25.10.2016, 22:22
Southwestern tests Moorefield shale in Arkansas
OREANDA-NEWS. Natural gas producer Southwestern Energy is testing a new gas-bearing formation known as the Moorefield shale in Arkansas that could jump-start its production in that energy-rich state.
Southwestern, the third-largest US gas producer by volume, has drilled thousands of wells in Arkansas' Fayetteville shale but sidelined rigs there late last year because of low gas prices. It resumed drilling in Arkansas earlier this year to explore the Moorefield, which sits just below the Fayetteville and could offer an upside to a producer that could tap both formations.
Stacked formations like the Fayetteville and Moorefield in Arkansas, the Haynesville and Bossier in Louisiana, or the Marcellus and Utica shales in the northeast can boost productivity by allowing operators to drill different gas-rich formations from the same location, driving down costs.
The Moorefield testing is in the early stages but the results "could significantly lower the breakeven costs for the [Fayetteville] and help it compete with opportunities available in our Appalachia portion of the portfolio," Southwestern chief executive Bill Way said during a recent conference call with investors.
Large natural gas producers like Southwestern were stung by a sharp downturn in prices last year. But the price slump has allowed operators to focus on cost-cutting measures and new techniques to coax more gas from each new well. Those methods could boost output in places like the Fayetteville, a field that has largely been abandoned by its peers because of the downturn in gas prices.
Prompt-month gas prices collapsed last March to a 17-year low below $1.65/mmBtu following an unusually mild weather. But prices recently rebounded to near $3/mmBtu on summer heat, growing exports and government data indicating that domestic production was slipping.
Southwestern has the only working rig in Arkansas. It redeployed one of five rigs there this year to explore the Moorefield. The other rigs are working in the mammoth Marcellus shale in Pennsylvania and West Virginia, the company's most lucrative gas field. Southwestern has identified more than 2,100 gross drilling locations in the Marcellus at gas prices of $3/mmBtu and just 500 in the Fayetteville area of Arkansas.
Southwestern has drilled just seven wells into that Moorefield since the start of 2015. Those wells cost about $3.5mn-$4mn and had an average initial production rate of 7.2mn cf/d (203,760mn cf/d).
Southwestern's third-quarter production from Arkansas was 978mn cf/d, down by 24pc from a year earlier.
Southwestern, the third-largest US gas producer by volume, has drilled thousands of wells in Arkansas' Fayetteville shale but sidelined rigs there late last year because of low gas prices. It resumed drilling in Arkansas earlier this year to explore the Moorefield, which sits just below the Fayetteville and could offer an upside to a producer that could tap both formations.
Stacked formations like the Fayetteville and Moorefield in Arkansas, the Haynesville and Bossier in Louisiana, or the Marcellus and Utica shales in the northeast can boost productivity by allowing operators to drill different gas-rich formations from the same location, driving down costs.
The Moorefield testing is in the early stages but the results "could significantly lower the breakeven costs for the [Fayetteville] and help it compete with opportunities available in our Appalachia portion of the portfolio," Southwestern chief executive Bill Way said during a recent conference call with investors.
Large natural gas producers like Southwestern were stung by a sharp downturn in prices last year. But the price slump has allowed operators to focus on cost-cutting measures and new techniques to coax more gas from each new well. Those methods could boost output in places like the Fayetteville, a field that has largely been abandoned by its peers because of the downturn in gas prices.
Prompt-month gas prices collapsed last March to a 17-year low below $1.65/mmBtu following an unusually mild weather. But prices recently rebounded to near $3/mmBtu on summer heat, growing exports and government data indicating that domestic production was slipping.
Southwestern has the only working rig in Arkansas. It redeployed one of five rigs there this year to explore the Moorefield. The other rigs are working in the mammoth Marcellus shale in Pennsylvania and West Virginia, the company's most lucrative gas field. Southwestern has identified more than 2,100 gross drilling locations in the Marcellus at gas prices of $3/mmBtu and just 500 in the Fayetteville area of Arkansas.
Southwestern has drilled just seven wells into that Moorefield since the start of 2015. Those wells cost about $3.5mn-$4mn and had an average initial production rate of 7.2mn cf/d (203,760mn cf/d).
Southwestern's third-quarter production from Arkansas was 978mn cf/d, down by 24pc from a year earlier.
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