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Range Expects to Double Marcellus Output in 2010

Learning how to tap successfully into the Marcellus Shale has come at a big cost and a lot of work, and the producer continues to find ways to become more cost efficient, Range Resources Corp. COO Jeff Ventura said Tuesday.

After entering the Marcellus in 2004, Range now is one of the top producers. Innovation has followed innovation by the "technical guys doing a good job of driving up performance and driving down costs," said Ventura, who was a keynote speaker at PennWell Corp.'s Unconventional Gas International Conference and Exhibition held in Fort Worth, TX.

By Range's estimates the Marcellus Shale, with 101 rigs in operation, already is producing a total of 1.4 Bcf/d of gas -- a figure that is above the 2010 exit rate forecast by Penn State University researchers (see Daily GPI, Sept. 20).

The learning curve has been quick, said Ventura. When Range first began to drill wells in the Marcellus six years ago, "we were spending a lot of money for not a lot of production..." Longer laterals and more hydraulic fracturing (fracking) stages weren't always cost efficient. In some cases, closer well spacing and refracks were a better way to go.

Three years later the company began to turn it around -- and how.

"2007 was a key year for us," Ventura recalled. "We made a decision to open an office in Pittsburgh and focus only on the Marcellus." That year Range had built a portfolio that included 650,000 net acres spread across the Appalachian Basin. Range drilled 44 vertical and 15 horizontal wells across the "full fairway," and established contracts with key service companies, pipe suppliers and drilling contractors "to bring Barnett-style equipment to the Appalachian Basin."

After adjusting its completion techniques, Range's last five horizontal wells in 2008 had initial production rates of 1.4-1.7 MMcfe/d, said Ventura. "We cracked the code...and ended the year drilling a string of successful wells."

By 2008 the Marcellus buzz was generating some heat, and Range wanted more land and more infrastructure.

In June 2008 Range and MarkWest Energy Partners LP agreed to develop infrastructure in the Marcellus, and Range secured firm transportation capacity for 15 MMcf/d, with plans to expand capacity as the play developed (see Daily GPI, July 15, 2008).

Range also that year bumped up its lease holdings by 20% to 850,000 net acres -- 1.4 million acres gross. Staff determined that the Marcellus had both wet gas and dry gas areas, Ventura recalled. The company established a drilling and contractor base and ran the first 3-D seismic surveys to target shale.

By the beginning of 2009 Range was producing about 30 MMcf/d in the Marcellus. By the end of the year it was producing 100 MMcf/d.

This year Range's gas production exit rate in the Marcellus is expected to double to 200 MMcfe/d, and Ventura said "we're well on our way to do that." And the exit rate for 2011? It's forecast to double again to end the year at 400 MMcfe/d.

Gas is good, gas is great, but Range is not unlike a lot of shale gas producers working to add more natural gas liquids to the production mix. There isn't a consensus on how the Marcellus might stack up against the liquids-rich plays, like the Eagle Ford Shale in South Texas. However, Ventura said some analysts think the wet gas in the Marcellus may be the "best or second best to Canada...Even in the southwestern dry gas area, wet gas stacks up pretty well."

Today Range's estimated resource potential in the Marcellus Shale has increased to 20-27 Tcfe, Ventura noted. "That's just Range's position, conservatively calculated...Put that in perspective: we entered the year at 3.1 Tcfe." 

It's not just about producing gas, he said. Range also works to be a partner with its neighbors. Water recovery has been factored in since the beginning. When Range imported Barnett Shale technology, it brought with it the slick water techniques that had worked in Texas.

"When we brought slick water into the Appalachian Basin, then we had to deal with a lot of water," Ventura said. "Even today less than a handful of saltwater disposal wells exist. It's a common thing to reinject water after you're done" drilling. "But that doesn't exist in Pennsylvania."

To solve the water recycling issue, engineers went back to the drawing board. "It's taken a lot of innovation," he said. "Fortunately we kept plowing forward on new recycling techniques and by December we were recycling almost all of our water...That leads to zero discharges. No water to any streams, and on the front end, it reduces our water needs."

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