, which relies on gas as a feedstock to make plastics and the other building blocks of modern manufacturing. These supplies are strengthening America’s steel industry, which is building new mills and hiring workers to support shale gas drilling. And areas where production of shale oil or natural gas is occurring are experiencing economic growth, job creation, and increased tax revenue.

For instance, in North Dakota, unconventional oil and gas production in the Bakken Shale has provided enormous economic benefits, with close to $5 billion in direct economic activity in 2009. In Texas, a study of the Barnett Shale formation near Fort Worth estimates it is now responsible for $11 billion in annual economic output and more than 100,000 jobs for the North Texas region. And in Pennsylvania, state labor statistics show 214,000 Marcellus Shale-related jobs at the beginning of 2011. Penn State researchers meanwhile calculate that Marcellus drilling could add nearly $10 billion in value to the Pennsylvania economy this year.

We also must not forget that hydraulic fracturing helps our nation reach our shared goals for responsible environmental stewardship. Natural gas produces about 50 percent fewer greenhouse gas emissions than coal when used to produce electricity for consumers and businesses, and significantly reduces other emissions such as mercury, sulfur and nitrogen oxide. It also uses a small fraction of the water used in coal, nuclear and solar power generation processes to produce a barrel of oil equivalent energy.

To ensure economic and environmental benefits continue, the people of the natural gas industry understand that we must remain firm in our commitment to properly manage the risks involved in drilling operations. That means meeting the highest standards of well design and well integrity. It means training our personnel and contractors to ensure adherence to established operating procedures. It means safely and efficiently handling the water and additives used to fracture wells. And it means working with state regulators to ensure protection of water and air quality.

The United States’ shale gas resources are an extraordinary energy endowment for our country, and our industry knows how to produce these resources safely and responsibly. We must keep these facts in mind as the public and policymakers discuss energy policies – and what increased access and technology mean for the energy industry.

With a commitment to operations integrity, wise development of our shale gas can provide new supplies of affordable, reliable energy in a safe, secure and environmentally responsible manner. And the rise of this resource comes at a time when our country – and the world – clearly needs the economic and environmental benefits that natural gas stands ready to deliver.

Mark W. Albers is a senior vice president at Exxon Mobil Corporation.

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Two energy firms plan Tuscaloosa Marine Shale play

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By TED GRIGGS
Advocate business writer
Published: May 6, 2011

Two energy companies announced plans this week to drill or complete four horizontal wells in the Tuscaloosa Marine Shale, an oil-rich formation that straddles the middle of Louisiana.

A third independent, Amelia Resources LLC of The Woodlands, Texas, has signed a deal with an unnamed partner to help develop the more than 110,000 acres Amelia has under lease.

Devon Energy officials said Wednesday the Oklahoma City-based company has leased around 250,000 acres in the shale. Devon plans to drill two wells in the formation this year, the first of them this quarter.

On Thursday, Dallas-based Denbury Resources announced a joint venture with an unnamed partner that will complete one well and drill another at no cost to Denbury. In late 2009, Denbury acquired Encore Acquisition Co., which had drilled some wells in the shale.

In a news release, Denbury Chief Executive Officer Phil Rykhoek said the company will retain a small interest in future activities in the shale.

“We continue on our oil-focused program and expect many good things in the near future,” he said.

LSU researchers have estimated the Tuscaloosa Marine Shale holds 7 billion barrels of oil.

During Wednesday’s conference call with stock analysts and investors, Devon Executive Vice President of Exploration and Production David Hager said the formation lies 11,000 to 14,000 feet underground and is 200 feet to 400 feet thick.

Hager said Devon believes it can use fracturing technology — pumping in water, sand and chemicals to crack the shale — to increase production in the formation.

The state plans to hold a hearing, possibly by next month, on whether to approve Devon’s request to use hydraulic fracturing for a well near Ethel in East Feliciana Parish. “Fracking” has drawn criticism from environmentalists who say the process contaminates the water supply and places a heavy burden on the resource. The oil and gas industry says those claims are inaccurate.

Hager said vertical wells drilled in the formation had initial production rates of 300 barrels per day.

The three or four horizontal wells drilled in the shale three years ago, which were shorter than Devon plans to drill, tested at rates of up to 500 barrels per day, Hager said.

Those are all reasons for encouragement, Hager said. But Devon needs to get more information on the oil play, including whether the formation can be fractured, and there are risks associated with Devon’s investment.

Still, the company has spent less than $50 million on its leases, and if Devon is successful the company “can create an awful lot of value,” he said.

Kirk Barrel, president of Amelia Resources, said drilling a longer horizontal segment, or lateral, exposes the wellbore to as much rock as possible, and that means the well can produce more oil.

Barrel, author of a blog on the Tuscaloosa Marine Shale, said one of Encore’s wells was drilled horizontally out to 4,100 feet; a typical horizontal section is 4,000 to 5,000 feet long.

However, in the two wells it fractured, Encore only did three stages, Barrel said. Devon’s plans show the company plans to do 13- to 15-stage fracks, which in theory should substantially increase production.

In the south Texas Eagle Ford Shale, “a distant cousin” geologically of the Tuscaloosa Marine Shale, some drilling companies have done 20-stage fracks, Barrel said. In North Dakota’s Baaken Shale, some wells have had 40-stage fracks.

Matt Ross, a spokesman for the Louisiana Oil and Gas Association, said in multistage fracturing, the initial fracturing is done around the point where a well levels out horizontally.

The subsequent fracks are spaced throughout the rest of the horizontal section, Ross said. The spacing depends on the drilling company’s preference.

Meanwhile, Barrel said his firm has placed a significant amount of acreage with an unnamed partner.

Barrel said he could not disclose how much acreage Amelia now has under lease; in February that was more than 110,000 acres.

Amelia is still in the process of adding to its acreage, Barrel said, and he did not know when the partnership might begin drilling.

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