PITTSBURGH, Pa. — Economic booms are ahead for the Utica and Marcellus shale areas, but patience is needed for it to happen.
Kristen Holmquist, the manager for natural gas liquids for Bentek Energy, spoke March 20 at the Hart Energy’s 2012 Marcellus Midstream conference in Pittsburgh, Pa.
Holmquist told the crowd there are 1,000 gas wells drilled in the Marcellus shale layer that have not been fracked.
She said there are a couple of reasons why they have not been fracked. One is that there is a lack of demand in the marketplace and a shortage of hydraulic fracking crews.
Fracking, or hydraulic fracturing, is a technique used by the energy industry to extract oil and gas from rock by injecting high-pressure mixtures of water, sand or gravel and chemicals.
According to the Ohio Department of Natural Resources permitting list, there are 14 Utica shale wells waiting to be fracked in Ohio and five Utica shale wells with rigs onsite to begin fracking.
Holmquist also told the group that natural gas liquids and natural gas prices have a large impact on the economics of Marcellus and Utica shale plays.
However, now that Shell has announced a cracker plant for Beaver County, Pa., and refineries have been announced by Chesapeake for eastern Ohio, things may be changing fast.
One of the issues has been a lack of infrastructure for the compounds coming out of the ground to be turned into what the marketplace is looking for such as ethane, propane and butane.
Stan Chapman, a senior vice president at NiSource Gas Transmission and Storage, said infrastructure will not be cheap. The estimates are that it will cost $2 million per mile to construct pipeline.
The glut of gas on the market has slowed development in the dry gas areas. However, the Utica shale is a wet gas area but without infrastructure, it could also run into problems which makes it very important for refineries and pipelines to be built in eastern United States.
Rodney Waller, senior vice president of Range Resources Corp., said the Marcellus shale has been over-drilled and it has had a direct impact on market, tied in with warm winter weather most of the United States experienced this year.
He said that although the Utica shale layer drilling is in its infancy, he is worried natural gas liquids will also be over-drilled and that will drop the price of the components of the liquids being found in the Utica shale.
Waller said Range has drilled only 10 percent of its holdings in the wet gas area of the Marcellus shale. He said Range has 210,000 areas leased in the liquid rich area and 125,000 acres in what he described as the super rich Marcellus shale area.
He told the crowd that it is very important that drillers figure out what “we did right in the Marcellus shale and find out how to do it in the Utica shale.”
“The Marcellus shale and Utica shale are new springboards of opportunity for everyone,” said Waller.
Pennsylvania Lt. Governor Jim Cawley said the Marcellus shale has been a game changer for the state. He estimated 75 percent of the jobs in the field are going to Pennsylvania residents and the average wage for jobs has been $77,000.
However, Cawley said the work is not over when it comes to the creating economic activity. Cawley said the governor’s office is very excited about the Shell petrochemical complex coming to the state, but added there is a lot to be done before construction can begin.
“We will not rest until we have that sited here in Pennsylvania,” said Cawley. “It’s not enough to just drill here. We have to use it (natural gas and natural gas liquids) here too.”
Marc Halbritter, managing director of commercial activities and gathering for Dominion Transmission Inc., said all 14 Utica shale wells producing are tied to the Dominion system. There are three Marcellus tied to the system.
He said there are already almost 100 miles of existing large diameter high pressure pipelines converted to create a wet gathering system connected to Hastings extraction plant in W.Va..
The pipelines will also be connected to the Natrium gas processing and fractionation plant, which is under construction on the Ohio River in W.Va.. and will be online in December 2012. It will allow Dominion to ship products through pipelines, barges, rails and trucks.
The future plans also call for a future processing site in Augusta in Carroll County, Ohio, and one in Lewis, W.Va, according to a map in Halbritter’s presentation.
There are 40 miles of new pipeline planned to get the gas from the wells to the plants.
Each company presenting talked about their plans in relation to the Marcellus and Utica shale gas plays, but most commented on the infrastructure needed to get it to market now that it is found.