Consol moves ahead with plans for gas

PITTSBURGH – Emphasizing the move could “truly change the world,” Consol Energy President Nick DeIuliis said selling five coal mines to raise cash to drill more Marcellus and Utica shale natural gas wells primes his company for the future.

And just as West Virginia Gov. Earl Ray Tomblin made his Thursday announcement that Odebrecht could build an ethane cracker near Parkersburg, the CEOs of natural gas drillers Range Resources and EnerVest told the nearly 4,200 attendees at the DUG East conference in Pittsburgh that they plan to pump ethane elsewhere for cracking.

“Our recent shift in strategy allows us to meet both domestic and global energy demands,” DeIuliis told those inside the David L. Lawrence Convention Center regarding the deal Consol announced last month that will have the company sell five West Virginia coal mines, including the McElroy and Shoemaker mines in Marshall County, to Murray Energy for $3.5 billion. Consol plans to use this money to drill and frack more natural gas wells in both Ohio and West Virginia.

Earlier this week, natural gas processor MarkWest Energy announced plans to ship up to 400,000 barrels of Marcellus and Utica shale ethane out of the region for cracking by 2016. Thursday, both Range President and CEO Jeffrey Ventura and EnerVest President and CEO John Walker said they also plan to ship ethane to places such as Sarnia, Canada or Mont Belvieu, Texas for cracking. They would accomplish this by shipping the ethane in one of three pipelines: The Enterprise ATEX pipeline, the Sunoco Mariner West pipeline and the Sunoco Mariner East pipeline.

“There is only one use for ethane and that is to make ethylene,” said Walker, whose company works primarily in Ohio. “When the ATEX pipeline comes on line, all of us are going to be getting in line to get our ethane to Mont Belvieu.”

Also at the conference, Jim Palm, chief executive officer of Gulfport Energy, said the company’s first dry methane gas well in the Utica shale, the Irons 1-4 H well off state Route 148 near Armstrong Mills, recently yielded 30 million cubic feet of natural gas daily.

“I have been surprised at how fast this play has started. I’d rather be drilling in these two basins than anywhere else in the U.S.,” Palm said of the Utica and Marcellus formations.

Though impressed by the Irons dry gas well, Palm said a “good wet gas well” – which would also yield ethane, propane and butane – could “pay off” in just one year. He said it now typically costs the company about $9.5 million to drill a single Utica well.

Christopher Simon, managing director for the Raymond James financial services firm, said numerous companies are seeing strong economic returns on their Marcellus wells. In the Utica, he said that Ohio Department of Natural Resources officials recently agreed to require companies to report well production on a quarterly basis, instead of only on a yearly basis.

“Reporting will accelerate the play because you will know where the best areas are,” he said.

During lunch, President George W. Bush spoke to attendees about his tenure in the White House, but admitted, “I don’t miss Washington, (D.C.) – I don’t miss being president.

“I want to thank you for what you do,” Bush told the oil and gas professionals. “This country is never going to grow the way it needs to grow until we recognize the work of the people in this room.”

Outside the speaking area in the exhibit hall, Melissa Pagen, water treatment specialist for GreenHunter Water, displayed a piece of equipment she said the company could provide to drillers looking to cover sources of water at well sites. However, she said no such device would be used at GreenHunter’s frack water recycling plant in the Warwood section of Wheeling once it is built, as that facility will feature closed tanks.