Interesting activity in Erie County PA!!!

Emkey Energy, LLC. an Erie, Pa. based midstream company purchased millions of dollars of pipeline from the Norse Company, a NY based company that went bankrupt and continues to extend pipelines throughout the area.  They recently built a natural gas processing plant in Union City, Pa. where they process natural gas into different products such as butane, propane, ethanol etc., They purchase natural gas from local wells
and feed their processing plant.  Current prices on all of these commodities are challenging and make it difficult to be profitable.  Emkey Energy, LLC. using Nucomer Energy, LLC.., who purchased over 1,800 acres of gas wells in the Wattsburg area, including the 270 acres I am involved with, which is why I follow the activity in this area.
 
A few years ago, a Texas company drilled a Utica test well, a 7000' ft+ well looking to tap the Utica.
The well was never flow tested and conflicting stories from the driller of the well and owner of the well
has not been resolved but the information from the driller was that it was a good well, good natural gas showings and approx. 170' of Utica depth.  
 
Empire Energy,LLC. a NY based company owns lots of acreage in the area and specializes in shallow, low cost drilling, upper devonian
plays that they say have low decline prolific natural gas.  Emkey purchases gas from them and others to process in their plant in Union City.  Of course, currently activity is low because of the current prices.
 
The activity that caused me to write this post was that Stedman Energy, LLC. a NY company who owns leases in this area recently drilled and OIL well just 3-4 miles from our 270 acres.  I spoke with the owner of the company about whether he would be interested in eventually drilling on our property.  He referred me to his geologist who told me he discouraged Stedman from drilling in that location and was not interested in studying our land.  A year later Stedman continues to continue drilling. Stedman told me that it is cheaper to drill at current prices and he can wait for prices to rise before selling.  I spoke to Emkey about why Stedman continued drilling and their answer was "Because they can!" 
 
Now, understand, this is what was told to me, and I tend to follow not what they say,but what they do!  Drilling even though cheaper now than in the past, it still cost money and no one that I know likes to spend money without results...!!
 
Erie County is north of the prolific Marcellus area and the Point Pleasant activity but from what my research determines is that the Upper Devonian and more specifically Rhinestreet strata can be prolific in this area.  Stedman, IMO, is looking for shallow oil.....can any of you more experienced players shed some insight as to what may be going on!!!

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Permalink Reply by Jim Litwinowicz on April 4, 2016 at 5:50am

Upper D has wet gas with several components.  That may make it worth while to drill vertical wells.  Even if he just breaks even, or with a small loss, that will tie up all that acreage until gas prices rebound and deep Utica wells become profitable.  My guess is he is tying up acreage by HBPing with those wells.  Then he either drill deep wells or sub lease to the big operators and make a killing.

All depends on the lease language. Are their unit restrictions? Depth restrictions? Lots of other things to consider.

Permalink Reply by george m vietze on April 4, 2016 at 6:00am

Thanks Jim,

Is is practical and profitable,when prices rise, to horizonally drill the Upper Devonian Rhinestreet even if the strata is only 25-50 feet of depth?  The depth of the well is around 2,900' or so

and not as expensive as drilling 7,000+ and what strata might have oil???  Could the Rhinestreet

have oil???

Permalink Reply by Jim Litwinowicz on April 5, 2016 at 6:52am

Rex Energy has drilled several UD wells in Butler Co, Pa and seems happy with results.  The wells don't have the huge IP numbers but they don't deplete as rapidly.  They are very wet and are cheaper and faster to drill.  Of course, like all shales, the UD will vary with area so your area may not be as good.....or it may be better.

As for oil, it all depends on your area. I have no idea where they would find oil but they might find some. Oil seems to show up in pockets where it pools in certain domes. Many have been drained out but I am sure there is more oil to be found.

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