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$38,800 Per Day Pulled In: Move to Wet Gas Pays Off for Driller

May 6, 2012
By CASEY JUNKINS Staff Writer , The Intelligencer / Wheeling News-Register

WHEELING - Natural gas drillers are earning substantially more revenue - up to three times more - for every wet gas well they complete compared to every dry well, information from Chesapeake Energy states.

As natural gas prices continue to slump, more drillers are looking to take advantage of the ethane, butane, propane and pentane-rich gas found in West Virginia's Northern Panhandle and Eastern Ohio. Chesapeake announced plans earlier this year to shift much of the company's focus from drilling in the methane-dominated dry gas regions in much of Pennsylvania to drilling in the wet gas areas.

For Chesapeake, the move to the wet gas areas seems to be paying dividends. Company information shows that for a typical dry gas well, the company makes an average of $13,000 in revenue per day. However, for a wet gas well, the daily revenue more than doubles to $27,800 per day.

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An oil and natural gas rig worker completes a drilling operation in Marshall County.

Finally, for a "wetter" gas well, such as those found locally, Chesapeake states the company earns an average of $38,800 in revenue every day of production.

Chesapeake spokeswoman Stacey Brodak said these amounts are for gas streams that keep the ethane with the methane, as opposed to separating and sending the ethane to cracker facility for even higher profits. The process of keeping the ethane in the gas stream is known as "ethane rejection."

"Ethane rejection may occur when there is not sufficient market demand for purity ethane. Consequently, the ethane is left in the gas stream until increased demand is realized," Brodak said.

Along with the increased focus on natural gas liquids from wet gas, Chesapeake and its partners plan to open a $900 million natural gas processing complex with facilities in Harrison and Columbiana counties by the middle of next year.

Chesapeake will partner with M3 Midstream and EV Energy Partners to build natural gas gathering and compression facilities that Chesapeake will operate. M3 will also operate some processing, natural gas liquids fractionation, loading and terminal facilities.

In natural gas processing, the "dry" methane part of the gas stream is separated from the "wet" portions, like ethane, butane, propane and pentane. During fractionation, the natural gas liquids and other substances are separated from each other. These separated gas products are then ready for use, with the ethane possibly going to a cracker plant.

The processing facility to be located in Columbiana County will have an initial capacity of 600 million cubic feet per day. Natural gas liquids will be delivered to a central hub complex in Harrison County that will feature an initial storage capacity of 870,000 barrels. The Harrison County facility will also have fractionation capacity of 90,000 barrels per day, as well as a substantial rail-loading facility, according to Chesapeake.

MarkWest Energy is building a $500 million natural gas processing complex for Harrison and Monroe counties, as well.

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