Five Years On, Marcellus Shale Play a Booming Business


Washington, PA Observer-Reporter
4 October 2009
By Christie Campbell, Staff Writer
chriscam@observer-reporter.com


Five years ago today, the first well drilled into the massive Marcellus Shale formation produced natural gas.

Known as the Renz well, it was drilled by Range Resources Corp. in Chartiers Township. The well was an experiment, designed to see if 100-year-old maps and newspaper clippings would help the company in its search for gas.

The results were promising and even more favorable when a second well performed similarly to the first.

Drilling for natural gas in Southwestern Pennsylvania quickly has become a $5 billion industry. The company has leased in excess of 900,000 acres in the Marcellus Shale, most of it in Washington County, where the company now has 150 wells and seven property owners have become millionaires.

Numerous other natural gas drillers, such as Chesapeake Energy Corp. and Atlas Energy, are operating in the region. CNX Gas has 10 wells in western Greene County, with plans to drill 24 in 2010, according to Laural Ziemba, CNX's manager of public relations.

This is only the beginning, said Matt Pitzarella, director of public affairs for Range Resources, during an interview last week. If the gas play should turn out as predicted, it could be the second largest in the world, second only to Qatar in the Middle East.

"It was never thought that the United States had this much natural gas," he said, noting domestic reserves have jumped by 35 percent.

A study released in July by Penn State University predicts the state could begin exporting natural gas by 2012.

That may not come as welcome news to some folks in Washington and Greene counties who have watched farmland transformed into industrial sites complete with drilling activity and 24-hour lighting. They cite the noise involved with drilling, dirt and excessive truck traffic that causes congestion and damages local roads. And they fear contamination of water used in the hydrofracturing process of extracting gas.

Pitzarella doesn't deny there are environmental impacts but says they are manageable. The industry continues to improve its drilling methods, he said, citing the creation of a new "walking drill" that can drill several wells on the same site. It recently opened up seven wells on one well pad along Wotring Road in Hopewell Township. The company plans to do most of its gas extraction from now on with multiple wells.

The ability to pull gas out of what is essentially black rock first occurred in the Barnett Shale in Texas. When attention turned to the much larger Marcellus Shale, which encompasses most of Pennsylvania as well as portions of West Virginia, Ohio, Maryland and New York, geologist Bill Zagorsky used century-old maps and newspaper clippings that recorded "blow-outs" of oil wells to pinpoint pockets of natural gas. This historical data was combined with modern seismic activity to locate the shale formation.

Range's drilling activity from 2004 to 2007 was fairly quiet until the end of the latter year when the company posted its production data. A month later, Penn State University geoscientist Terry Engelder, along with Gary Lash from the State University of New York at Fredonia, estimated there was 50 trillion cubic feet of natural gas in the formation, setting off a storm of interest in the gas play. That estimate has since jumped to more than 500 trillion cubic feet.

The Penn State study estimates $2.5 billion in annual royalties will be paid to landowners by 2020. But the study also cautions that the natural gas industry is prone to sharp contractions in drilling activity, such as swings in costs, prices and taxes.