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.