DUG East 2015: Drilling is slow in 2015, however recovery is near

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John Staub, United States Energy Information Administration

PITTSBURGH, Pa. — One thing was clear at Hart Energy’s 2015 DUG East conference: Interest and drilling is growing in the Marcellus shale over the Utica shale.

Why?

Prices being paid for gases like ethane, which are prevalent in the Utica shale, are lower, and the cost of drilling in the Utica is higher.

John Staub, United States Energy Information Administration, described the Marcellus shale as the largest shale play over the long term. He said that the Marcellus will produce 147 trillion cubic feet between 2014 and 2040. He said the Utica will only produce 27 trillion cubic feet in that same time period.

Historically, Staub said, shale gas production was only 5 percent of the total dry gas production in 2004. By 2007, the shale gas production accounted for 10 percent of the dry gas production. Then 10 years later, in 2014, the amount was 56 percent. When questioned about why, when the Utica had been thought of as being a mass producer,

Staub said it’s partly due to geography, as well as the quality of the wells, when it comes to looking at the natural gas liquids, oil and gas produced in the Utica shale. Staub expects other geological layers in Appalachia to become more economical to produce gas and oil from as technology progresses.

Stacking plays

Most of the companies that presented at Hart Energy’s 2015 DUG East Conference, said what is making them profitable is their ability to stack plays — or drilling Marcellus, Utica and Upper Devonian wells on the same pads.

Consol Energy

Craig Neal, vice president of operations at Consol Energy, said that its Marcellus shale production grew by 93 percent in 2014 compared to 2013. Neal said Consol has the potential to produce 30 trillion cubic feet of natural gas, and said Consol will be concentrating on Ohio’s dry gas as well as Pennsylvania and West Virginia.

Neal added the dry Utica shale is being aggressively tested in the northern West Virginia and Pennsylvania where Consol holds 100 percent working interest in approximately 496,000 net acres.

Neal said Consol plans on increasing the investment on the dry Utica and Marcellus shale, but keeping it flat on the wet Utica. In addition, he said Consol plans on spending more to drill in the dry Utica in Ohio and the Marcellus shale in West Virginia and Pennsylvania.

Rice Energy

Derek Rice, executive vice president of exploration for Rice Energy, had much of the same sentiment. He said Rice Energy has 90,000 acres in the Marcellus shale in Greene and Washington counties in Pennsylvania that have 95 percent dry gas potential and 25 percent wet gas.

Rig count

Besides where companies are drilling, the number of rigs operating has also decreased. For example, Range Resources plans on drilling only two new Utica shale wells in 2015. Eclipse Resources only has one rig operating in 2015-2016 and claims it is directly related to commodity prices.

Consol Energy reported bringing five wells online the first quarter of 2015 but alluded to no big increase in bringing wells online through the rest of the year. Although, the companies represented made it clear that drilling and bringing wells online have been slowed by commodity prices, they appeared to be confident that the prices will eventually rebound and the drilling frenzy will begin again.

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