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EQT Offers Lessons Learned in 'Shale Revolution'

Through EQT Corp.'s experience in the "shale revolution" -- the 120-year old company expects to have 100 wells in the Marcellus Shale in southwest Pennsylvania and northern West Virginia by the end of the year -- it has learned several lessons of value to other companies, according to CEO David Porges.

"We're only seeing the beginning of what's happening in the Marcellus," Porges said at the recent Developing Unconventional Gas (DUG) East conference in Pittsburgh. "We are on the way to it becoming a much more substantial part of our country's energy mix."

EQT's productivity has more than doubled since 2008, and improved techniques are the best way to continue to improve production and reduce costs, Porges said.

"We're not going to be going back to $8-10 gas prices as we had in 2008," so EQT is looking to better techniques and technological improvements to improve the economics of its shale drilling. "We are thinking our way to a better cost structure," he said.

EQT has come to depend on techniques, including fishhook design drilling, which reaches an average 1,150 feet of play missed in conventional design pads, and extended laterals, which recover up to twice as much gas at only about a 40% cost increase.

EQT's capital expenditures budget for well development this year is more than $900 million. In the Appalachian Basin the company drilled 702 wells in 2009, of which approximately 60% were horizontal wells in low-pressure shales and tight sands, while the rest consisted of coalbed methane and Marcellus Shale. Almost all were successful.

Porges said the natural gas industry is the "new neighbor" in much of the Marcellus region, and it should act like one -- extending good will to those already in the region and recognizing friends who extend good will in return.

"As an industry we're the good guys and we ought to be ambassadors for our industry and let them know we're the good guys," he said.

Part of that give-and-take should involve making drilling operations more transparent, he said. Early on, EQT decided to disclose the chemicals used in its hydraulic fracking processes on its website (see Daily GPI, July 30).

"Preserving the environment is good business," said Porges, who said the disclosure improved public perception of EQT, which now receives only a fraction of the fracking-related complaints it used to hear.

On the other hand, the industry should "embrace the appropriate punishment of bad actors" who damage the environment -- and the industry's reputation -- he said.

"There aren't inherent risks with hydrofracking," Porges said. "The issue is whether companies are handling their wells properly."

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