As the majors and other large oil and gas companies deploy up and down the Marcellus and Utica shales, a handful of smaller companies are targeting shallower formations like the Upper Devonian Shale, using hydraulic fracturing (fracking) at less expensive wells to achieve their own measure of success.
Mark Thompson, president of Horizontal Exploration LLC, said his company has already drilled three horizontal wells and has plans to drill another eight, possibly as early as the first quarter of 2014. The company, based in Indiana, PA, is focused on seven counties in northwest Pennsylvania: Clarion, Elk, Forest, Jefferson, McKean, Venango and Warren.
“We’re going through the learning curve like everybody else did earlier,” Thompson said Monday, adding that the company’s first well cost approximately $2.3 million, while the second was near $1.4 million. “We’re hoping to get them in range of around $900,000 to $1 million. That’s the plan, anyhow.”
Thompson said a group of companies that support Horizontal’s drilling efforts “would like us to do as many [wells] as possible, as long as the success is there.”
The Upper Devonian lies above the Marcellus but shares some of its attributes. In places where the Marcellus is either gassy or liquids-rich, the Upper Devonian is generally the same.
According to Thompson, Horizontal has been drilling to a vertical depth of between 1,600 and 2,300 feet, targeting the Upper Devonian sandstones. Specifically, he said the company has targeted the Balltown, Bradford, Cooper Town and Lewis Run zones.
“We then come back up around 1,400 feet and that’s where we kick off to go for the various zones,” Thompson said. “We had been drilling [laterals] out as far as 3,300 to 5,300 feet.
“We’re finding out that the longer the lateral, the more issues you have on shallow. These issues have to do with lifting the oil, and so that’s why our engineers are now recommending that we just drill out 2,000 feet. We were in an eight-foot zone on one of the plays, and an 18-foot zone on the other. We’re basically going to start chasing zones that are 40- to 60-foot thick. That seems to be the better results.”
Thompson said that so far, the company has used between 120,000 and 150,000 gallons of fracking fluid at its horizontal wells.
Meanwhile, in the southwest corner of the state, Penneco Oil Company Inc. COO Ben Wallace told NGI’s Shale Daily that his company has 24 horizontal wells in line, all of which are targeting the Upper Devonian. He said the company plans to add about 10 horizontal wells a year, but they’re currently targeting oil, not gas.
“Right now we’re just drilling oil,” Wallace said in an interview on Sept. 23. “We’re really curious to try it in gas, but the gas price doesn’t support it and we don’t want to take the risk at the moment. But we think there would be a real opportunity to do it in conventional gas formations.”
Wallace added that Penneco, which is based in Delmont, PA, operates about 900 wells in the Pittsburgh area, all of them vertical except for the 24 aforementioned horizontal wells. He added that the horizontal wells are primarily in Allegheny, Greene and Westmoreland counties, and cost around $2 million apiece.
“The [horizontal] wells’ costs are five- to eight-times higher than a vertical,” Wallace said. “It’s hard to maintain a good portfolio. You have to manage your portfolio carefully so you have good portfolio risk.
“The technical complexity goes up exponentially when you drill horizontally. A vertical well is relatively simple to drill. A horizontal well, once you get the hang of it, isn’t terribly difficult, but it’s still exponential risk and difficulty.”
Wallace said Penneco typically drills a horizontal well to a depth of 3,200 feet, and then uses a lateral measuring 1,800-2,700 feet. He added that the amount of fluid used to hydraulically fracture the wells can vary between 300,000 and 500,000 gallons.
According to data from the Pennsylvania Department of Environmental Protection, three other companies — Catalyst Energy Inc., Pennsylvania General Energy Co. LLC and Phoenix Energy Productions — have permits to drill additional shallow horizontal wells in the state.
“If the results continue, like with what Penneco has seen and what we’re starting to see, I think it’s going to become a big play, especially in areas that you couldn’t drill in [before] because of terrain, swamps and wetlands — things like that,” Thompson said. “You’re going to open areas that you could never drill in [before].”
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