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County may sit on one natural gas mother lode

December 19, 2007
A Texas gas drilling company believes Lycoming County may be sitting on top of a mother lode of natural gas.

The problem is getting it out, but that is exactly what Chief Oil and Gas LLC of Dallas plans to do.

So far, the company has drilled three wells in the county — two in Mifflin Township and one in Watson Township — and is preparing to drill a well in Penn Township after Christmas, company representative Jason de Wolfe said Tuesday during a meeting with local residents at the Holiday Inn in Williamsport.

The company plans to drill three more wells after the first of the year, he said.

In 2008, the company plans to invest $100 million and drill between 15 and 20 wells in the Appalachian Basin, which runs between southern New York state and West Virginia, he said.

“We’re excited to be here. There is a lot of promise in the area,” de Wolfe said. “This is the most excited we’ve seen our president in a long time.”

Chief was founded in 1994 by Trevor Rees-Jones. Until recently, the company concentrated most of its gas and oil drilling efforts in north Texas, during which time it developed expertise in removing natural gas from shale rock.

The company uses a technology called “fracing” — short for “fracturing” — in which a pressurized mixture of water and sand is injected into the rock to create fissures and release the natural gas.

It is that expertise that will enable the company to remove the previously inaccessible natural gas from shale formations such as those located deep beneath the surface in Lycoming County.

The company sold its assets in Texas and now is focusing its gas drilling and development in the Rocky Mountains and the Appalachian Basin, de Wolfe said.

According to information provided by the company, it sold its Texas assets for more than $2.6 billion.

The Appalachian Basin contains a large formation of shale called the Marcellus Shale, de Wolfe said.

The U.S. Geological Service estimates there could be as much as 200 trillion cubic feet of natural gas contained in the shale, which is located about 1 1/2 miles underground, he said.

The wells in Lycoming County are the first to be drilled into the Marcellus Shale, he said.

So far, none of the wells has produced gas, but company officials believe they will be productive.

According to de Wolfe, one of the main reasons the meeting was held was so landowners could meet company representatives and ask questions about gas drilling.

“It’s important that we are good corporate citizens,” de Wolfe said. “We believe in open and honest communication.”

The meeting began with a video which included an animated depiction of how a gas well is developed.

Gas and oil drilling is not, as many people believe, “a Jed Clampett thing” in which gas or oil simply comes flowing up out of the ground, de Wolfe said.

“Geologists know natural gas exists in shale, but finding a way to (extract) it is a problem.” he said. “It’s a complex and costly process,”

A well site must be prepared by installing roads, clearing the area for the drilling rig and equipment, and then installing infrastructure such as water and electricity.

A pit must be dug and lined to hold rock cuttings and drilling mud. It takes 50 to 75 people using 30 to 45 semi-trucks to move a drilling rig that can drill up to 10,000 feet into the ground.

Once drilling begins, the operation runs 24 hours a day, seven days a week for up to three weeks.

“Shutting down is not an option,” de Wolfe said.

During a recent tour of a gas drilling rig in Mifflin Township, it was revealed that it costs about $70,000 a day to operate a gas drilling operation.

Among the concerns raised during the meeting was the possibility of a drilling operation affecting water quality.

Drilling should not affect ground water because gas will be extracted from an area far below the water table, company operations manager Mike Hallford said.

The drill hole is lined with metal casing held in place with cement to prevent gas and drilling fluid from mixing with and contaminating water.

According to Kristi Gittins, company head of corporate communications, Chief has leased 200,000 acres in the Appalachian Basin. Only one other gas exploration company has leased more land in the region, she said.

The company is interested in leasing more land, de Wolfe said.

Carol Pryor of Mifflin Township attended the meeting with her husband Robert and son Wade.

The Pryors said they came to the meeting with questions because they leased about 14 acres to the company. They live across the road from a gas well the company drilled and which may extract gas from their property.

“(Gas drilling) is a very interesting concept, so we’re excited to see what happens,” Carol Pryor said.

Article Photos

Workers clamp two sections of pipe together as it is lowered into the ground at the Chief Oil and Gas drill rig near Salladasburg. Officials from the company are looking for natural gas in the shale over 7,000 feet below the surface.



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