Range keeps focus on region

Posted January 31, 2012

Mike Bradwell

A Range Resources spokesman said last week that despite reports that many natural gas producers are cutting back production in the Marcellus Shale and other shale plays around the country, Range doesn't foresee a similar curtailment here.

The reason, according to Matt Pitzarella, is that Range, the largest drilling and exploration company in the area, has for some time been focusing most of its extraction efforts on the so-called "wet gas" areas of the Marcellus, which yield ethane and other lucrative industrial distillates.

The spokesman said the company roughly defines the wet gas region here as being west of Interstate 79 and north of I-70, an area that contains Chartiers, Mt. Pleasant and other areas stretching toward the West Virginia panhandle.

While Range Resources is expected to release its 2012 drilling plan in the next couple of weeks, Pitzarella acknowledged that some of the company's drilling in dry gas areas of the Marcellus "could be pushed back by as much as five to 10 years" if low gas prices persist.

He also said Washington County should continue to see employment opportunities grow because of the company's focus on wet gas.

In the past two weeks, Chesapeake, the nation's No. 2 gas producer, announced it was cutting back on production in various shale regions of dry gas, which is mostly used for home heating.

The glut of dry gas, or methane, coming from shale plays here and across the country has been a bonus for consumers, who have seen monthly heating bills plummet, reflecting some of the lowest prices for natural gas in years.

Two weeks ago, natural gas futures slipped to $2.32 per 1,000 cubic feet, their lowest levels in a decade. The price fell 4 cents to settle at $2.71 Monday.

With a mild winter and natural gas prices at historic lows, Consol Energy revised its 2012 capital budget last week by cutting $130 million from its gas drilling activity, while EQT announced it was suspending drilling in the Huron shale in West Virginia, Ohio, Kentucky and Virginia to concentrate on the liquids-rich portion of the Marcellus.

Pitzarella also acknowledged last week that Range has plugged several early wells it drilled in Mt. Pleasant Township because they were underproducing. A recent production report from the state Department of Environmental Protection shows the company has plugged or is plugging one of five "Orton" wells; two "Christman" wells; and one of five "Godwin" wells.

According to Pitzarella, some of the decommissioned wells were "discovery" or "pilot" wells from several years ago as the company was determining optimum drilling locations. Some of the plugged wells were vertically drilled, before the company made the shift to all-horizontal drilling.

According to the DEP production report, some of the plugged wells, such as the Christman 5 and 6, were producing 5,000 to 8,000 mcf during the first half of 2011, compared to other more recent wells that are producing 25 to 35 times as much over the same time frame.

But in many cases, Pitzarella said, the verticals that were plugged are within drilling pads that include multiple horizontal wells that are continuing to produce gas in commercial quantities.

"In other cases, we've told DEP we have to plug (a well), but we go back to the location and drill more wells," he said.

While Range intends to keep its focus on the profitable wet gas - it has announced two separate agreements to supply ethane to Texas and Canada - Pitzarella said the company is continuing to closely follow developments in Harrisburg to determine when legislation will be passed to impose an impact fee on Pennsylvania's Marcellus Shale gas producers.

Last week, differences over local zoning presented a new obstacle to legislators' efforts to reach an agreement on impact fees and to modernize state safety regulations on the drilling industry.

"They've been debating this for three years," Pitzarella said. "They have all of the stakeholders' input. It's really, really imperative that they provide certainty" by passing legislation, he said.

Copyright Observer Publishing Co.