Report for 2007 Annual Meeting Eastern U.S. Section Energy Minerals Division American Association of Petroleum Geologists
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Data & Consulting Services Division of Schlumberger Technology Corporation 1310 Commerce Drive Park Ridge 1 Pittsburgh, PA 15275-1011 Tel: 412-787-5403 Fax: 412-787-2906 REPORT FOR 2007 ANNUAL MEETING EASTERN U.S. SECTION ENERGY MINERALS DIVISION AMERICAN ASSOCIATION OF PETROLEUM GEOLOGISTS CHARLES M. BOYER II EASTERN SECTION COUNCILOR 2 March 2007 OPERATIONAL ACTIVITIES RELATED TO THE PROSPECTING, EXTRACTION, AND USAGE OF EMD COMMODITIES. Coalbed Methane Coalbed methane activity continued at a rapid pace in the Eastern section. Production is currently coming from fields in six states – Pennsylvania, West Virginia, Ohio, Virginia, Indiana, and Illinois, Fig. 1 1. However, over 90 percent of the production is from the Oakwood and Nora fields in western Virginia. Figure 1 - Location of coalbed methane production fields (red areas) in the Eastern section. Annual production reached 90 Bcf in 2005 for the states of Virginia, West Virginia, and Pennsylvania2 while proved reserves for these same states exceeded 1.8 Tcf in 2005 3, Figs. 2 and 3. Production and reserves from Illinois and Indiana have not been reported. Data & Consulting Services Division of Schlumberger Technology Corporation 2 March 2007 Page 2 Figure 2 - Annual coalbed methane production in Virginia, West Virginia, and Pennsylvania. 95 90 85 80 75 70 65 Annual Coalbed Methane Production, Bcf 60 55 50 2000 2001 2002 2003 2004 2005 Figure 3 - Proved coalbed methane reserves in Virginia, West Virginia, and Pennsylvania. 1,900 1,800 1,700 1,600 1,500 1,400 1,300 Proved Coalbed Methane Reserves, Bcf 1,200 1,100 1,000 2000 2001 2002 2003 2004 2005 Data & Consulting Services Division of Schlumberger Technology Corporation 2 March 2007 Page 3 The largest producer of coalbed methane in the Eastern section is CNX Gas of South Park, Pennsylvania. Primary production for CNX Gas comes primarily from the Oakwood field of western Virginia (Central Appalachian basin) where over 1,800 wells are producing 131 MMcf per day 4. In this field a combination of vertical, hydraulically fractured, multi-zone wells, vertical gob wells, and in-mine horizontal wells are employed to produce gas from the Lower Pennsylvanian, Pottsville Group, Pocahontas formation coal seams. These three well types produce, respectively, 67%, 32%, and 1% of the reported production. The vertical fracced wells were originally spaced on 60 and 80 acre units, but recently the Virginia Gas and Oil Board granted permission to CNX Gas to test downsizing of the spacing to 40 acres in selected areas. In addition to their primary production in western Virginia, CNX Gas is also producing from gob and horizontal wells in the northern Appalachian basin. In the area along the West Virginia-Pennsylvania state line, CNX Gas is producing 7.6 MMscf per day from 133 gob and horizontal wells5. The horizontal wells consist of up to three laterals drilled into the Pittsburgh coal seam. The second largest producer of coalbed methane in the Eastern section is Equitable Resources of Pittsburgh, Pennsylvania. Equitable produces primarily from the Pocahontas formation coals in the Nora field (western Virginia) and southern McDowell County (southern West Virginia) in the Central Appalachian basin. Currently Equitable produces about 60 MMscf per day from approximately 1,100 vertical, hydraulically fractured, multi-zone wells. Other producers in the Central Appalachian basin include Pine Mountain Oil & Gas, Geomet, CDX Gas (16 MMscf/d from 32 horizontal pinnate wells 6), Penn Virginia Oil & Gas, and Dart Oil & Gas. In addition to CNX Gas activity in the northern Appalachian basin, Range Resources (through their subsidiary Great Lakes Energy Partners) operates approximately 30 wells in Indian County, Pennsylvania. This field produces from the Allegheny formation coals (primarily the Freeport and Kittanning group coals) along the eastern edge of the basin. In addition to these projects, other operators – Dominion Resources, Harken Energy, CDX Gas, Dynatec, Admiral Bay, and others – are actively acquiring acreage and beginning small-scale pilot programs in southwestern Pennsylvania and southeastern Ohio. Within the Illinois basin numerous coalbed and coal mine methane projects have been attempted. The largest project to date is the BPI Industries production +90 well production field in Marion County, Illinois. Recent published production results state 88 MMscf produced in the six-month period ending 31 January 2007. In addition, the company is planning to drill an additional 29 development wells, 12 pilot wells, three pressure observation wells, one water disposal well, and five test wells by the end of July 2007 7. Peabody has been testing the potential for coalbed methane production in the southern Illinois basin for the last 5 years. They have one 5-well pilot in production and one horizontal well in production, but no production data is available. One of the oldest