PITTSBURGH—The industry needs to remember there is more to value creation than dollars from top-performing wells; water and air protection are important as well, David Dell’Osso, vice president and general manager for Southwestern Energy Co.'s (NYSE: SWN) Northeast Appalachia division, said at Hart Energy’s recent DUG East Conference and Exhibition.

Dell’Osso said the company’s formula for value creation enables it to focus not only on top-quartile wells and longer laterals in the Marcellus and Utica, but also, water restoration and ultimately, higher value in a dollar sense.

The company ramped up in late 2014 when it acquired Appalachian acreage from Chesapeake Energy Corp. (NYSE: CHK) for nearly $5 billion. “We think this basin matters to America,” Dell’Osso said.

“The meteoric growth in oil and gas production in the U.S. means cheap, abundant energy supply is here to stay—and the remarkable story is heavily anchored to what’s happened in the Appalachian Basin. That growth trajectory began in 2010-2011 in terms of gas supply, and it’s been accompanied by a massive ramp-up in the chemicals industry and a resurgence in American manufacturing.”

RELATED VIDEO: View David Dell’Osso’s speech at Hart Energy’s DUG East Conference & Exhibition

Southwestern has played its part by being innovative on completions and environmental protection. This pioneer in the shale revolution started by discovering the Fayetteville Shale in Arkansas, where it has produced over 5 Tcf of gas on a gross basis. Lessons learned there, where Southwestern continues to dominate activity, are being applied in the Northeast, where the company’s daily production now outpaces that of the Fayetteville.

“That is where we really cut our teeth and built our operational capabilities, which we then moved to the Appalachian Basin. We starting leasing here in 2006 and since then, in late 2014, we acquired assets in the panhandle of West Virginia,” Dell’Osso said.

The company acquired 413,000 net acres, mostly in West Virginia’s panhandle, where it now estimates 1,925 locations if $3 gas prevails.

The panhandle assets overlie a resource-dense area with a tremendous amount of gas in place, from dry Utica, liquids-rich Marcellus and liquids-rich Upper Devonian. The company sees up to 45 Tcf of resource there and 4,200 drilling locations under different gas price scenarios.

“We have built our business around the idea of agility and the ability to focus our investment appropriately. The end result is that Southwestern’s estimated production exit rate from 2016 to 2017 was up 50%,” he said.

“We just got on line our first Utica well in southern Marshall County, WV, the O.E. Burge. We believe that’s a top-quartile well in terms of performance.” It flowed 17 million cubic feet per day (MMcf/d) at high pressure, apparently one of the best wells yet drilled by any operator in the area, he said. “We’re drilling our second well and we think we have 1,400 locations in this area.”

In northeast Pennsylvania, the company has 245,805 net acres in Susquehanna, Bradford, Tioga and Wyoming counties, with a focus on Susquehanna County. In first-quarter 2017, it turned to sales 24 Marcellus wells.

“We’ve drilled over 400 wells, and we continue to drive improvement in these assets, with good results in Wyoming and Tioga. We have developed a very low-cost, integrated transportation portfolio to deliver our product to markets,” Dell’Osso said.

In Tioga, Southwestern has tested laterals as long as 6,700 ft and reported a 30-day IP of 13 MMcf/d per well.

The value-plus goes beyond frack spacing, laterals dollars and shareholders. “The reality is you have to be cost-efficient and capital-efficient. F&D for our PDP is based on the capital invested in wells, divided by reserves associated with those wells,” he explained.

Environmental protection and being fresh-water neutral are constant goals that the company has achieved. It was the first E&P to voluntarily reveal its fracking fluid formulas.

“We’ve seen a tremendous growth in energy supply, but a lot of what we do is well connected with how we do it,” Dell’Osso said. “Two precious resources the industry needs to focus on are clean water and clean air.

“One example is our Fall Brook project in Tioga County: from an abandoned acid mine there, highly dissolved metals were seeping into the Tioga River; about 13 miles of the river was essentially dead, with no aquatic life.”

Southwestern coordinated with The Nature Conservancy, Pennsylvania’s Department of Environmental Protection and other groups to repair this section of the river. They put in place a passive treatment in limestone beds that act as a natural neutralizing agent, bringing the Ph back into balance and the heavy metals were dripped out.

“Since that time, we’ve seen the return of biological species such as trout and the water’s appearance is back to normal. You now have a recreational area again with natural beauty.”

In addition, the company has Project ECHO, which stands for energy conserving water. “We set out a few years ago to be fresh-water neutral by the end of the calendar year 2016, water shed by water shed.”

Southwestern offsets every gallon used through treatment and replenishment in the specific areas it drills.

“We also have a number of other projects in leak detection across the value chain, to make sure we have 99% efficiency and less than 1% methane emissions from wellhead to burner tip.”

Leslie Haines can be reached at lhaines@hartenergy.com.