Chesapeake meeting draws sizeable crowd

ATHENS, Mar 06, 2009 (The Daily Review - McClatchy-Tribune Information Services via COMTEX) -- CHK | Quote | Chart | News | PowerRating -- More than 850 area residents attended a public meeting held by representatives from Chesapeake Energy on Thursday night at the Athens Area High School to explain how Chesapeake operates and to answer questions.

Brian Grove, director of corporate development for Chesapeake Energy, has said that Chesapeake always tries to hold public meetings in areas where it is doing significant operations.

"We take very seriously our commitment to working with the communities that we operate in," he said. "Events like this are essential to building relationships with the towns, counties and individuals that we do business with."

Statistics

Mike John, vice president for corporate development, told the crowd about Chesapeake Energy and about the well-drilling process it uses.

John said that Chesapeake currently has around 100 drilling rigs running with a success rate of 98 percent for finding commercial quantities of natural gas. The company drills exclusively onshore and domestically to look for natural gas, and is the largest producer of natural gas in the United States, he said.

"We're confident that we are, far and away, the premier driller in the United States," John said.

In the Marcellus Shale, he said, there are currently six drilling rigs running -- three in Northern Pennsylvania and three in West Virginia.

"We would expect by the end of July that we would have maybe six rigs running in Northern Pennsylvania and perhaps six rigs running in Northern West Virginia," John said. "We would expect by the end of the year that between New York and Pennsylvania we would have 16 rigs running in the Marcellus in this general area."

The drilling process

The drilling process is broken down to five steps, John said: site selection, drilling the well, completing the well, marketing the gas and reclaiming the site.

For site selection, John said they will look at all the information on the site available, including historic information, information from Chesapeake's competitors who may be drilling in the area, seismic testing and topography.

When drilling a well, he said they use horizontal drilling, which he said has been used more recently because it is more effective than vertical drilling. When talking about horizontal drilling, John said that Chesapeake wants to emphasize "the improvements in surface disturbance, the lack of surface disturbance, that goes along with horizontal drilling, as well as efficiency in running our pipelines."

With horizontal drilling, he said, there is 85 percent less surface disturbance when drilling for natural gas than with vertical wells.

In completing the wells, John said that after the rigs leave, fracturing takes place, which is when a combination of water, sand and other elements is used to break apart the shale, allowing gas to be produced. The vast majority -- 99.5 percent -- of what is pumped into the shale is sand and water, he said.

"Just under 1 percent is a mixture of other chemicals," John continued. "Those chemicals provide some thickening or viscosity to the fluid that allows that fluid to carry sand. Some of those chemicals act as a friction reducer, something that would allow us to pump this mixture into the Marcellus shale with less pressure. ... Many of the other chemicals are things that you would find in products that we all use every day."

When the process has been completed, the water and gas are separated, and a pipeline takes the gas away, John said.

The final step, reclaiming the site, is a high priority to Chesapeake, he said. He added that the company works to reclaim as much of the land as possible while working closely with environmental agencies to stay in compliance.

Questions from attendees

Attendees were invited before the meeting started to write down any questions they had about Chesapeake, and at the end of the presentation, Grove read the questions, which were answered by the Chesapeake representatives.

One question asked was how a person can know that gas isn't being taken from his property if their neighbor has a well. John said that Chesapeake will not place a lateral underneath an unleased parcel of land. Grove later stated that if Chesapeake is crossing a property line, it needs to have a lease.

Another person had asked how long after a well is drilled revenues will come back. John said if workers drill two wells, it will take a month to drill each well, and a week to 10 days to "fract" them.

"We would be hopeful that we would have gas on line in three months after drilling if we're only drilling two, and then the money would flow when we get our money from the pipeline downstream, which may be another two months after that," he said.

Another question asked was how well Chesapeake would work with townships with road issues. Grove said that it is a big part of his job to work with townships on issues like that, and said he would be happy to talk with any township officials with any issues they have.

After being asked a question about the frequency of water testing, John said that Chesapeake tests all water wells in the area of drill sites before activity in the area.

Currently the water being produced from well drilling is going to either a wastewater treatment plant in Williamsport and one in Sunbury, John said in response to another question.

Investment in Bradford County

Matt Shepard, senior director for corporate development at Chesapeake Energy, talked about the investment in Bradford County that Chesapeake will have.

"I would say it's safe to say by the end of the year we could be spending up to $90 million a month drilling wells in Bradford County alone," Shepard said. "That's a significant investment and that's an investment we are poised to make."

Shepard said that Chesapeake has some positions that it will need to fill and will hire locally for them. It recently established an office in Towanda, he said, and will need to fill positions such as well tenders, laborers, pipeline foreman, facilities foreman and more. Also, other vendors will be looking to hire locally for things like hauling, pipeline work and construction, he said.

A video clip was shown about how businesses in Susquehanna County had prospered by the increased amount of people who came to the area from drilling.

"There will be a lot of people that do come in to do work here and hopefully they are spending money in the community," Shepard said of Bradford County.

He added that Chesapeake will also be active in charity work in the community. He said it had made a donation to the Bradford County Regional Arts Council, that it will be donating a vehicle to the Area Agency on Aging, and it will be supporting the program Discovering Tomorrow's Leaders.

"You will see us be very be active philanthropically here in Bradford County," Shepard said.

Tiffany Peden may be reached at (570) 888-9652; e-mail: reviewvalley@thedailyreview.com.

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