Just when you think Northeast shale gas drilling has slowed, something big pops up. In this case, it may be a substantial new year's present for a lot of gas lease landowners in Ohio, Pennsylvania and West Virginia.
EQT Corporation, one of the largest drillers in the Marcellus Shale, recently released their 2014 (what'll we do next year) "guidance" update yesterday. It'll spend an eye-popping $1.1 billion and drill 186 Marcellus shale wells. In the Utica Shale, it plans to spend $145 million and drill 21 wells. In the Upper Devonian shale, it expects to spend $155 million to drill 30 wells. Almost 75% of its planned capital expenditures are targeted to the Northeast. Here's why:
Lots of cash
That sums it up. EQT is cash-rich from the sale of Equitable Gas Company plus cash generated from operations. That enables the company to "profitably accelerate development of our expansive Marcellus position and will result in significant volume growth in 2015," says Dave Porges, EQT's CEO.
A total of $1.9 billion will be spent. It doesn't include land acquisition, but does include re-starting drilling plans in Kentucky's Huron formation, which has returned to being a profitable play thanks to the already existing gathering (pipeline) system.
The 2014 drilling program is projected to support 2015 sales volume of 575 to 600 Bcfe. Key to it's marketability is the growing gathering system capacities in Pennsylvania and West Virginia.
Here's a glimpse at the plan:
•Marcellus: The 186 wells will have an average lateral length of 4,800 feet. All will be on multi-well pads with about 90% targeted to the company's two core development areas -- southwest Pennsylvania and northern West Virginia. The remainder will be in central Pennsylvania to "de-risk" this future development area. EQT owns approximately 560,000 net Marcellus acres.
•Utica: Plans call for drilling 21 wells in its liquids-rich acreage in Guernsey County, Ohio. The Utica wells are expected to have average lateral length of 6,500 feet. EQT owns about 14,000 net Utica acres in Ohio.
•Upper Devonian: This formation sits above the Marcellus in much of EQT's leased zone. The 30 wells are expected to have an average lateral length of 4,000 feet. EQT Production owns approximately 170,000 net acres in the Upper Devonian. It believes this formation can be developed as a separate zone.
•Huron: Some 120 wells will be drilled with an average lateral length of 6,000 feet. The company owns about 1.4 million net acres of Huron shale formation in Kentucky, and now has more than 800 producing horizontal wells in the play.
Information courtesy of Marcellus Drilling News.