PITTSBURGH—Michael John, president of Northeast Natural Energy proudly told the audience at Hart Energy’s DUG East conference and exhibition, “We’re at home in West Virginia, where most of the owners and staff grew up. It’s always good to be home.”

And home’s been good to them.

“It wasn’t that long ago that the Appalachian Basin was irrelevant in terms of natural gas production. In 2010, total basin production was about 5% of the total U.S. production and in 2018, about 44%, mostly from fields in Pennsylvania and the more recent discoveries and production in Ohio.”

The Charleston, W. Va.-based company currently holds 60,000 acres across the Marcellus and in 2013 the company shifted its focus to northern West Virginia where it currently holds about 44,000 acres in Monongalia and Marion counties, according to John. Within the next year, Northeast Natural energy expects to have 90 wells online, which would increase its production rate from 400 million cubic feet per day (MMcf/d) to 500 MMcf/d by the end of 2019.

The company’s dry gas wells give it more than 40% return on investment due to production techniques and cost control that resulted in a drilled and completed cost of about $750 to $800 per foot, according to John.

He noted that there is infrastructure in place to handle production over the next few years, including the company’s projected increases.

“One of the reasons that a small company like ours has been able to flourish is that we’re a small local company in the northern part of the state where land has been hard to deal with,” he said. “The geology is complicated. The mineral ownerships are severed. The tract sizes are small but because of our size flexibility and our local roots, we’ve been able to accumulate an attractive acreage base and put drilling units together successfully.”

Northeast plans to focus on its concentrated core footprint with large-scale pad development and seven wells per pad per drilling cycle. Also at the well site, it plans to optimize its completion designs to have more and larger frac stages and to integrate a water delivery system from the Monongahela River that will be available later in 2018.

“The recent co-tenancy law passed by the state will be good for the company in that it will make it easier to put drilling units together,” John added. “We will also be looking at wells we can drill with 10,000-foot laterals over the next year or so.

“For some of our drill units where we have two units per pad in Monongalia County, there are more than 1,000 lease owners in it,” he continued. “The task is daunting and has been one of the biggest challenges we have.”

In 2014, the Department of Energy, West Virginia University and Ohio State University contacted the company to do a collaborative research project near Morgantown with a hydraulically fractured well the company would drill, what was labeled a “transparent well.”

“The operation has been essentially open to anyone who wanted to come in and perform air or water or any other kind of environmental impact testing associated with the well we would drill.”

The Department of Energy also agreed to provide funding test some new technologies, including completion and drilling.

“The well was completed in 2015 and today, I’m proud to say, first of all, the results of the environmental impact were in line with our expectations as well as the rest of the industry. The data is also being used widely and at last count, there have been about 80 technical papers written that are based on the project since the completion of the well,” John said.

“In addition, the state’s Department of Energy has asked our company to take their staff out on to our well site to show them how it should be done,” he said. “We’ve been successful from a drilling and completion stand point as well as from an environmental stand point—we’re very, very proud of that and are so pleased to be working with the department.”

Results from the program, “The Marcellus Shale Energy and Environment Laboratory” can be found at http://mseel.org/research/

Larry Prado can be reached at lprado@hartenergy.com.