Shale Daily / NGI All News Access

Boardwalk Building Marcellus System for Southwestern

A unit of Boardwalk Pipeline Partners LP plans to build a $90 million gathering system in northeastern Pennsylvania to connect Southwestern Energy Co. wells in the region to the Tennessee Gas Pipeline Co.'s (TGP) Line 300.

The 15-year agreement between the two companies calls for building a new natural gas gathering system in Susquehanna and Lackawanna counties, where Southwestern leases a block of acreage it calls the Price area.

The proposed 275,000 Dth/d gathering system would include approximately 26 miles of 12-inch diameter high-pressure pipeline and a low-pressure in-field gathering pipeline, as well as associated compression and dehydration facilities. The companies did not offer a timeline for the project, other than to say it would be "built out over several years."

Although active in northeastern Pennsylvania, Southwestern only recently began focusing on Susquehanna County.

Through the first six months of the year, the company produced 9.7 Bcf from 18 Marcellus wells, all in Bradford County, according to the most recent figures from the Pennsylvania Department of Environmental Protection (DEP).

This past summer, though, Southwestern brought a second rig into Pennsylvania to begin developing its acreage in neighboring Susquehanna County. The company has spudded 14 Marcellus wells since early July, according to the DEP.

The majority of those wells are in Lenox Township, along the Lackawanna County line.

Susquehanna is the third most active county in the Marcellus, with 207 permits issued and 147 wells drilled this year through the end of September, according to the DEP. Lackawanna, just to the south, is one of the least prolific. Exco Resources Inc. drilled the only Marcellus well in the county, but plugged it last September. Southwestern holds the only active permit in the county, but does not appear to have any plans to drill there in the immediate future.

Southwestern holds 173,000 net acres in the Marcellus of northeastern Pennsylvania, which places the company as the 17th largest acreage holder in the play. According to company reports and NGI's Shale Daily calculations, the top five net acreage holders in the Marcellus are Chesapeake Energy with 1.75 million net acres, followed by Range Resources (1.048 million acres), Consol Energy (750,000 acres), Seneca Resources (745,000 acres) and Chevron (714,000 acres).

Earlier this year Southwestern signed a long-term agreement with a subsidiary of DTE Energy Co. to build and operate a 37-mile gathering system connecting Southwestern's Range Trust area in Susquehanna to Millennium Pipeline Co. in Broome County, NY, to the north and the TGP 300 line to the south (see Shale Daily, July 6).

The company plans to increase operations, according to Southwestern CEO Steve Mueller. "I wouldn't be surprised if we exit next year with roughly five rigs running in the Marcellus," he said during a second quarter conference call.

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