The Marcellus shale gas play is the largest unconventional natural gas play in North America, according to a 2009 report prepared by the U.S. Department of Energy. The Marcellus shale gas play covers an area of approximately 95,000 square miles over 6 states in the northeastern United States. With its proximity to the large northeast U.S. natural gas market and expanding pipeline take-away capacity, Marcellus gas receives a premium price and has one of the lowest breakeven production costs in North America.
We entered the Marcellus shale gas play in September 2009 and since then we have invested a total of $29 million. At year end 2009 we held an average 23.6% working interest in over 126,000 net acres of Marcellus prospect land. At that time we had a total of 43 wells drilled with 11 wells on production, 22 wells waiting to be completed, and 10 wells awaiting tie-in. Daily production average 2.1 MMcfe/day net to Enerplus during the month of December. We currently have four rigs working in the play with a fifth rig expected early in the second quarter of 2010 and plan to drill and complete 12 gross wells and tie-in 8 additional wells during the first quarter of the year.
Although only a limited number of wells have been brought on production since our acquisition, we are seeing encouraging tests which support higher production profiles than used in our original assumptions. Since the acquisition we have added 10,000 net acres to our position and have swapped acreage to consolidate our position.
Our independent reserve engineer's best estimate of natural gas contingent resources in our Marcellus acreage increased to 0.7 Tcfe from our original best estimate of 1.4 Tcfe to approximately 2.1 Tcfe at December 31, 2009. This increase is based on area results which support higher type curve recoveries and higher well density and overall recoveries per section. In addition, we booked 25 Bcfe of natural gas proved plus probably reserves at year end, an increase of over 200% from the proved plus probable reserves acquired effective July 2009.
Key Statistics:
- 2010 expected production: 10,800 Mcf/day
- 2010 development capital plan: $80 million, 11 net wells
To learn more about Horizontal Drilling - How it Works Video
For additional information on the Marcellus shale gas play, visit the following websites:
For a detailed analyst presentation on our Marcellus acquisition, click here.
To read the press release announcing our Marcellus acquisition, click here.
For further information on all of our resource plays, click here.
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