MARCELLUS SHALE HISTORY AND DEVELOPMENT


Background

The Marcellus Shale Formation is a unit of marine sedimentary rock that extends primarily over portions of Pennsylvania, New York, Ohio, West Virginia, Maryland, and Virginia. The formation ranges up to 900 feet thick and in portions of Pennsylvania and West Virginia is around 200 feet thick. The formation is named for the small town of Marcellus, New York, approximately 10 miles southwest of Syracuse, where it outcrops. Estimates of the amount of recoverable natural gas in the formation ranges from 50 to more that 1,000 trillion cubic feet. Currently, the total production of natural gas in the U.S. is about 30 trillion cubic feet per year. Clearly, the Marcellus Shale will be a major source of natural gas for many years.




Historically, gas wells have been drilled vertically into relative porous formations such as sandstone or fractured limestone, while “tighter” geologic units such as shale were unattractive because of their relatively low porosity. However, in recent years new technologies have emerged that make recovery of natural gas from shale formations economically feasible. These new technologies involve horizontal drilling and hydraulic fracturing of the shale in the horizontally-drilled portion of the well. As shown in the illustration below, wells are drilled vertically to a point near the top of the Marcellus Formation and then turned horizontally and drilled laterally into the shale. This technique has been successfully used in shale formations since about 2000. The feasibility of this technique has led to rapid expansion of natural gas well drilling and production in the Marcellus Shale.




Hydraulic fracturing is used to increase the yield of the gas wells in the shale. This technique involves pumping fluid containing proprietary mixtures of various chemicals and a “propping” material such as sand under high pressure to fracture the rock. Large quantities of surface water (up to 20 times the volume required for a vertical well) are needed for implementation of this technique. The sand, also referred to as the “proppant,” serves to lodge in the fractures and keep them open so that the natural gas can flow into the well. While a vertical well would typically cost less than one million dollars to put into production, a single horizontally-drilled well can cost between three and five million dollars. Vertical wells are typically spread over a wide area, but multiple horizontally-drilled wells can be installed from a single drilling pad with the horizontal portions of the wells fanning out from the pad depending upon the lease rights.

The Marcellus Shale is a unit of the Hamilton Group shales and drilling in these shales can impact the drilling fluid due to the presence of metals, sulfates, pyrites and other potential constituents. These materials as well as the chemicals used in the hydraulic fracturing process make careful handling of the drilling fluids a priority. Residents in areas where drilling is occurring have frequently expressed concerns relative to the protection of surface water impoundments and groundwater aquifers. Drilling and development of the gas wells using hydraulic fracturing can require more than one million gallons of water per well.

Through the first nine months of 2010, more than 4,900 permits were issued in Pennsylvania for drilling of wells in the Marcellus Shale and more than 2,200 had been drilled. Activity has been heavy in western and north central Pennsylvania counties, including Washington, Greene, Fayette, Westmoreland, Indiana, Armstrong, Forest, Warren, McKean, Tioga, Bradford, Lycoming and Susquehanna. The Marcellus Shale is 5,000 to 7,000 feet below the surface in these counties and up to 200 feet thick.

D'Appolonia Gas Well Support Capabilities

A summary of our capabilities related to gas well drilling and development is provided at the following link.



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