Abstract

The developing interest in the Northeast Marcellus Shale play has led to a flood of lease acquisition activity not seen in many years. Competitive acreage positioning and rumors of huge delayed rentals, large signing bonuses, and generous buy-outs are reminiscent of the boom years in the early 1980's. Most of the potential affordable assets have already been locked up and the small or medium size operator has either been priced out or crowded out.

Those operators may not be as far behind the rush as they may fear. The nature of oil field culture has led to the Marcellus and other shale formations being ignored for years and viewed as more of a drilling nuisance than as a valuable play. As a result, it has been drilled to, drilled through, cased through and generally avoided for as long the Devonian Sands have been developed in the Appalachian Basin. In a few cases where shale stimulations were attempted, they were poorly designed and marginally effective which kept the interest very limited.

The oil field culture of past decades allowed many of these resources to remain hidden and underdeveloped. These assets can now be "Re-Discovered" through a variety of record resource reviews, re-drilling and re-completion techniques, spacing analysis, and general detective work.

This paper will explore a variety of techniques that both major and independent operators can use to take advantage of their existing underdeveloped assets.

Introduction

The discovery and development of the Marcellus Shale play has had both positive and negative effects on the Appalachian Basin oil and gas production culture. The play has been great for lease and land acquisition contractors, drilling contractors, pumping service companies, dirt movers, pipe suppliers, and those holding or controlling sizable acreage holdings. On the down side, many of the traditional independent operators are unable to compete for prime lease acreage because of the inflated contracts and limited opportunities. They are also feeling the pressure of higher prices for their normal goods and services which are in unusually high demand.

As the major operators have spread across the Basin on a three year drilling spree, a general trend of Marcellus Shale quality factors like organic content, thermal alteration index, thickness, reservoir pressure, and performance has emerged. The savvy independent may discover that his present lease holdings may be positioned amid or near favorable shale trends. Armed with this knowledge, a wide variety of resource tools are available that an operator can employ to expose and exploit potential drillable assets that he may not readily recognize. These range from mining in-house data files, public and subscribed data services, to drilling techniques and tool applications.

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