American Oil and Gas Reporter - March 2016 - 94

ConventionCoverage: Independent Oil and Gas Association of West Virginia
proached Dominion twice last year, seeking gathering and processing relief. In
September, he recounted, the association
asked Dominion to convert its Gateway
fees to a percentage, extend the term of
its Gateway agreements from 2022 to
2025, and lock in prices on a 10-year
forward curve to provide producers cost
certainty.
When that was rejected, Freshwater
said IOGAWV returned in November
and asked Dominion to defer Gateway

fees whenever the Dominion hub price
fell below $2.00 an Mcf so that producers
could shut in temporarily. "We offered to
extend the term for each month a well
was shut in, but again the response was
that (Dominion) had done everything it
possibly could during the gathering and
processing negotiations," Freshwater reported.
Going forward, he promised, "IOGAWV will continue to communicate
the difficult position producers are facing.

We are evaluating grounds for government
action/intervention, and if there is standing,
you can be sure IOGAWV will be at the
forefront."
But because the Gateway contracts
are between Dominion and the various
producers and/or shippers, Freshwater
allowed, there are few options for direct
IOGAWV intervention. "It really is getting
to the point that you need to be talking to
your marketers about what is the best avenue for your situation," he advised. ❒

Efficiency Gains A Two-Edged Sword
CHARLESTON, W.V.-Oil and gas
may be the only industry that the better it
does, the worse off it gets.
Scott Potter, managing director of
business development for Houston-based
RBN Energy Inc., made that observation
to assess the state of the industry in a
keynote address at the Independent Oil
and Gas Association of West Virginia's
winter meeting, Feb. 2-3 in Charleston.
"We can't control prices, so we control
our costs. We control how well we do
things and we continue to get better and
better," Potter remarked. "That is why
production continues to grow."
He got no argument from two West
Virginia operating company executives.
"Commodity prices are going to turn
around, but I will never see $5 gas again
in my career," reflected Alvyn A. Schopp,
chief administrative officer and regional
senior vice president for Antero Resources.
"It is through science and how we operate
that we can be profitable in this market."
Added Mike John, founder, president
and chief executive officer of Northern
Natural Energy LLC in Morgantown,
W.V., "The shale revolution has reset
long-term price expectations. As workers,
investors and service providers in this
industry, it is important for folks to focus
on this lower expectation of prices."
It may seem irrational, Potter allowed,
for an industry suffering from a year and
a half of low prices to continue drilling
wells. But that doesn't tell the whole
story. He responded, "What many folks
don't recognize is this industry has made
such an investment in infrastructure,
whether it be people, companies, acreage,
pipelines or gathering systems, and so
many people have multiyear commitments.
You can't just walk away from it, so we
have to manage it. Sometimes the least
94 THE AMERICAN OIL & GAS REPORTER

painful thing to do is drill wells and hope
things get better."
Rising Productivity
The story of tight oil and gas is one of
rapidly increasing productivity, Potter
suggested. He used the example of one
Eagle Ford Shale operator who reduced
average drilling times from 22.3 days to
7.7, thereby increasing wells drilled per
year per rig from 16 to 47 and raising
initial production additions per rig per
year from 9,000 barrels a day to 49,000
bbl/d.

Dramatic increases in productivity have
enabled U.S. producers to maintain production levels while drilling fewer wells
over the past year and a half, Scott Potter, managing director of business development for RBN Energy Inc., advises
the Independent Oil and Gas Association of West Virginia during a luncheon
keynote at IOGAWV's winter meeting,
Feb. 2-3 in Charleston.

A lot of those gains, he pointed out,
were made when prices were good. "We
were showing Wall Street how good we
were," he characterized. "But in 2015,
this industry went from 'Let us show
people how good we are' to 'We have to
survive.'"
He illustrated that by showing crude
oil production added per rig in the Eagle
Ford went from fewer than 600 bbl/d to
800 bbl/d between 2014 and '16. The
Bakken and Niobrara, Potter said, both
posted gains from around 400 bbl/d to
722 and 718 bbl/d, respectively, while
the Permian went from a little more than
200 bbl/d in 2014 to 417 bbl/d in 2016.
Timothy S. Knobloch, president of
James Knobloch Petroleum Consultants
in Marietta, Oh., focused attention on
gains in the Marcellus and Utica plays,
using average estimated ultimate recovery
per 1,000 feet of stimulated interval and
average total treated length (TTL) per
well as yardsticks.
According to the company's database
of unconventional wells, Knobloch said
the first Marcellus well drilled in 2006
had an EUR per 1,000 feet of 963 million
cubic feet equivalent and a TTL of 2,327
feet. By 2014, average EURs per 1,000
feet had grown to 2.09 billion cubic feet
equivalent and TTLs averaged 5,342 feet.
The 286 Marcellus wells in his firm's
database with 2014 completion dates had
average total EURs of 10.6 Bcfe, Knobloch
reported.
For the Utica, he continued, the numbers are 344 MMcfe average EUR per
1,000 feet in 2010 to 1.42 Bcfe average
EUR per 1,000 feet in 2014 before slipping
to 1.30 Bcfe in 2015. Average TTLs grew
from 2,276 feet in 2010 to 7,849 in 2015.
The four Utica wells in Knobloch's database for 2015 had average total EURs of



American Oil and Gas Reporter - March 2016

Table of Contents for the Digital Edition of American Oil and Gas Reporter - March 2016

Contents
American Oil and Gas Reporter - March 2016 - Cover1
American Oil and Gas Reporter - March 2016 - Cover2
American Oil and Gas Reporter - March 2016 - 3
American Oil and Gas Reporter - March 2016 - Contents
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American Oil and Gas Reporter - March 2016 - Cover3
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