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COPYRIGHT 2006 Hart Publications, Inc.
Operators of all sizes are bent on extracting gas from the Paleozoic sediments
of the Appalachian Basin to supply prime Eastern U.S. markets. Tight gas sands, shales, hydrothermal dolomites and coalbed-methane reservoirs are all targets of wide-ranging efforts.
Oil-patch writers often use such adjectives as venerable, aged and mature to characterize the Appalachian Basin. These descriptors are all apt, certainly. But this Paleozoic basin, probed by more than a million wells, also offers fresh and vital gas plays. Layer on its proximity to top markets, a long-established producing tradition and a vibrant community of independents, and the basin's ability to attract investments from throughout the industry is clear.
The great basin stretches from central New York south and west to western Virginia and into Tennessee and Kentucky. It encompasses western Pennsylvania, eastern Ohio and much of West Virginia. It has produced more than 70 trillion cubic feet (Tcf) of gas, and ranks as the largest onshore sedimentary basin in the U.S.
Appalachia offers a cornucopia of reservoirs, quite variable in their characteristics and distributions. The rocks are Cambrian through Pennsylvanian, which means lots of carbonates, black shales, coals and tight sandstones. These ancient sediments have been twisted and deformed through tectonic events, wrenched apart and squeezed together through eons of geologic time. Fluids of all sorts have oozed through the region's faults and fractures, complicating matters further.
A lifetime is not long enough for a geologist to tease out all the oil and gas possibilities in this birthplace of the petroleum industry.
New and improved technologies are at work in the renaissance of Appalachia, such as horizontal drilling, slick-water fracture stimulations, microseismic monitoring, and innovative geologic concepts. And these technologies are especially applicable to the search for unconventional resources and resource plays. Furthermore, less than 1% of the wells drilled in Appalachia reached depths greater than 7,500 feet. Deeper horizons, especially in Ordovician and Cambrian sediments, are true exploratory targets.
The traditional plays are still thriving as well. Appalachia's tight-gas reservoirs are famed for their long and steady productive lives, although per-well rates can be disconcertingly low. Back in the day, typical wells needed to recover a minimum of 200 million cubic feet each; today, thanks to favorable commodity prices, companies can make money with wells that will ultimately produce less than 100 million apiece.
Amazingly, locations can still be found in the heavily drilled Silurian and Devonian sandstone trends. Indeed, in 2005, Pennsylvania alone issued 5,616 drilling permits. In all the U.S., only Texas and Wyoming issued more, reports Denver-based energy-data and consulting firm IHS Energy.
Three-pronged growth
Today, Appalachia is recognized as an area that can deliver production growth, even to large independents such as $3.5-billion-market-cap, Fort Worth-based Range Resources Corp., which produces 105 million cubic feet of gas per day from its Appalachian division, known as Great Lakes Energy Partners LLC. It also makes about 50,000 barrels of oil per month, mainly from Clinton wells in Ohio.
Appalachia fits well into Range's three-pronged growth plan: the basin offers a stable base of proved reserves, multi-year inventories of development locations, and upside potential in emerging plays. This year and next, Range targets company-wide production growth of 15%, and Appalachia is one of its workhorses.
The independent owns 2.1 million gross (1.9 million net) acres in the basin. This year, it budgeted $170 million to drill 750 wells in the region, in four focus plays, says Steven Grose, Hartville, Ohio-based senior vice president and division manager. "About 90% of our budget is for development drilling."
A major effort targets coalbed methane (CBM). Close to 250 wells are planned this year, mainly in Virginia. Range's prize properties are its Nora and Haysi fields, where it holds 287,000 acres and has 2,700 well locations on 60-acre spacing. Of those, 624 are proven undeveloped locations and 2,100-plus are unproven and not yet booked. Geologic definition on the play is quite high, thanks to 50 core holes in the coals, more than 1,050 CBM wells, and 550 deeper conventional wells in the fields. The company operates Haysi Field, and Equitable Resources operates Nora.
The Virginia wells recover an average of 400 million cubic feet per well from depths of 2,500 feet. In an exciting...
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