Northeast Driller Year in Review

By Brian Bishop
Published: December 23, 2010

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Most of the companies producing natural gas in Bradford County’s Marcellus Shale reported an increase in drilling activity throughout 2010, while other companies have merged with larger corporations or have sold their interest in the Marcellus Shale.
Here is an overview of some of the companies drilling in the Marcellus Shale:
 
Chesapeake Energy
Oklahoma City-based Chesapeake Energy has around 1.8 million acres under lease in Pennsylvania, with around 401,000 acres in Bradford County, according to information from Chesapeake. The company has drilled 254 wells in Pennsylvania, with 186 in Bradford County. Of those, 44 wells are producing in Bradford County, and 70 total in the state, with a cumulative production, since February 2009, of around 44 bcf of natural gas in Bradford County and 72 bcf total in the state.
“Chesapeake continues to expand its local workforce and create progressively more career opportunities for Pennsylvanians. Two years ago, no Pennsylvania residents were working on our rigs. A year ago, we averaged one per crew. Today, of the five-member crews, we are averaging two Pennsylvania workers on our rig floors, and we are training local employees to eventually transition to an all-local workforce,” said Brian Grove, senior director of corporate development, in a prepared statement.
The recently opened NOMAC Drilling LLC’s Eastern Training Center and Housing Facility in Athens Township site will house 276 rigworkers during their work rotation and provide introductory and ongoing employee training focusing on safety awareness and environmental protection, Grove said.
“Chesapeake also strives to hire military veterans, which earned us recognition recently from G.I. JOBS magazine as a 2011 Top 100 Military-Friendly Employer. Two separate programs — Junior Military Officers and Troops 2 Roughnecks — identify prospective candidates and place them in jobs suited to the skills they acquired in the military,” Grove said in the statement.
“The programs have helped Northern Tier natives like Jason Chilson of Towanda, Bradford County, find long-term, family-sustaining work after returning home from serving their country. Jason deployed to Iraq with the 2nd Battalion, 9th Marine Regiment. Upon his return stateside, he enrolled in a rigworker training program. He was honorably discharged from the U.S. Marine Corps in June 2010, and within roughly a month, Chesapeake had hired him to work as a righand in his hometown of Towanda.
“Like many of Chesapeake’s operations, that growth will spur further growth, requiring the hiring of local workers for a variety of positions both directly by Chesapeake and by the vendors with which Chesapeake contracts,” Grove said.
Chesapeake also continues to work with local educational institutions, including the Pennsylvania College of Technology, Westmoreland County Community College and Lackawanna College, to identify workforce needs and define curriculum to make sure graduates are prepared with the skills necessary to immediately begin work in the industry, Grove said.
“Extending resources such as class speakers and rig tours, helps educators define what students will need to know to remain in their hometowns and qualify for well-paying jobs in a growing industry that’s providing family-sustaining employment in this region — and will be doing so for generations to come,” he said.
 
Talisman Energy USA
 
Talisman Energy USA is a subsidiary of Talisman Energy Inc., which is headquartered in Calgary, Alberta, Canada, according to a press release available on the company’s website. Talisman Energy USA has offices in Horseheads, N.Y. The company changed its name from Fortuna Energy to Talisman Energy USA effective Jan. 10, 2010, the release stated.
In January 2010, Talisman forecast its Marcellus production by the end of 2010 to be in the 250 to 300 million cubic feet per day range with about 145 wells completed and tied in, said spokesman Mark Scheuerman.
“We are well on track to meet those targets by Dec. 31,” Scheuerman said. By comparison, Talisman’s end-of-year rate for 2009 was 65 million cubic feet per day, Scheuerman said. Talisman’s production from the Marcellus Shale in Pennsylvania was approximately 270 million cubic feet per day at the beginning of November, 2010.
On July 21, Talisman Energy USA Inc. opened its U.S. Shale Headquarters north of Pittsburgh in Warrendale, Pa., Scheuerman said. From this office, the company will manage all of its shale activity in the United States. The workforce at the Warrendale location is 140 full-time employees, he said. Talisman also maintains an operations field office in Horseheads, N.Y., currently with about 65 full-time employees, he said.
 
