The Appalachian Basin's gas endowment extends from upstate New York through Pennsylvania, the Virginias, eastern Kentucky and into Alabama's Black Warrior Basin. The region contains nearly 6% of all U.S. gas reserves and some 3% of production.

But efficiently producing gas from shale and coalbed-methane plays in the region is not as simple as making hole and sitting back to watch the gas flow. It takes innovative thinking and skillful use of technologies. Horizontal drilling, which can triple production without tripling costs, is one of these technologies. Air drilling and smart water-handling are others.

Among producers using these is Equitable Resources Inc., based in Pittsburgh. Equitable is one of the largest gas suppliers in the Appalachian Basin. From its 3.3-million-acre position, its gas production is 250 million cubic feet per day and proved reserves are 2.5 trillion cubic feet.

Equitable drills exclusively in Pennsylvania, West Virginia, Kentucky and southwestern Virginia. Its two major plays target Devonian shale, where the company uses horizontal drilling, and coalbed methane (CBM), drilled with traditional vertical methods, in Pennsylvanian-age coals in southwestern Virginia. Equitable's biggest field in southwestern Kentucky is Nora Field, which may be expanded into eastern Kentucky.

"The Appalachian Basin is the oldest oil and gas basin in the country. It's been undergoing a significant renewal over the last few years and innovation is leading the way," says Murry S. Gerber, Equitable Resources president and chief executive.

Horizontal drilling can be used in many situations where conventional drilling is impossible or cost-prohibitive. A horizontal well is commonly defined as one whose lower part is parallel with the targeted zone.

"We're not the first to employ horizontal drilling, but we are doing it in a unique manner, using air drilling. It's our linchpin technology in formations that previously were thought not to be amenable to horizontal drilling. We really crossed a technological barrier here."

Most wells and almost all horizontal wells are drilled traditionally with fluid to increase lubrication and reduce vibration. Equitable, however, is drilling wells on 80-acre spacing exclusively with air.

Instead of using mud pumps and mud-handling equipment, Equitable uses large compressors to force air down the well to the drillbit and bring cuttings back to the surface for disposal. These basins are underpressured and dry (without water production) so air drilling is an economic alternative to mud drilling.

"Air drilling was never thought to be applicable for widespread use in horizontal drilling. I think it is fair to say that Equitable now has the world's leading application of horizontal air drilling. No one has done as many successful air wells as we have, using this technology."

Most importantly, with horizontal air drilling, the company is getting more than three times the production results of vertical drilling, which means it has absolutely increased the productivity of Appalachian gas extraction.

"We're leading the technological charge here. We want to increase the amount of gas coming out of these wells and drill a heck of a lot more," Gerber says.

"The gas business is, at the end of the day, a commodity business, and the winners in extracting oil or natural gas are ultimately those that can do it in a more productive manner. That's what this technology is bringing us."

An ancillary benefit is a reduced footprint. To drill a horizontal well, Equitable must use a slightly larger drillpad, but uses fewer of them and can drill a number of wells from the same pad, depending on the location. Its horizontal wells extend laterally as far as 4,000 feet, although they are typically drilled 3,000 to 3,500 feet.

Appalachian shale has traditionally been considered uneconomic. "It's interesting that every well Equitable drills today wouldn't have been drilled by anyone 10 to 15 years ago. It's a big step forward and it's a great reawakening for the Appalachian Basin."



CBM drilling

Meanwhile, drilling for CBM produces another unique set of challenges. Because CBM wells produce water in addition to gas, Equitable again uses specific-use technology, in this case an artificial-lift process, to handle the water.

"We have about 13,000 wells, and about 9,000 miles of pipelines connecting all the wells. That creates quite an information-technology challenge. Over the last five years, Equitable has employed a lot of wellhead automation."

To handle the produced water, Equitable installs automatic plunger lifts. It's like artificial intelligence, he says. The automation allows the wells to dispose of water automatically without field personnel going onsite to do it manually. The technology comes from several suppliers.

The more water in the well, the harder it is for the plunger to lift water out and for the plunger to travel to the surface. The automation programs are written in such a sway that the software can acknowledge a problem and speed up the time between artificial lifts. Conversely, when less water is indicated, the software automatically slows down the plunger timing. The well "learns" how to unload the water itself.

One of the leading CBM producers in the Eastern U.S., the company typically drills vertical wells on 60-acre spacing. "Over the last year or so, we have started to drill successfully on 30-acre spacing. And we think that works, which means we have basically been able to double the number of locations we originally thought we had."

Equitable has strategic midstream activities to take advantage of the production realized through horizontal drilling and the other technologies it uses. Part of its midstream business involves stripping gas liquids from the high-Btu shale gas in the basin, and sending it to MarkWest Hydrocarbon, Dominion or others for fractionation.

The CBM is exclusively methane, and is put directly into the sales pipelines. "We just take the water out and it is good to go. These are bituminous coals, so the sulfur has been pretty well cooked out."

Equitable plans additional midstream projects. Its Big Sandy plant and pipeline built to take gas from the company's expanded horizontal-drilling plays are nearly completed; another project is on the books.

The Big Sandy pipeline starts near Langley, Kentucky, and heads north to connect with Tennessee Gas Pipeline in northeastern Kentucky. There's also a large processing and compression facility, called Langley, in eastern Kentucky, comprised of a 70-mile pipeline and a 100-million-cubic-foot-per-day plant, representing more than $200 million of capital investment for Equitable.

In Virginia, Equitable is building the Blue Ridge pipeline to take the increased CBM production from Nora Field. Blue Ridge starts at the Big Stone Gap area in Virginia, and connects to the existing Jewel Ridge pipeline, which is a little farther east in Virginia. Gerber says being close to the East Coast market is good, and he is happy with gas prices so far.

Equitable's capital budget for this year is $700 million, which will be spent on horizontal drilling, CBM drilling and gas take-away infrastructure. The company also has 61 billion cubic feet of gas storage, but does not plan to increase that capacity this year.

"You can take this innovation theme and apply it to a number of different companies in a number of different places, but I think it is the genius of this kind of innovation that, collectively, is going to help solve the energy problems for the country," he says.