coalbed methane project in this basin is operated by Pulse Energy along the eastern edge of the basin in west-central Indiana. In this project, 36 wells are producing approximately 34 MMscf per month from shallow (>500 feet) coals. Throughout the Eastern section area, additional coalbed methane are in the planning stages. However, the drop in natural gas prices in 2006 has placed many of these projects on hold. Historically, the commercial production areas of southern West Virginia and western Virginia were developed under low gas pricing scenarios - $2.00 to $4.00 per Mscf. With the increase in gas prices over the last 3 years, previous economically marginal coalbed methane projects have Data & Consulting Services Division of Schlumberger Technology Corporation 2 March 2007 Page 4 become commercially viable. However, recent reductions in gas prices have once again marginalized these projects. Limited on-going research in the area of coalbed methane is occurring in the Eastern section area. Original primary organizations conducting research included the U.S. Department of Energy, the Gas Research Institute, and the U.S. Bureau of Mines (1970 through 2000). Current research by these organizations is associated with carbon sequestration in coal seams (DOE) and methane emission control in underground mines (USBM, now NIOSH). The DOE is conducting a CO2 sequestration/enhanced coalbed methane recovery project in northern West Virginia in conjunction with Consol Energy. Numerous state agencies have been performing and updating assessments of coalbed methane resources. For more information and data, regional contacts include: North American Coalbed Methane Forum C/o K. Aminian, West Virginia University [email protected] Illinois State Geological Survey http://www.isgs.uiuc.edu/isgshome/isgshome.html Indiana Geological Survey http://igs.indiana.edu/Geology/index.cfm Ohio Geological Survey http://www.dnr.state.oh.us/geosurvey/ Pennsylvania Bureau of Topographic and Geologic Survey http://www.dcnr.state.pa.us/topogeo/ West Virginia Geological and Economic Survey http://www.wvgs.wvnet.edu/ Virginia Department of Mines, Minerals and Energy http://www.mme.state.va.us/Dmr/home.dmr.html Kentucky Geological Survey http://www.uky.edu/KGS/ U.S. Department of Energy, National Energy Technology Laboratory http://www.netl.doe.gov/ National Institute of Occupational Safety and Health (formerly the U.S. Bureau of Mines) http://www.cdc.gov/niosh/mining/ Coalbed Methane Outreach Program, U.S. Environmental Protection Agency http://www.epa.gov/cmop/index.html Gas Technology Institute (formerly the Gas Research Institute) http://www.gastechnology.org/webroot/app/xn/xd.aspx?it=enweb&xd=gtihome.xml Data & Consulting Services Division of Schlumberger Technology Corporation 2 March 2007 Page 5 Gas Shales Shale gas production was initiated in the Eastern section area in 1821 near the town of Fredonia, New York. Peebles (1980) stated: “The accidental ignition by small boys of a seepage of natural gas at the nearby Canadaway Creek brought home to the local townspeople the potential value of this "burning spring." They drilled a well 27 feet [8 m] deep and piped the gas through small hollowed-out logs to several nearby houses for lighting. These primitive log pipes were later replaced by a three-quarter inch lead pipe made by William Hart, the local gunsmith. He ran the gas some 25 feet [8 m] into an inverted water-filled vat, called a "gasometer' and from there a line to Abel House, one of the local inns, where the gas was used for illumination. In December 1825 the Fredonia Censor reported: "We witnessed last evening burning of 66 beautiful gas lights and 150 lights could be supplied by this gasometer. There is now sufficient gas to supply another one [gasometer] as large." Fredonia's gas supply was acclaimed as: "unparalleled on the face of the globe." This first practical use of natural gas in 1821 was only five years after the birth of the manufactured gas industry in the United States, which most commentators agree was marked by the founding of the Gas Light Company of Baltimore [Maryland] in 1816.” Development of these Devonian-age organic shale formations spread throughout this region of the eastern US throughout the remainder of the 19th and beginning of the 20th century. In 1921 the discovery well for the Big Sandy Field was drilled into the Devonian Ohio shale in eastern Kentucky, producing up to 1 MMscf per day. By the mid-1930’s this field was recognized as the largest gas accumulation in the USA 8. Government and industry-sponsored geological, geochemical, and petroleum engineering studies in shale gas were initiated in the mid-1970’s and continued through the early 1990’s, primarily through the U.S. Department of Energy, the Gas Research Institute. Results of this work led to the further expansion of the shale gas industry into the Devonian Antrim shale of the Michigan basin, which became commercially productive in the late 1980’s, and the New Albany shale of the Illinois basin, which became commercially productive in the late 1990’s.