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Not all gas wells golden

Production varies across panhandle

June 4, 2012
By CASEY JUNKINS - Special to the Herald-Star , The Herald-Star

WHEELING - A single Chesapeake Energy well in Wetzel County produced 1.05 billion cubic feet of natural gas and 349 barrels of oil in 2011, according to the West Virginia Department of Environmental Protection.

By comparison, a Chesapeake well in Marshall County yielded a comparatively low 310 million cubic feet of gas and 1,137 barrels of oil last year, showing that production levels in the Northern Panhandle's Marcellus shale can vary quite a bit.

"Given that the wells cost $6 million to $7 million, the well revenues would have covered a significant portion of the capital cost. Also the mineral owner should be happy with the royalty check," said Tim Carr, Marshall Miller professor of energy at West Virginia University.

A survey by the Sunday News-Register of 24 random operating wells in Marshall, Wetzel and Tyler counties shows various amounts of oil and gas being produced.

The numbers show production from 2011 only, which means there are not yet any figures for Ohio, Brooke or Hancock counties because the pipeline network needed to take gas to market in those counties is still under construction.

Information provided by Chesapeake shows that drilling in the wet gas areas found in the Northern Panhandle - loaded with ethane, propane, butane and pentane - has proven up to three times more profitable than drilling in Pennsylvania's dry gas regions. For a typical dry gas well, the company earns about $13,000 in revenue per day. However, the company earns up to $38,800 in revenue each day for wet wells, company statistics show.

Fact Box

FYI:

how much money can a gas well produce?

n Based on the 2011 production of the Whiteman well in Wetzel County, which was 1.05 billion cubic feet of natural gas and 349 barrels of oil, with an estimated royalty rate of 17 percent on production and a natural gas price of $2 per mcf, the landowners in the drilling unit would have received $357,000 in royalty payments last year on the natural gas and $5,933 from the oil production, based on a price of $100 per barrel of oil. The natural gas royalty figure only considers for methane production and not the possibility of any wet gas being part of the mix.

"A well that makes more liquids will probably (have) lower gas (production) rates, just because the liquids get in the way of the gas. Given that oil is $90 per barrel, one should have such a problem," Carr added.

Natural gas futures for July delivery are trading at $2.35 per mcf, up slightly from $2 per mcf in April. One mcf is equivalent to 1,000 cubic feet of natural gas.

In Wetzel County, the Chesapeake well yielding 1.05 billion cubic feet of gas and 349 barrels of oil last year is located on surface property in the name of Whiteman. Another Chesapeake well on surface land in the name of Hohman produced only 314 million cubic feet of gas in 2011, but rendered 7,232 barrels of oil, according to the DEP.

Also in Wetzel County, a Chesapeake operation in the name of Rine produced 805 million cubic feet of gas last year with 775 barrels of oil. Another Chesapeake well in the name of Messenger yielded 656 million cubic feet of gas and 2,365 barrels of oil in 2011, DEP statistics show.

The Saber well in Wetzel County, also operated by Chesapeake, produced 614 million cubic feet of natural gas and 12,109 barrels of oil last year. Finally, a Chesapeake well drilled on land the company owns rendered 911 million cubic feet of gas and 3,710 barrels of oil in 2011.

Louisiana-based Stone Energy Corp., on land in the name of Nice, saw one of its Wetzel County wells produce only 54 million cubic feet of gas in 2011. However, the well also yielded 7,160 barrels of oil last year.

Another Stone Energy project produced 638 million cubic feet of gas and 1,670 barrels of oil on land owned by Wheeling Jesuit University.

Finally in Wetzel County, Pittsburgh-based EQT Corp. saw one of its wells produce 768 million cubic feet of natural gas and 14 barrels of oil on land in the name of Tyrell last year.

In Tyler County, Houston-based Magnum Hunter Resources saw a well produce 765 million cubic feet of gas and 4,156 barrels of oil on property in the name of Weese.

According to the DEP numbers, Marshall County features the widest range of producing wells. Houston-based Gastar Exploration, which has signed deals to develop wells on property owned by PPG Industries and Bayer Corp., produced 232 million cubic feet of gas and no oil from a well in the name of Wengerd.

St. Marys, W.Va.-based Trans Energy struck a degree of success in 2011 with wells in the name of Keaton and Groves, respectively. For the well on the Keaton land, Trans Energy rendered 1.03 billion cubic feet of gas and 1,620 barrels of oil in 2011. The well on the Groves land produced 827 million cubic feet of gas and 1,117 barrels of oil.

California-based oil giant Chevron assumed control of AB Resources' Marshall County assets last year, eventually shutting many of the wells down to improve the safety of operations. Nevertheless, for a well on land in the name of Bardall, Chevron reported 412 million cubic feet of gas and 9,542 barrels of oil for 2011. Another well in the name of Taylor yielded Chevron 496 million cubic feet of gas and 7,370 barrels of oil.

A well Chevron shut down in September in the name of Carmichael produced 345 million cubic feet of gas and 126 barrels of oil last year. A well on surface land owned by the Starcovic family yielded 818 million cubic feet of gas and 494 barrels of oil, while one in the the name of Curry rendered 439 million cubic feet of gas and 5,275 barrels of oil for Chevron.

For its Marshall County operations, Chesapeake produced 746 million cubic feet of gas and 6,717 barrels of oil at a well in the name of Law. On land in the name of Stern, Chesapeake saw a well produce 331.4 million cubic feet of gas and 2,813 barrels of oil, while a well in the name of Mason Dixon Farms produced 310 million cubic feet of gas and 1,137 barrels of oil last year.

A Chesapeake well in the name of Harlan yielded 668 million cubic feet of gas and 745 barrels of oil last year, with another well in the name of McDowell producing 511 million cubic feet of gas and 7,184 barrels of oil. Another Chesapeake well in the name of Waryck rendered 727 million cubic feet of gas and 5,274 barrels of oil in 2011.

Chesapeake spokeswoman Jacque Bland said the company had no comment on these West Virginia production levels, while officials with Chevron and Stone Energy could not be reached for comment.

 
 

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