Range Resources Corp. set the Appalachian Basin's latest record on Monday, announcing that its first unconventional Utica Shale well in southwest Pennsylvania reached an average 24-hour peak production rate of 59 MMcf/d.
Range joins a series of companies in recent months that have released encouraging initial production rates from the Utica Shale outside the dominant area of operations in southeast Ohio. All of those, however, have come from West Virginia. Range is the first to announce results from the Utica in Washington County, PA, an area where operators have been heavily focused on wet gas from the Marcellus Shale.
Range flared the Utica well, though, and no gathering infrastructure is in place. The 59 MMcf/d rate was factored with simulated pipeline pressure, which Wells Fargo Securities analyst David Tameron said makes it difficult to gauge the well's true potential.
The Utica sits about 3,000 feet below the Marcellus in southwest Pennsylvania, and when Range first discussed its plans to drill the well earlier this year, it said the task would be a difficult one with that higher pressure regime (see Shale Daily, June 5; March 26).
"We believe this is a record for any horizon drilled in the Appalachian Basin and also represents the highest [initial production] rate of any Utica well," the company said.
Stone Energy Corp., Chevron Appalachia LLC, Magnum Hunter Resources Corp. and Gastar Exploration Inc. have all released Utica test results ranging from 25 MMcf/d to the previous record of 46.6 MMcf/d in West Virginia (see Shale Daily, Sept. 25; Sept. 8; Dec. 9). Range, which drilled the basin's earliest exploratory Utica well in northwest Pennsylvania in 2009, said its latest Utica well has a total depth of 11,693 feet with a 5,420 foot lateral. The well was completed with 32 horizontal hydraulic fracture (frack) stages and will now be shut-in for 90 days while it's connected to gathering infrastructure.
While Tameron said the results provided a momentary break from the static of falling oil prices, Range also said it was cutting next year's budget by 18% from 2014 levels given the challenging commodity price environment.
But Tameron added that the company's move to cut capital spending wasn't necessarily a bad thing. Falling costs in the Marcellus Shale, where Range is a leading producer, and a production growth forecast of 20-25% -- unchanged from previous announcements -- are both positives for the company, he said.
Range said it would budget $1.3 billion for next year's operations, down from a 2014 budget of $1.52 billion. The company will spend $1.06 billion for drilling and recompletions, $155 million for leasehold and renewals, $55 million for pipeline tie-ins and facilities, and $25 million for seismic and other activities.
An overwhelming majority of next year's spending, or 92%, will go toward the Marcellus Shale, while 4% will be spent in Virginia's Nora Field and another 4% will be spent in the Midcontinent.
Range said it would increase the average lateral lengths of its Marcellus wells to 6,200 feet and complete them with 31 frack stages next year in order to optimize production.