Range Resources Inc., which two years ago turned away from the Barnett Shale and toward the Marcellus Shale, saw its overall production boom in 3Q2012, based in large part on a surge of Marcellus gas, according to CEO Jeff Ventura.

Range recently said it had beaten its 3Q2012 forecast for natural gas and natural gas liquids (NGL) production, with output up 47% year/year (y/y) and 10% sequentially (see Shale Daily, Oct. 12). Natural gas accounted for more than three-quarters (79%) of the total three-month net output at 623.3 MMcf/d, which is 52% higher than in 3Q2011. NGLs accounted for 15% of the quarterly production at 20,040 b/d, while oil claimed 6%, or 7,748 b/d.

“This year we drilled in the dry gas portions of the Marcellus Shale in the northeast, which for us centers in and around Lycoming County, PA…we ran four, and at times up to five rigs in this area,” Ventura said during a conference call with analysts Thursday. The Southern Marcellus Shale Division brought online 68 horizontal wells in southwest Pennsylvania during 3Q2012, with 24 wells in the super-rich area, 40 wells in the wet area and four wells in the dry area.

“By January 2013 we plan to be down to one drilling rig here. The reason is at this point we can run one rig and still hold the key acreage we want to keep in that area, given the continuous drilling clauses that we have, coupled with the larger tracts in general than in the southwest part of the play. Therefore, given the relatively low price of dry gas as compared to wet gas and oil, for 2013 we’re planning to focus on the wet and oily areas of our portfolio.” Those areas include the wet portion of the Marcellus and the horizontal Mississippian oil play in northern Oklahoma and southern Kansas.

“The good news is that our two most economic plays happen to be where we need and want to drill to hold acreage,” Ventura said. Preliminarily, Range expects to grow volumes in 2013 by 20-25% compared with 2012.

Earlier this year Range said its Marcellus Shale leasehold may have the long-term potential for 24-30 Tcf of reserves (see Shale Daily, July 26).

“Combined between the wet and dry portions of the play, we believe that we can possibly grow the Marcellus production alone to 2-3 Bcfe/d,” Ventura said. “In addition, we believe a lot of this acreage is prospective for both the Upper Devonian and Utica shales and would allow us to leverage existing Marcellus infrastructure,” opening the possibility for production beyond the 2-3 Bcfe/d estimate, he said.

“We’re on track to achieve 35% year-over-year growth for 2012 versus 2011 within our capital budget of $1.6 billion.” When the budget is set in December, it will likely include reduced capital spending, Ventura said.

Range posted a 3Q2012 net loss of $53.8 million (minus 34 cents/share), compared with a $34.8 million (21 cents) profit in 3Q2011. Revenue for the quarter was $295 million, compared with $370.6 million in 3Q2011.

During the quarter, Range reached a 15-year agreement with Sunoco Logistics Partners LP to anchor the Mariner East pipeline project, which includes processing and export facilities to connect natural gas liquids (NGL) in southwest Pennsylvania to Sunoco’s port at its Marcus Hook facility near Philadelphia (see Shale Daily, Sept. 28). Range would have firm transport capacity of 40,000 b/d (20,000 b/d of ethane and 20,000 b/d of propane). Once transported to Marcus Hook, the ethane and propane will be fractionated into purity ethane and propane for delivery to domestic and international customers.

In addition, a Range subsidiary recently struck a 15-year ethane sales agreement with INEOS Europe AG for delivery at Marcus Hook. INEOS, a manufacturer of petrochemicals, specialty chemicals and oil products, plans to use its own ships to take delivery of the ethane. Contracted volumes will start at 10,000 b/d in the first half of 2015 and eventually increase to 20,000 b/d, Range said.

Participation in Mariner East and Range’s previously announced Mariner West (see Shale Daily, Sept. 8, 2011) and ATEX (see Shale Daily, Jan. 27) plans “ensure that we’ll be able to meet gas pipeline specifications in a timely manner, they give us operational flexibility, and they enable us to build and grow our wet Marcellus production volumes,” Ventura said. The projects allow Range to potentially grow Marcellus volumes in the wet portion of the play up to 1.8 Bcf/d and add about 40 cents/Mcf to the company’s effective gas price, he said.

Range sold most of its Barnett leasehold two years ago to concentrate its exploration efforts in the Marcellus (see Shale Daily, Oct. 29, 2010). The company’s capital spending plan doesn’t include any more drilling in the gassy Barnett Shale. The company “has elected not to drill the last remaining Barnett undeveloped leasehold, which it had retained when the Barnett properties were sold in 2011. The Barnett undeveloped leasehold will increase the noncash unproved property impairment provision by $20 million for the quarter.”