Increased Costs with Marcellus Wells and Pipelines
A new 92-page study released by the University of Pittsburgh estimates the direct costs of drilling a single Marcellus Shale gas well. The study, called the “Economic Impact of the Value Chain of a Marcellus Shale Well,” looked in depth at an EQT-drilled well in Washington County, PA.
A single well had direct costs of more than $7.6 million. The costs to drill a well break down this way:
- Land acquisition and leasing: $2.1 million
- Permitting: $10,000
- Vertical drilling: $663,000
- Horizontal drilling: $1.2 million
- Hydraulic fracturing: $2.5 million
- Completion: $200,000
- Production to gathering: $472,000
- TOTAL…………………………………………….$7.6 million.
Shale gas pipeline construction costs in 2011 have tripled compared to 2004 prices to almost $200,000 per inch-mile for new projects, according to a report by Ziff Energy Group . The Marcellus region was the most expensive, averaging about $300,000 per inch-mile. For a new pipeline running 120 miles with a diameter between 24 and 36 inches, the cost would be about $500 million. Many smaller and shorter pipelines are being installed in West Virginia.
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CONVENTIONAL GAS WELLS IN WESTERN NEW YORK STATE, TO A DEPTH OF ABOUT 3000 FEET, COST ABOUT $250,000 EACH AND INVOLVE LIMITED FRACKING. PROPOSED REGULATIONS DUE OUT IN OCTOBER WILL LIKELY DISTINGUISH BETWEEN THESE AND MARCELLUS WELLS AT 10,000 FEET, FOR EXAMPLE.