Carrizo Oil & Gas Inc. has nearly completed a vertical test well in New York State’s portion of the Marcellus Shale and will make its next move in the play once geological samples are analyzed and regulatory uncertainty in the state clears.
According to permit data from the state Department of Environmental Conservation (DEC), Carrizo’s operator in the play — Carrizo (Marcellus) WV LLC — has drilled the Wetterling #1 well in Tioga County, in a rural area off McHenry Road and about three miles northeast of the Town of Owego.
Richard Hunter, Carrizo vice president of investor relations, told NGI’s Shale Daily the Wetterling well is being drilled to a depth of 5,000 feet and will target only the Marcellus. “We have no plans on turning it into a horizontal well,” Hunter said Thursday. “It’s simply an evaluation well for collecting rock properties. We’re going to log it and take a core, and that’s all we have planned to do.”
Although high-volume hydraulic fracturing (HVHF) is currently illegal in New York, drilling wells that don’t use the practice is legal.
The DEC had been working its way to a several-times delayed conclusion of supplemental generic environmental impact statement (SGEIS), begun in 2008 which effectively placed a moratorium on most of the shale development in the state (see Shale Daily, Dec. 10, 2010).
A decision was on HVHF was anticipated before the end of the year, but last month DEC Commissioner Joseph Martens asked Health Commissioner Nirav Shah to conduct a health impact analysis of the practice (see Shale Daily, Sept. 24). Industry analysts and others believe the decision will probably cause enough of a delay to require an additional public comment period (see Shale Daily, Oct. 4; Oct. 2).
Geologic data and regulatory uncertainty aside, Hunter said Carrizo would be very interested in drilling in New York State if it appeared profitable.
“Certainly we would be interested if all of those things are the case,” Hunter said. “But we don’t think this is going to happen anytime soon. And there is a good possibility that by the time all of these things come to be true, all of our leases will have expired.”
Last year Carrizo formed a joint venture (JV) with a private equity company, Avista Capital Partners (see Shale Daily, Oct. 3, 2011). Its first acquisition was 15,000 net acres in the Utica Shale in eastern Ohio and northwestern Pennsylvania.
Hunter said Carrizo owns a 50% interest in 16,000 net acres in New York State. He said the leasehold lies in three counties — Broome, Chemung and Tioga — all of which have been mentioned as potential development counties by Gov. Andrew Cuomo (see Shale Daily, June 14).
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