The Marcellus Shale in Pennsylvania is generally divided into two regions, the northeast and the southwest, but increasingly the stretch of fairway between those regions is gaining prominence.

While statewide shale production jumped 60% between the end of 2010 and the beginning of 2011 (see Shale Daily, Aug. 17), it tripled in neighboring Clearfield, Centre and Clinton counties in central Pennsylvania to 15.9 Bcf in the first six months of 2011 from 5.2 Bcf in the last six months of 2010.

And the activity is not confined to those counties. Between January and July of 2009, the Pennsylvania Department of Environmental Protection (DEP) issued 10 permits in nearby Elk and Jefferson counties and operators reported drilling two wells. During the same period this year, the DEP issued 93 permits and operators reported drilling 26 wells.

Counties in the northeastern and southwestern parts of the state also saw large production increases in the first six months of 2011 over the last six months of 2010, according to the DEP. In the northeast, Bradford County’s production increased from 65.8 Bcfe to 117.6 Bcfe, while Susquehanna County increased from 60.8 Bcfe to 82.9 Bcfe. In the southwest, Greene County jumped from 31.8 Bcfe to 51.1 Bcfe and Washington County increased from 35.5 Bcfe to 48.4 Bcfe.

The most active companies in the region include well known names like EOG Resources Inc., Seneca Resources Corp., Anadarko Petroleum Corp., EXCO Resources Inc. and Williams Companies Inc.

In addition to its 50,000 acres in prolific Bradford County in northeastern Pennsylvania, EOG operates on 160,000 acres in Clearfield and Elk counties through a 50/50 joint venture with Seneca. The companies drilled 15 wells on their acreage in 2010 using a new “high-rate” completion strategy and the early results show that while central Pennsylvania lags behind northeastern Pennsylvania, it is still promising.

EOG reported initial production (IP) rates between 7 MMcf/d and 9 MMcf/d from its wells in Clearfield and Elk counties, compared to IP rates between 10 MMcf/d and 15 MMcf/d from its Bradford County wells.

And while drilling in each region costs roughly the same amount, about $5 million per well, EOG has an estimated ultimate recovery (EUR) of 4 Bcf per well in Bradford compared to 3.5 Bcf in Clearfield and Elk. As a result, EOG estimates that it can earn a 40% rate of return in Bradford, compared to a 30% rate of return in Clearfield. Those results, though, are better than expected, according to EOG CEO Mark Papa.

“As more data becomes available, our perception of the Marcellus has improved,” Papa said in an earnings call in February. “Data to date had indicated two sweet spots, one in the southwest near Pittsburgh and one in north central Pennsylvania in the Bradford County area near the Pennsylvania-New York state line. It was thought that the area between these sweet spots was of lesser quality, but our Clearfield County results indicate at least a portion of the intervening acreage is excellent.”

He added that those early drilling results suggested “a trend of good gas productivity all the way from the New York state line down to Pittsburgh” that would require additional drilling to prove up.

Details remain scarce from other companies, but interest remains strong.

EXCO now holds about 55,000 net acres in its “Central Development Area” over Jefferson and neighboring Armstrong counties, and plans to drill about 18 wells in that general area this year. The company produced nearly 1 Bcf from 11 wells in Centre County during the first half of the year.

EXCO and its long-standing joint venture partner, BG Group plc, also bought acreage in Jefferson and nearby Clarion counties for $82 million in March, which CEO Douglas Miller called “a cheap deal.” The company plans to drill as many as eight appraisal wells on its central Pennsylvania acreage this year.

While EXCO and EOG are drawing distinctions between their northeastern and central Pennsylvania acreage, Anadarko appears to be focusing on its acreage as a single unit (see Shale Daily, June 16).

Anadarko holds about 90 permits in Clinton and 39 permits in Centre. Through the first six months of the year the company produced 5.7 Bcf from 19 wells in Clinton, the entirety of the production from that county, and 1 Bcf from four wells in Centre, more than half of the total production from that county.

Those projects and others in the region could benefit soon from a midstream project proposed by National Fuel Gas Supply Corp., a subsidiary of National Fuel Gas Co., the parent company of Seneca.

The West-to-East Project would include 82 miles of pipeline through Elk, Jefferson, Clearfield, Cameron and Clinton counties, as well as two compressor stations. It would transport 425 MMcf/d of Marcellus gas to a market center in Leidy, PA. National Fuel Gas Supply hopes to bring the system online in late 2013 or 2014.