Gulfport Well Outperforms Chesapeake's Buell Well
YOUNGSTOWN, Ohio – A well that Gulfport Energy Corp. drilled in southern Harrison County is producing more oil, natural gas liquids and dry natural gas combined at peak levels than the Buell well – considered the most productive well in the Utica shale.
During a conference call with analysts to discuss Gulfport's second-quarter earnings report, executives said their company's Wagner 1-28H well was producing at a peak rate of 4,650 barrels of oil equivalent per day.
“I can say without a doubt that our Wagner well is by far the strongest well that Gulfport has ever drilled," CEO James D. Palm said, according to a transcript of the conference call posted on the website Seeking Alpha. "From north to south, to east to west, we're starting to feel like we're already finding the sweet spot, and we continue to see that our acreage seems to be located right in the middle of it."
By comparison, Chesapeake Energy Corp.’s Buell well, about 15 miles from the Wagner well in Harrison County, turned out a peak production rate of 3,010 barrels of oil equivalent per day when the first results were reported late last year.
That well continues to produce more than 1,000 barrels of oil equivalent per day.
It was the Buell well that sparked frenzied exploration in the Utica shale in eastern Ohio, driving energy companies from across the country to the region.
The Wagner well was drilled in February and brought online at the beginning of August. End early results show that its peak production rate is 54% more than the now-famous Buell well.
"My first impression is that this is pretty amazing," said Jeffrey Dick, chairman of the geology department at Youngstown State University. “The Utica shale is turning out to be everything they hoped it would be.”
However, the real strength of the Wagner well is still to be determined because since peak production rates can’t be sustained, Dick said. As pressure in the well decreases, so does production, and production rates are likely to decline very rapidly. “The key is how well it does in the long run,” he noted. “It'll take about a year or so to see just how much the pressure declines.”
What’s striking about the Wagner well is the length of its horizontal leg, Dick notes.
Energy companies use horizontal drilling to explore for shale gas – a method in which pipe is dropped vertically into a well and then turned horizontally to drill across relatively thin layers of shale rock.
Because the shale is thin – usually about 300 feet – it isn't economically feasible for oil and gas companies to simply drill vertically through the rock. But the ability to drill horizontally into the shale allows energy companies to drill thousands of feet and extract oil and gas contained there.
The horizontal leg of the Wagner well extends 8,143 feet, the longest drilled in the Utica, Dick noted. "This is the longest I've seen yet," he said. "My overall feeling is that there's a lot of good news out there."
Preliminary test results from three other Gulfport wells in the region also look promising, Palm said. The Boy Scout well in Harrison County, the Groh well in Guernsey County, and the Shugert well in Belmont County are still in the very early stages of development, he cautioned, but the company is confident that these wells could produce results similar to the Wagner well.
"We really like what we're seeing along the line from the Buell well to our Wagner well and down to the Shugert well," Palm said. "We believe there is a high volume of recoverable reserves packed into each acre in this very repeatable play. If you run the numbers, you'll see that the Utica stands to be a real company changer for Gulfport."
Gulfport has 62,000 net acres under lease in the Utica shale and has secured a partnership with MarkWest Energy, Denver, as its anchor customer for a processing network under development in Cadiz, Ohio, in Harrison County.
Most of Oklahoma City-based Gulfport's acreage rests in Belmont, Harrison and Guernsey counties.
The company is currently operating two rigs and plans to drill a total of 20 in the play, 10 by the end of this year.
MarkWest Energy is developing a $500 million midstream project in Cadiz. The project consists of building two processing plants in southeastern Ohio – one in Cadiz, the other in Noble County. The midstream infrastructure separates wet gases from dry gases such as methane. The wet gas is further processed and separated into various liquid gases such as propane, ethane and butane. These products are then delivered via pipelines to markets across the country.
M3 Midstream, EV Energy Partners and Global Infrastructure Partners are also developing a $900 million midstream complex in southern Columbiana County and another processor in Harrison County.
And, Hilcorp Energy Corp. is scouting areas in Ohio – reports have indicated that representatives of the company are canvassing southern Mahoning County -- for a $300 million pipeline and processing center.
"It's valuable, and there's stuff down there," Dick said of the Utica shale, noting the concentration of activity appears to extend from Carroll County south toward Belmont and Guernsey counties.
“They're figuring out where the hot spots are,” Dick continued. “I think now it's no longer a matter of ‘if’ they're going to develop the Utica, it’s a matter of ‘how’ they're going to develop it.”