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Chesapeake Drills Vertical Rogersville Tests; More Permits Issued in Play

Chesapeake Energy Corp. has become the latest operator to sink its drill bits into the Rogersville Shale, with two vertical test wells in Eastern Kentucky's Lawrence County, according to the Kentucky Geological Survey (KGS).

The company has long held reserves in both Kentucky and West Virginia, where the formation is thought to be prospective. Land records in Kentucky show that it has more than 100 leases there, but the company has not commented about its activity.

Head of the Energy and Minerals Section at KGS David Harris added that the state also recently issued another horizontal permit for one of Chesapeake's vertical wells in the county. Speculation about the play's prospects have persisted even after disappointing vertical test results from a Cimarex Energy Co. subsidiary were released by Kentucky regulators in August (see Shale DailyAug. 20July 24). In addition to Cimarex, Chesapeake now joins EQT Corp. and Cabot Oil & Gas Corp. in ongoing efforts to test the shale in both states.

Six Rogersville test locations have been permitted in the last two years, while just five wells have been drilled. Only one of those is a horizontal well, drilled by EQT Corp. subsidiary Horizontal Energy Technology Inc. in Johnson County, KY. Plans for more sites, however, appear to be increasing.

West Virginia Department of Environmental Protection spokeswoman Kelley Gillenwater confirmed Friday that Charleston-based Hard Rock Exploration Inc. has applied for a vertical Rogersville test permit in Putnam County, in the same area where Cabot has already drilled a vertical Rogersville test. Gillenwater said the application proposes a total depth of 15,000 feet and a land disturbance of 3.26 acres.

She stressed, however, that the agency has not yet issued a permit for the application, which was filed in September.

"The time it takes to approve a permit just depends on the information we get," she said. "Whether we have any questions, etc." Gillenwater added that no other Rogersville permit applications have been filed in the state.

In August, Cimarex's Sylvia Young No. 1 well in Lawrence County, KY, showed initial test volumes of only 19 b/d of oil and 115 Mcf/d of natural gas, according to a completion report released by the Kentucky Division of Oil and Gas. The well was drilled vertically to 11,967 feet. Harris said that "while these volumes are modest, the first vertical well may not reflect the potential of the zone."

In Putnam County, Cabot's No. 50 Amherst Industries vertical well has been drilled. Harris said it is currently producing dry gas to a sales line. But it could be a year or more before any additional Rogersville production data is released by Kentucky and West Virginia regulators, as operators have either been granted or are expected to ask for confidentiality to protect that information, as Cimarex did with its Sylvia Young well (see Shale DailySept. 23).

After it submits records from the first horizontal well, a Kentucky Energy and Environment Cabinet spokesman recently told NGI's Shale Daily that EQT could request up to a year of confidentiality under state law. In April, Cabot requested its well record be kept confidential. The West Virginia Conservation Commission granted that request, meaning a completion report and even production data from Cabot's Amherst Industries well could be kept confidential for up to three years.

Cimarex has also permitted a second Rogersville well to the south of its Sylvia Young site, which was also recently issued a horizontal permit, according to KGS.  EQT, Cabot and Cimarex have not commented about their efforts in the Rogersville. A small company founded in 2003, Hard Rock Exploration has been touting the Rogersville's potential, setting up at least one booth at a recent industry conference in Pittsburgh to detail the play’s geologic characteristics.

The company has not commented about its permit application, but its main prospects currently span about 65,000 acres in six counties across Southwest West Virginia in an area that includes Putnam County. The company also employs horizontal drilling techniques.

Chesapeake's objective in the Rogersville is unclear. While it counts the Appalachian Basin among its core operations, it has primarily concentrated on the Utica and Marcellus shales. As it confronts billions in losses and property impairments, the company said during its third quarter earnings call in November that it's working to sell $200-300 million in noncore assets by early next year (see Shale DailyNov. 4).

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