GASTAR PUMPING LARGE QUANTITIES
PROCTOR – With large trucks traveling on narrow roads, Michael McCown knows the process of drilling and fracking a $7 million Marcellus Shale well can create plenty of disruption for a community.
However, once the process is complete, natural gas producers leave behind a well head cap they refer to as a “Christmas tree.”
“It is pretty quiet out here now. This is what is left when we are finally done with the wells,” said McCown, who serves as vice president-northeast for Houston-based Gastar, while inspecting the well head at one of the company’s producing wells.
During a tour of the site and Gastar’s Marshall County operations, McCown said the company currently is producing about 65 million cubic feet of natural gas per day from West Virginia’s Northern Panhandle. McCown said Gastar now has 47 wells in Marshall and Wetzel counties that are pumping gas or will be soon.
“In 2012, our company invested $200 million – all in Marshall County,” he said, noting the amount was probably about $70 million in 2011.
McCown said this year and in future years, his company will probably look to work more in Wetzel County. Gastar also is planning to acquire more acreage, working out of the company’s leasing office on Warden Run Road near Oglebay Park.
“All of our gas goes to Williams” Partners, McCown said of the company that operates the Fort Beeler processing facility along U.S. 250 near Cameron, as well as a fractionation facility along the Ohio River south of Moundsville.
“The one thing that is slowing us down a little bit right now is that it is taking Williams a little bit of time to catch up to us with their infrastructure, but we are very confident in them,” McCown said.
Last year, Williams spent $2.5 billion to purchase the Fort Beeler plant and associated processing facilities and pipelines from Caiman Energy. Once Gastar’s gas goes to Williams, the wet natural gas liquids are separated from the dry methane gas so that all products can be sent to market.
“The liquids-rich Marcellus is here. That makes the operations here so valuable,” McCown said. “This is not going to be a short-term rush. We are in this for the long haul.”
Gastar also is reinvesting in infrastructure, as the company repaved Rines Ridge and Burch Ridge in Marshall County, which suffered damage from heavy equipment traveling to drilling sites. Gastar also spent about $5 million to build a private road exclusively for drilling truck traffic, relieving much of the truck traffic from the other roads.
“The terrain is a significant challenge for drilling here in West Virginia,” McCown said. “By having our own road, we are able to keep our trucks off the public roads, which is especially good when school buses need to use those roads.”
In another move to help reduce traffic and potential pollution, McCown said Gastar spent $4.5 million to construct facilities to pump fresh water from the Ohio River up to the drilling sites.
“We are continuing to refine our drilling and completion techniques in an effort to achieve maximum efficiency, well economics and estimated ultimate recoveries,” said J. Russell Porter, Gastar president and chief executive officer.
McCown said part of this efficiency effort is to drill as many wells as possible on a single well pad, noting the company plans to have 10 wells on a single pad soon. Though the exact numbers will vary for each well, McCown said one particular well currently being drilled will go roughly 6,000 feet deep before turning to go 5,000 more feet horizontally. Slightly different equipment is used to drill the vertical and horizontal portions of the well.
“We are realizing improving internal rates of return in our Marcellus (Shale) program from increased yields of high-value liquids the further west that we develop the play, combined with lower drilling and completion costs and shorter drilling times. We are also seeing increasing reserves per well and declining total well costs,” added Porter.
While McCown sees a prosperous future in Gastar’s Marcellus activity, he said the potential of increased scrutiny from the U.S. Environmental Protection Agency could curtail operations.
“We feel that West Virginia’s (Department of Environmental Protection) is a fair and capable regulatory agency,” McCown said. “And as an industry, we are finding ways to be more environmentally friendly every day.”