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Test well in Putnam County leads to gas speculation

WINFIELD – As gas companies continue to develop the Marcellus Shale in Northern West Virginia, recent gas exploration in Putnam County and Eastern Kentucky have people speculating about the possibility of a future gas boom in the southwest part of the state.

Last year, Cabot Oil and Gas drilled a vertical test well into the Rogersville Shale, a relatively unexplored deep-shale formation that underlies parts of northeast Kentucky and the southwestern counties of West Virginia.

The test well, located just northeast of Hometown, is the first permitted well drilled into the Rogersville in West Virginia, but Cabot’s exploration of the geological formation comes on the heels of two exploratory wells being tapped by another company just over the state line, in Lawrence County, Kentucky.

While neither of the gas developers has released production data from the three wells, the companies’ continued interest has government and industry officials waiting to see if the Rogersville can become the country’s next profitable shale formation.

“I know that Cabot has an interest in the Rogersville,” said Corky DeMarco, executive director of the West Virginia Oil and Natural Gas Association. “I haven’t seen any production reports, so I can’t comment as to the amount of production they’re getting from this well.”

The recent exploration of the formation comes at a time when advancements in extraction technology — horizontal drilling coupled with hydraulic fracturing — have unlocked previously unattainable oil and natural gas reserves throughout the country.

However, while industry officials hope the Rogersville will produce sustainable volumes of natural gas, the depth of the shale and slumping gas prices — largely caused by a glut in production nationally — might forestall any immediate development in the region.

“We are looking at various intervals to assess what we have,” said Cabot spokesman George Stark, but the company has “no plans to drill any more exploratory wells this year, due to lower commodity prices.”

If the formation does prove to be profitable, it could usher in a new wave of drilling in the southwest part of the state.

While Putnam, Wayne and Lincoln counties have a long history of exploration into shallow gas deposits, the development of the Rogersville could provide one of the region’s first large-scale unconventional gas plays, bringing with it the jobs, tax revenue, land disputes and environmental concerns that have accompanied drilling in other parts of the country.

For companies like Cabot that already have substantial lease holdings in the area — including more than 600 tracts held by existing gas wells in those three counties — the formation could offer a new source of profit, once commodity prices rebound.

The Rogersville Shale formation is an older and deeper geological formation than the Marcellus, the formation that has attracted national attention as gas companies have drilled and fracked hundreds of wells in Ohio, Pennsylvania and West Virginia over the past couple years.

Unlike shallow gas deposits that can be captured using vertical wells, unconventional, or tight gas, formations require operators to drill thousands of feet down and out, through the targeted layer of earth, before pressurizing the well with water, sand and chemicals — fracking — to release the gas trapped inside.

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While the Marcellus is located around 5,000 feet underground, the Rogersville can be anywhere from 9,000 to 14,000 feet below the surface.

According to geologists with the Kentucky Geological Survey, who have conducted some of the most recent research on the formation, the depth, thickness and composition of the shale varies, depending on the location.

David Harris, the head of the Kentucky agency’s Energy and Minerals Section, said the formation tends to be much deeper in West Virginia than it is in Kentucky and that the extreme depths of the Rogersville likely would make production costs higher than a well drilled into the Marcellus.

“In Putnam County, it’s going to be a little deeper,” Harris said. “It’s definitely going to be multimillion-dollar wells.”

In a July 2013 company newsletter, officials with Abarta Energy, a company active in Eastern Kentucky, wrote: “The Rogersville shale is even older and deeper than the Marcellus or Utica shales. This makes the potential shale play extremely risky and expensive, but the rewards could also be extreme!”

Besides the depth, Harris said he expects the makeup of the gas in Kentucky and West Virginia to also differ.

In Kentucky, he said, the gas produced could include natural gas liquids — butane, ethane and propane — which can be separated off and sold for additional profit. In West Virginia, he said, the gas will largely consist of pure methane.

“The gas content will vary, depending on where you are,” he said.

That difference in the gas composition could be why companies continue to explore the formation in Kentucky, while permitting has remained flat in West Virginia, Harris said.

While there are only two permitted production wells in Kentucky — both owned by Bruin Resources, a subsidiary of Cimarex Energy — Harris said several other companies have submitted paperwork to begin horizontal drilling operations and additional stratographic test wells, which allow operators to analyze a well bore while keeping the location and production of the well confidential.

“It’s been a very closely guarded play, so far,” Harris said.

Although none of the companies in Kentucky will have to reveal how much natural gas the Rogersville wells are producing until January 2016, Harris said there is evidence that the wells are hitting.

At times last year, he said, the first well to be drilled in Lawrence County began flaring off gas, with flames leaping above the well pad.

“Everything that I have heard about that well is encouraging,” he said.

Here in West Virginia, state officials have heard only secondhand suggestions of companies’ interest in the formation.

“It is speculation, but we have heard there is a lot of activity planned for that area,” said Gene Smith, assistant chief of the Office of Oil and Gas in the West Virginia Department of Environmental Protection. “At this point, we don’t have the documentation to prove it.”

At the Cabot well in Putnam County, production data could be available a year after the well is completed. Cindy Raines, an administrative assistant with the state’s Oil and Gas Conservation Commission, said that hasn’t happened yet.

Cabot has 90 days after completing the well to file its completion report with the state, and Raines said she could not confirm any production until that occurs.

Besides that well, there have been very few deep wells permitted in the southwest corner of the state, Smith said.

“The Rogersville Shale is big in Kentucky right now,” he said, “but we have not had any other activity in those three counties or the western part of the state.”

Until production data from the wells does become available, officials said, there is no definitive way to determine how significant the formation could become.

Still, Harris said, all indications seem to be positive.

“Thats the interesting aspect to this Rogersville play,” he said. “Despite the drop in prices, the interest in this play seems to be holding up.”

 

(c)2015 The Charleston Gazette (Charleston, W.Va.)

This article was written by Andrew Brown from The Charleston Gazette, W.Va. and was legally licensed through the NewsCred publisher network.

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