Chief Oil and Gas
Chief Oil and Gas is headquartered in Dallas, Texas, with a regional office in Wexford, Pa., and a field office in Lycoming County. Chief is a privately held oil and gas company and according to Vice President of Industry and Public Affairs Kristi Gittins, has more than a decade of experience developing natural gas from shale. Today, Chief’s primary focus is on developing the Marcellus Shale, according to Gittins. Chief entered the Marcellus Shale in 2006 and is one of the largest leaseholders with acreage in Pennsylvania, West Virginia and Maryland.
Gittins stated that Chief recently announced the implementation of a number of best practices in its drilling operations including providing the content of its hydraulic fracturing fluid additives on its website and the implementation of a closed loop drilling process, eliminating the storage of discarded drilling fluid in open reserve pits at the drilling site. Other initiatives include enhanced well construction design to protect water aquifers, the addition of protective liners at drill and frac sites to contain spills and prevent fluids from coming in contact with water resources and the enclosure of compressor stations to minimize noise.
Gittins also stated that Chief has spent $15 million on road improvements in Bradford and other counties to compensate local areas for additional pressure placed on roads by vehicles involved in natural gas development.
Chief’s Marcellus leasehold has increased to 600,000 gross acres in Pennsylvania, West Virginia and Maryland and the Marcellus drilling program continues to expand. As of November, Chief has drilled 93 wells with 42 wells placed on production, 15 wells waiting on a pipeline, and 36 wells waiting on completion. Currently, 20 wells are being drilled or remain to be drilled in 2010. Chief entered 2010 with three drilling rigs and expects to exit 2010 with seven rigs. Chief is producing 100 million cubic feet equivalent per day (MMcfe) per day with a target exit rate for 2010 of 115 MMcfe per day. Chief does not have any holdings in the Southern Tier of New York.
Chief has drilled and completed 44 wells in Lycoming, Susquehanna, Wyoming, Clearfield, Blair, Bradford, Somerset, Greene and Fayette counties in Pennsylvania. Five of these are in Bradford. In addition, Chief Gathering, a pipeline/midstream subsidiary of Chief, has secured a tap to the Tennessee Gas Pipeline in Bradford County, Gittins stated.
According to Gittins, Chief ramped up drilling activity in 2010, including additional wells in Bradford County. The company now has six drilling rigs under long-term contract and expects to have seven rigs by the end of 2010.
The company has around 100 employees working on Marcellus Shale development and around 50 percent of those employees are local Pennsylvanians, Gittins said. In the Lycoming field office, more than 75 percent are local employees.
 
Shell Appalachia
East Resources Inc. a Pennsylvania-based independent oil and gas producer was sold to an affiliate of Royal Dutch Shell plc (“Shell”) for cash consideration of $4.7 billion in July, 2010, according to a press release from East’s website.
Shell is a global group of energy and petrochemicals companies, according to information provided by Shell.
The acquisition of East Resources, a Pennsylvania-based oil and gas company, on July 29, is the foundation for Shell’s new operations and growth in the Appalachian Basin, said company spokesperson Deena McMullen. Shell’s current operations are focused in Tioga County.
Shell Appalachia is headquartered in Warrendale, Pa., and has 185 employees located in Pennsylvania, with approximately 50 employees located in Tioga County, McMullen said. 
Shell owns or leases 700,000 gross acres of Marcellus rights in the Appalachian Basin.
Shell will continue to focus Marcellus shale development in Tioga County, Pa., while exploring other parts of the leased acreage, she said. East/Shell has drilled more than 100 wells in the Marcellus shale in 2010 and will continue to increase activity in 2011.
 
EOG Resources
EOG Resources, Inc. (EOG) in November announced the signing of a purchase and sale agreement with Newfield Exploration Company (NFX) for approximately 50,000 net acres in Bradford County, Pa., according to a press release from EOG. The transaction, valued at $405 million, is expected to close year-end 2010, the release stated.
Representing less than one-half of one percent of EOG’s total North American production, this Marcellus Shale acreage in northeastern Pennsylvania includes five producing natural gas wells with 7 million cubic feet per day of gross production, according to the release. Following the close of the divestiture, EOG retains approximately 170,000 net acres in the Marcellus Shale in northwestern Pennsylvania, the release stated.
EOG Resources Inc. is one of the largest independent (non-integrated) oil and natural gas companies in the United States with proved reserves in the United States, Canada, Trinidad, the United Kingdom and China, the release stated.
 
Cabot Oil and Gas
Cabot Oil and Gas Corporation is headquartered in Houston, Texas, and is a leading independent North American natural gas producer, according to information from George Stark, external affairs director for Cabot Oil and Gas. 
According to information provided by the company:
Cabot has been an active member of the Appalachia exploration and production community for more than 120 years. Throughout that time Cabot has been committed to conducting compliant, safe operations. Its North Region Headquarters is located in Pittsburgh, Pennsylvania.
Since commencing operations in Susquehanna County in 2006, Cabot has: established an office in Montrose, Pa.; drilled over 110 wells; built more than 50 miles of pipeline; and produces approximately 235 million MCF a day from its producing wells.
By the end of 2010, Cabot’s investments in Susquehanna County include: $900 million in lease and operations expenditures with increased local investment planned; millions of dollars of investment in local road infrastructure improvements, $10 million in 2010; Cabot has created more than 400 full-time jobs in Susquehanna County with plans to hire additional full-time workers as we continue to expand our operations in the region.
Cabot is making concentrated investment in Susquehanna County and the economic impact ripple effects have been many and real, Stark said in a prepared statement. Businesses all over northeastern Pa. are benefitting from Cabot investment...engineering and surveying companies, construction and earthmoving companies, equipment manufacturing, service and repair companies, water transport/wastewater management companies, legal, accounting and other professional services from all over the region are seeing the very real impact from Cabot investment, Stark said.
Brian Bishop can be reached at (570) 888-9652; or e-mail: bbishop@thedailyreview.com.

 

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