American Oil and Gas Reporter - November 2021 - 44

SpecialReport: Marcellus/Utica Update
Driven by the Marcellus Shale, Appalachian
gas production soared to an
historic high in October, averaging 34.8
billion cubic feet a day, according to the
U.S Energy Information Administration.
That was up by 1 Bcf/d year-over-year
and effectively double 2016's output. But
despite the basin's critical supply contribution,
pipeline capacity growth has
slowed in the wake of highly publicized
project cancellations. After expanding
from 4.5 Bcf/d in 2008 to 24.5 Bcf/d in
2020, pipeline capacity failed to increase
in 2021 for the first time in several years.
Help is on the way, however. The 2 Bcf/d
Mountain Valley Pipeline is scheduled to
enter service in 2022, connecting the Equitrans
transmission system in northwestern
West Virginia to the Transcontinental
Gas Pipeline in southern Virginia.
Bright Future
Despite the challenges, the future of
Appalachian gas is bright, especially considering
the International Energy Agency's
estimate of a 50% increase in global energy
demand by 2050, says Toby Rice, EQT's
chief executive officer. As the nation's
number one producer of natural gas, the
company is producing 5.5 Bcfe/d or 2
trillion cubic feet equivalent annually.
Rice estimates that building new interstate
gas pipelines to alleviate fragmentation
in the domestic market and
more liquified natural gas export facilities
to supply global demand hubs will
allow U.S. shale producers to add 20
Bcf/d of new supply in a relatively
short period.
" That sounds like an ambitious goal,
but when you look back 15 years, the industry
nationally was producing just under
6 Bcf/d from shale formations. Now we
are producing 70 Bcf/d from shales, " he
points out. " The Appalachian Basin alone
has added nearly 21 Bcf/d in production
over the past seven years. "
EQT has a 25-year core of long-lateral,
" combo " development projects supported
by advanced digital technologies, longrange
well planning, and closely coordinated
drilling and stimulation operations
on multiple pads at the same time, Rice
says. Given gas price dynamics, the company
could easily ramp activity in the
face of compelling economics, but is
electing to keep its focus on " sustainable
growth instead of chasing price signals, "
he adds.
" Sustainable growth is securing longterm
supply, pairing up long-term demand
with long-term supply agreements,
and then using those as vehicles to
grow, " Rice remarks. " If the industry
does it any other way and just grows
production and throws the commodity
on the market, we will end up in the
same situation we saw in 2020 when
gas prices were $2/MMBtu. I think operators
are smarter now. "
Consequently, with industry investors
heavily favoring free cash flow, deleveraged
balance sheets, and zero-carbon
footprints, Rice says EQT is continuing
to maintain a " production maintenance
mode " strategy on its 1.5 million acres
in the basin. The company plans to drill
a total of 1.2 million horizontal feet per
year, with laterals averaging 12,000 feet
per well. Its Pennsylvania Marcellus assets
lead the way in low developed well costs
among company holdings at $675 per
completed foot of lateral, he offers.
Over the past two years, EQT has
doubled drilling speeds and increased
completion efficiencies by 75%, using
gas-fired turbine " e-fleets " to stimulate
wells with 2,000 pounds of sand and
2,000 gallons of water per lateral foot on
average, according to Rice. EQT also is
investing in water and logistics infrastructure
to serve its footprint and further
drive down costs.
Strategic Drivers
EQT is focused on sustainable growth of its 25-year core of long-lateral, 'combo' development
projects supported by advanced digital technologies, long-range well planning,
and closely coordinated drilling and stimulation operations on multiple pads.
44 THE AMERICAN OIL & GAS REPORTER
Consolidating and fully leveraging
recent acquisitions, while simultaneously
optimizing ESG performance, remain
key strategic drivers for EQT, Rice states.
Its purchase earlier this year of Alta Resources
Development added 300,000 net
northeast Marcellus acres, 1 Bcfe/d of
current net production, 300 miles of midstream
gathering systems, 100 miles of
freshwater systems, and a firm transportation
portfolio to premium demand
markets, he summarizes.
That followed up EQT's $735 million
purchase of Chevron's Appalachian assets
in 2020. That deal included current net
production of 450 MMcfe/d, 335,000
total net Marcellus acres (125,000 core
net acres), 31% ownership of Laurel
Mountain Midstream, and two water systems
in Pennsylvania and West Virginia.
Even with its expansive operational
footprint and its standing as America's
" largest pure-play natural gas producer, "
Rice says the company plans to be net
zero for Scope 1 and Scope 2 emissions
by 2025. EQT has an initiative underway

American Oil and Gas Reporter - November 2021

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