The Appalachian Basin is still a puzzle, but there is no lack of enthusiasm for those trying to solve all the value it may hold.
After roughly seven years of unconventional exploration and development, more natural gas and liquids are flowing in Ohio, West Virginia and Pennsylvania. Operators are accelerating their development plans and maximizing their estimated ultimate recoveries with longer laterals, shorter fracturing (fracking) stages and well pads that seem to expand by the month.
More important, though, the parameters of the basin continue to shift. The Utica Shale has not yet been clearly delineated in a way that presents a sweet spot that the industry can agree on. Similarly, the Upper Devonian formations across the basin, particularly in Pennsylvania, are only now being tested by horizontal wells. Meanwhile, the veritable Marcellus Shale continues to surprise producers with the high volume of varying hydrocarbons across a fairway that straddles three states.
"I hear this a lot,” said Consol Energy Inc.’s Andrea Passman, director of engineering for gas operations, at the NAPE East business conference in Pittsburgh on Wednesday. “Even before I moved here, people would say 'there's a great opportunity, we'll get there. Everyone kept saying to me 'we'll get to where the Barnett and the Eagle Ford and the Permian Basin are...We're not going to get there; we already are there. We are in the development, we're trying to get to gas factory mode. This is a great chance to accelerate what we saw in other basins and do it much quicker here in the Appalachian Basin."
Passman joined Consol this year along with other executives, including Timothy Dugan, who was appointed COO of the company's exploration and production division in January (see Shale Daily, Jan. 28). Consol is bolstering its transition from coal-focused to one focused on natural gas (see Shale Daily, Jan. 31, 2013; Oct. 28, 2013).
The Appalachian Basin's moving parts, such as the new technologies that are being tested, the constant learning curve and the improving prospects that new lessons bring, have helped to lift Consol and other operators’ production. On Tuesday, Consol announced it had nearly doubled year/year production in 1Q2014 because of the Marcellus (see Shale Daily, April 8).
"Consol is largely focused on getting to gas factory mode,” said Passman. “That includes a focus on capital efficiency; a focus on optimizing our completion programs in the Marcellus and Utica and really driving forward with development of multi-play stacked laterals.”
Like many operators across the basin, Consol’s average lateral lengths are extending; the average lateral of its wells is set to increase this year to 7,500 feet at most locations and stretch as long as 10,000 feet in a few others. The company is completing wells with frack stages spaced at 150 feet or less, which means 60-70 stages per well, Passman said. Meanwhile, it is considering constructing drilling pads that can handle between 18 and 24 wells.
But a large part of the Appalachian puzzle for Consol is all of the basin's targets, from the Marcellus and Utica, to the Rhinestreet and Burkett. Although development is accelerating in Ohio's Utica, Passman called it an entirely "different animal." Operators, she said, cannot often transfer what they've learned or the techniques they've applied in shallower formations in West Virginia and Pennsylvania.
"The Utica looks to me a lot like the Eagle Ford” in South Texas. “I see many similarities in how we developed the Eagle Ford and how we're developing the Utica," said Passman, who once worked as a consultant for oilfield services giant Halliburton Co. "That's a great thing because we've already done it once before, but the multistage development of the Utica presents some interesting challenges in terms of how we're using our completion technologies because it's not the Marcellus."
That same challenge also applies to the Upper Devonian formations, Passman said.
"The opportunity for the multi-play stacked lateral is massive out here. It is great that we discovered that so early," she said. "But the Burkett looks very different than other shale plays in terms of how it's producing, we've yet to see any kind of decline in the Burkett, which is fascinating."
The basin's multiple pay horizons could mean at least 35 years of sustained development, Passman said. Talisman Energy Inc.’s Rick Kessy, vice president of the Marcellus delivery unit, said at the conference he thought development in the basin could last 100 years.
Passman said she didn't believe development had even hit full stride in Ohio, as many analysts and other operators have noted. She argued that operators would need to keep delineating acreage in some parts of the state. There remains little knowledge about the play's oil window and she projected that activity would increase significantly in early 2015.
MarkWest Energy Partners LP's Greg Floerke, senior vice president of the Northeast division, agreed, adding that the midstream operator can't yet predict what peak production in both the Utica or the Marcellus might look like in the future. With 385 MMcf/d of gathering capacity and another 585 MMcf/d of cryogenic processing capacity, MarkWest is Ohio’s largest processor of wet gas (see Shale Daily, Feb. 3). It also has 2.2 Bcf/d of processing capacity in the Marcellus and is currently at work on another 19 projects in the Appalachian Basin.
"I think what's unprecedented is the rate at which we're building some of these processing facilities. I was down in the Barnett. I worked there and it was bone-dry gas," Floerke said. "The western Marcellus and the Utica are so different. It's rich gas, there's a lot of liquid and it has a high ethane content.
"The last thing a midstream company wants to do is overbuild," he added. "The fact that we are continuing to build and expanding the way we are is testament to how confident we are that the drilling and production will continue here."