Marcellus Coming of Age, Says Range Resources

Oil and Gas Journal
21 January 2009
By OGJ editors

HOUSTON, Jan. 21 -- The initial rate averaged 7.3 MMcfd of gas equivalent for 10 horizontal Devonian Marcellus shale wells brought online since October 2008 into a new gas processing plant in western Pennsylvania, said Range Resources Corp., Fort Worth.

The Marcellus, a hindrance to overall capital efficiency the past few years, will be "highly accretive to our capital efficiency in 2009," the company said.

Seven of the 10 wells had initial rates of 3.5 MMcfd or gas equivalent or more, and three flowed 9 MMcfd of gas equivalent or more. The best well made 24.5 MMcfd of gas equivalent.

The company is producing 35 MMcfd of gas equivalent from the Marcellus and is constrained by processing capacity. Eight of the wells have been on line for more than 30 days, and their 30-day average rate is 4.3 MMcfd of gas equivalent. The highest volume well averaged 9.6 MMcfd of gas equivalent.

Processing capacity is expected to expand to 60 MMcfd in late March or early April and to 180 MMcfd by late 2009-early 2010. Target 2009 exit rate is 80-100 MMcfd net to Range.

A built-for-purpose rig is to arrive later in January, the first of six that will replace existing rigs, and Range plans to exit 2009 with six rigs running in the play.

Range, which has cut more than 20 days and $800,000 from its drilling costs in recent wells, believes horizontal well costs will average $3-4 million in 2009.

Taking advantage of a streamlined permitting process, the company has a majority of its 2009 drilling permits in hand and has secured water withdrawal and disposal capacity for several years.

Baker Hughes reported 23 rigs active in Pennsylvania in the week ended Jan. 16, 2009, compared with averages of 16 in 2007 and 23 in 2008, when the state's count peaked at 30 in the week ended Nov. 7.