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EQT to drill test well in utica shale

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By Jim Ross

For The State Journal


EQT Corp. plans to drill a $15 million test well into the Utica Shale in southwestern Pennsylvania in an experiment that could open up thousands of acres of Utica Shale in West Virginia to development.


EQT officials discussed the test well during a conference call with investment analysts July 24, following the release of second-quarter earning results.

Steven T. Schlotterbeck, executive vice president and president of exploration & production for EQT, said the company has been looking at initial results of wells drilled by other operators in the Utica Shale, and EQT’s technical reviewers believe it is time to join the exploration. The Utica Shale is deeper than the Marcellus Shale, but it offers good returns on investment, Schlotterbeck said.

EQT has about 400,000 acres that could be prospected for Utica Shale development, about half of that in West Virginia.

“There’s little disagreement that there is a tremendous amount of gas in place in the play,” Schlotterbeck said. “The question is whether or not the gas can be profitably produced, as each well could cost as much as $15 million.”

The first well will be drilled in Greene County, Pennsylvania, which borders Monongalia, Wetzel and Marshall counties in West Virginia. The geology under Greene County looks promising, and EQT has pads, roads and takeaway pipes already in place there, he said.

“We realize that this well is an experiment and could result in a $15 million dry hole, but the upside, if successful, is tremendous,” he said. “We’ve begun the permitting process and expect to spud the first well before year end.”

The well will be about 13,500 feet deep, and it will have a lateral extending about 6,400 feet.

The well poses technical problems and challenges, Schlotterbeck said. EQT does not know if it will be able to use sand to hold the shale fractures open, so it may need some other material. There are also questions about the how strong the well casings will need to be and whether EQT’s equipment has the horsepower to accomplish the drilling and hydraulic fracturing.

And after that, the question is whether a well that costs twice as much to drill as a Marcellus well will deliver twice the amount of gas, he said.

If the test well is successful, EQT plans to drill other wells as it drills into the Marcellus, Schlotterbeck said.

In the second quarter, EQT reported net income of $110.9 million, up from $86.9 million in the second quarter of 2013. Production sales volume was 17 percent higher, midstream transmission operating revenues were 33 percent higher and midstream gathered volume was 17 percent higher.