American Oil and Gas Reporter - August 2017 - 81

SpecialReport: Marcellus/Utica Update
In an early summer update to community and elected officials in Montrose,
Pa., Cabot announced several milestones
from its previous decade of operations in
northeastern Pennsylvania. The 10-year
look-back included the announcement
that Cabot had paid more than $1.0 billion
in royalties to landowners in Susquehanna
and Wyoming counties, and nearly $500
million in signing bonuses since it commenced operations in 2006.
"We are living through history," Stark
attests. "The amount of gas there is mindboggling. We can see the economic development from the taxes paid to county
governments and school districts, as well
as to farmers who now have new equipment and can afford to send their kids to
college. It is huge for Susquehanna County,
which is where most of our operation
has been. We lose sight of this sometimes
when we get so busy working."
Stark points out that Cabot has 200,000
mostly contiguous acres in the region
and has drilled 525 wells, completed
more than 10,000 fracture stages, and
produced 3 trillion cubic feet of pipelinequality dry natural gas from the Marcellus
Shale during the last 10 years.
With daily production of nearly 2
billion cubic feet, he claims Cabot is
producing 3 percent of the nation's
natural gas from Susquehanna County
alone. He adds that although Susquehanna
County is one of Pennsylvania's largest
geographically, its status as one of the
state's more rural counties-with a population of only 47,000-makes the $1
billion in royalty payments that much
more impactful.
When Cabot drilled its first Marcellus
well a decade ago, the company listed its
estimated ultimate recovery at 8 billion
cubic feet. Ten years later, Stark says
Cabot's Marcellus EURs average 28 Bcf,
an increase he attributes to longer laterals,
more frac stages spaced more closely,
the ability to drill faster, a better understanding of the rock and the professionalism of Cabot's employees.
He says Cabot plans to drill 60 wells
this year with average lateral lengths of
8,000 feet and more than 50 frac stages.
Most of Cabot's gas heads northeast
to New York, New Jersey, Massachusetts
and Connecticut. As new pipelines are
built and others are reversed and retrofitted,
Stark says he anticipates future production

will be sent down the East Coast and ultimately to the Midwest.
He admits the industry often is a victim
of its own success, noting that 2016 was
Cabot's worst year for realized natural
gas prices. "But this rock is so predictable,
it almost is like having gas storage in
place," Stark relates.
Diversified Portfolio
Like Cabot Oil & Gas, Southwestern
Energy is active in northeastern Pennsylvania, but thanks to an acquisition, Southwestern has exploration, drilling and production operations in southwestern Pennsylvania and West Virginia as well.
Northeast Appalachian Division Leader
David Dell'Osso says Southwestern holds
roughly 250,000 net acres with historical
concentration in Bradford and Susquehanna counties, Pa., although it has expanded into Pennsylvania's Tioga and
Wyoming counties as well.
"We have drilled more than 400 operated wells in northeastern Pennsylvania
and have gross operated production of
around 1.3 Bcf/d," he reports. "Our first
well went to production in July 2010."
Dell'Osso says Southwestern tries to
"get out of the way of the reservoir as
much as possible" by utilizing bigger
flowlines and larger separation vessels
to enable higher gas production rates. He

adds that its northeastern Pennsylvania
gas is near pipeline quality when it comes
out of the reservoir. "We dehydrate it
and do little else to achieve pipeline specification, which is an advantage from a
cost standpoint," he reflects.
Historically, Dell'Osso says, Southwestern has drilled 5,000- to 5,500-foot
laterals on average, but has expanded that
over time and recently drilled some laterals
beyond 10,000 feet. In the northeastern
part of the state, he says, laterals tend to
be limited less by equipment and surface
leases than by subsurface faulting.
Dell'Osso says Southwestern is testing
a variety of sand loadings in an effort to
establish the point of diminishing economic returns, which will enable the
company to optimize economics in a variety of commodity price and service cost
combinations. It has shifted to a tighter
stimulation design with around 2,000
pounds of sand per foot of completed
lateral in a more intensive completion
strategy, and he says the company expects
to bring 67-75 wells to sale this year.
Jack Bergeron, Southwestern's senior
vice president of operations, revealed in
the company's first-quarter earnings report
that the first 39 wells it placed to sales
this year had cumulative production that
outperformed offsets by approximately
130 percent in their first 150 days. As a

Cabot Oil & Gas Corporation has produced 3 trillion cubic feet of pipeline-quality dry
natural gas from the Marcellus Shale over the last 10 years, and has paid more than $1.0
billion in royalties to landowners in Susquehanna and Wyoming counties, Pa., along with
nearly $500,000 in signing bonuses since it commenced operations in 2006. With daily
production of nearly 2 million cubic feet a day, Cabot says it is producing 3 percent of
the nation's natural gas from Susquehanna County alone.

AUGUST 2017 81



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