First of two gas wells is drilled
Officials celebrated the drilling of the first horizontal gas well in Tyler County on Friday morning.
Magnum Hunter Resources Corp. held a groundbreaking for its wholly-owned subsidiary, Eureka Hunter Gas Pipeline in Middlebourne at the home of Roger Weese.
“Drill baby, drill,” Weese said from a podium overlooking the drill site on his property. Drilling in Tyler County will boost the local, state and national economy.
The Eureka Hunter pipeline includes 182 miles of rights of way initially for the transportation of a mix of crude oil and natural gas. The Northern West Virginia portion of the pipeline is 114-miles long and is in the heart of the Marcellus Shale through Pleasants, Tyler, Ritchie, Wetzel, Marion, Harrison, Doddridge, Lewis and Monongalia counties.
The pipeline can move up to 200 million cubic feet a day, said Gary Evans, chairman of the board and chief executive officer of Magnum Hunter Resources.
“We are really excited about this groundbreaking occasion,” Evans said.
After the company acquired Triad, a fuel exploration company, in February and formed Triad Hunter, Magnum Hunter’s portfolio grew to more than 2,000 wells in the Appalachia Basin in Ohio, West Virginia and Kentucky.
“We are adding two new wells with the drilling of the Weese-Hunter 1001 and Weese-Hunter 1002,” Evans said.
The horizontal drilling method is more expensive than a straight vertical shaft to the pocket of natural gas, but it is more accommodating to the property owner because the well doesn’t have to be over the pocket.
“These wells aren’t cheap,” Evans said. “They cost $3.5 million each but they add significant economic value to both the local and state economies. Our current plan for 2011 is to drill between 12 and 15 wells in the Marcellus which could equate to a capital expenditure of $40 and $50 million in the next 12 months.”
In order for the company to be successful in moving the gas the company anticipates the wells will produce, they must have gathering a transportation to move the gas and the liquids form the wells. To meet this country’s energy needs, they need the infrastructure to get the gas to the markets where it can be used. This was the purpose behind the pipeline.
“We are solving the lack of infrastructure in this area by building the Eureka Hunter,” Evans explained. “We have significant pipeline plans in this area. We hope that this new system will allow the ability to move the gas to the market.”
Reconfiguring the existing low pressure gathering system will allow for the transportation of up to 200 million cubic feet of gas per day in a high pressure environment.
Locally, promises to have a huge impact on the economy by creating jobs. The construction contractor, Apex, employs 98 locals workers. In turn, the company utilizes 17 back-hoes, eight bulldozers all manned by local people. All of the pipe used at the site was ordered from McJunkin, a West Virginia company. Additionally, all engineers working and assisting with the project are form the state of Ohio.
“We are big believers in utilizing the local talent in the community and bringing our money to fund the growth,” Evans said. “Most of the initial $35 million to be spent on this project will remain with West Virginia companies and employees.”
The construction of the first phase of this system is underway on Weese’s property and currently on schedule to be completed in November.
Evans took the event as an opportunity to announce a joint venture with DCP Midstream based out of Denver, Colo. The company is one of the nation’s largest natural gas gathers and processing companies. According to Evans, the venture will allow his company to accomplish three key objectives by assuring a firm gathering service for the increasing natural gas volume, reducing the amount of capital expenditures and allowing the retention of significant equity interests.
“It takes landowners with vision, like Roger, for companies like us to have the opportunity to do what we are doing here today,” Evans said. “We are contributing a lot of jobs to the local community and we are creating a situation where our country has additional gas supplies. We have a tremendous resource here and this will allow for our children and their children to have clean, low-cost energy to fuel their lives for many years to come.”
Though Weese is onboard with the operation in his back yard, he admitted that wasn’t always the case. “Sandy and I are simply the current owners of this land,” Weese said. “This land will be here long after we are gone. It’s always been my intention with anything I acquire to pass it on to the next generation in better shape than it was when I received it. With that in mind, I’ve always been reluctant to even consider the development of this land. But then I became acquainted with Triad Hunter and we sat down and negotiated an agreement to benefit everyone.”
This agreement covers every aspect of the operation, including the preservation of the land and its resources. “There were a lot of things they needed. I told them what I would allow and what we could compromise on. For instance, I wanted a lake or a nice pond and they need a lot of water to frack these wells. So, they are building a 3-acre lake here.”
Designed by the Civil Corps of Engineers, the lake will be an asset to Weese’s property and his farm and will also serve Triad’s drilling crew. Land which was once of little value can now be utilized by both parties. Weese commented, “I think it’s been a major improvement to my farm.”
The well site itself will not interfere with Weese’s farm. Built on the backside of the Weese residence, the company will drill horizontally at a depth that will not affect anything on the surface.
“I also told them that I wanted my land restored,” Weese said. “They assured me this would be done.”
In preparation for the restoration of the Weese farm, Triad has removed the topsoil which was extracted prior to working on the site. The plan is to spread the soil over the farm at the completion of the project and reseed and fertilize the ground. “A year from now I will take you for a walk across the fields and show you where they have worked and what they have improved,” Weese said. “I guarantee we are going to see a lovely crop and a lovely lake stocked with fish. It will be something that the entire community will be proud of.”
“The bottom line is, with the cooperation of the landowners and companies such as Triad Hunter, we will be able to develop these resources, develop our local economy and improve everyone’s lives,” Weese said.
“What I think we’ve developed here is a model well and a model agreement between landowners and industry that shows what can be achieved if the parties all cooperate. It’s been a tremendous asset for me and I think it will be a tremendous asset for the community, Weese said.
He emphasized that the drilling of the well on his property will not only boost the local economy, but also the state and federal economy. Speaking to the lawmakers, Weese said, “I think it’s imperative that you let us do our jobs. We do not need anymore regulations. We do not need any more restrictions,” Weese said. “I am a practicing attorney and I have been representing landowners and oil and gas companies for years. There are adequate laws and protective measures on the books. We simply do not need anymore.”
Magnum Hunter Resources Corporation and subsidiaries are a Huston, Texas based independent exploration and production company engage in the acquisition of exploratory leases and producing properties, secondary enhanced oil recovery projects, exploratory drilling, and production of oil and natural gas in the United States. For more information on the company, visit www.magnumhunterresources.com.