Nov 14, 2013 3 min read

When Range Resources presented its third quarter earnings report Oct. 29, Chief Executive Officer Jeff Ventura discussed the company’s future earnings potential coming from the Southwestern Pennsylvania portion of its million-acre leasehold in the state.

The company noted that more than half its leasehold – about 540,000 acres – essentially doubles “when stacked pay reservoirs across most of our acreage in the (Appalachian) Basin are considered.

“This acreage position is anchored by the Marcellus, the most prolific gas reservoir in North America,” Ventura said.

For the first time, the company released “estimated gas in place maps” or GIP maps, indicating that its Southwestern Pennsylvania acreage is strategically located at the nexus where the largest estimated gas in place exists when considering all three shale horizons – the Marcellus, Utica and Upper Devonian.

“Range believes that this area also encompasses the core of the super-rich and wet areas of both the Marcellus and Upper Devonian shales,” Ventura said.

Range’ GIP maps describe specifically where the gas and oil exploration company has been focusing its production efforts in Southwestern Pennsylvania for the past few years.

GIP is a function of pressure, temperature, thermal maturity, porosity, hydrocarbon saturation and net thickness in a shale strata.

According to Range, the greatest GIP in the Upper Devonian Shale strata is found in Southwestern Pennsylvania. It also notes that a significant portion of the GIP in the Upper Devonian is located in the wet gas window. The greatest GIP in the Utica/Point Pleasant shale is in the dry gas window in Southwestern Pennsylvania.

When GIP analysis from the Marcellus, Upper Devonian and Utica/Point Pleasant are combined, Range said the largest stacked pay resource is located in Southwestern, where the company has concentrated its acreage position.

To put it more succinctly, “Southwestern Pennsylvania is the most hydrocarbon-rich portion of Pennsylvania with 250 billion cubic feet to 425 Bcf per square mile,” noted Range spokesman Matt Pitzarella.

Range’s information coincides with an Oct. 22 report from the Energy Information Administration that natural gas production from the Marcellus is growing faster than expected.

According to the EIA, Marcellus production has reached 12 billion cubic feet per day.

The amount has an energy equivalent of about 2 million barrels of oil a day, and is more than six times the 2009 production rate.

Range’s information is also supported by a July report from Credit Suisse, which estimated that the value of an acre in the Super Rich Marcellus is nearly $196,000, while an acre of the Super Rich Upper Devonian is valued at $83,970.

While Credit Suisse valued the Utica Shale’s dry gas at $113,235, Pitzarella said it is more likely that the wet gas portion of the Utica would bring around $50,000 per acre, meaning that the half-million acres would have a multiplier of around $300,000 per acre for all three shales.

“But we’ve only scratched the surface” of the acreage, Pitzarella said, noting that while the company now has about 500 producing horizontal wells in the region, they represent only around 7 percent of the potential production from the 540,000 acres under lease.

“It further confirms that this is the place to be” for natural gas production, Pitzarella said, adding that the GIP map projections underscore the fact that Southwestern Pennsylvania is sitting on one of the largest supplies of natural gas in the world.