Larry Prado, activity editor, Oil and Gas Investor, reports from reports from Hart's DUG East conference in Pittsburgh, Pa. EQT Inc. CEO David Porges reveals five lessons that have been key to the company's success.
"We've come a long way from a very short distance," said EQT Corp. president and CEO David Porges of EQT Inc. referring to the first commercial gas well in Murraysville, Pa., that is a mere 18 miles east of the company’s first commercial gas well and their offices in Pittsburgh. And they have come a long way – EQT recently reported the region's highest initial production rate producers, #590384 Cooper in Greene County, Pa., that flowed flowing 22.2 million cubic feet of gas per day.
EQT had 2009 year-end estimates of proved, probable and possible reserves at 12.5 trillion cubic feet, a 32% net increase over EQT's 2008 total that was driven mainly by the success of the company's Marcellus and Huron/Berea horizontal drilling programs. In the third quarter of 2010, the company reported a 35% over the same 2009 period.
"And, we learned a lot along the way," according to Porges. "The main thing was that we believed that we could use our thinking to show the way to better costs structures and from this, we learned five basic and simple things to make us better."
EQT lesson 1: "We began to increase production and reduce costs with pad drilling and skids and drilling extended laterals to maximize Marcellus production while reducing costs. "Our extended laterals doubled the amount of recoverables by focusing on the best rock porosities and permeabilities to achieve maximum fracturing," said the CEO.
EQT lesson 2: "Protecting the environment is good business for the industry. If we're not behaving properly, we can't ask for support from government and regulators." The company triple-cases each well, and has developed an innovative frac fluid recycling program and proactive spill prevention procedures.
EQT lesson 3: "Natural gas is the new neighbor. When neighbors to natural gas raise objections, we work with them as neighbors?from our external affairs staff to our land people to continuously be ambassadors. EQT also believes that good neighbors support each other: "We made a foundation to put money in back into community through the fire departments and other training for using natural gas as a power source."
Porges also explained that they have taken steps, including education for three main complaints–polluting water, dirty air created by diesel engines and excessive water use. EQT has already developed its own frac fluid recycling program to recycle all the water they use. In addition, the speaker proposed that rig-site air pollution concerns can be solved by converting diesel-fueled rig site vehicles to run on natural gas.
EQT lesson 4: Create jobs. According to EQT, the company has a direct economic impact in Pennsylvania with approximately 841 jobs and a multimillion dollar payroll. Porges also suggested that about 100,000 additional local jobs could be created through oil and gas production, and ancillary positions and industries including hotels, trade staff, and a variety of local retail sales.
EQT lesson 5: Create demand. Porges referred to surveys that show public demand for cleaner energy alternatives, which include natural gas. "We can fill the cleaner energy demand with natural gas which includes converting coal-fired power plants to natural gas-power plants."
"Of all the vehicles in our country, only about 1% of all vehicles run off natural gas. In other words, we need to support more gas-fueled opportunities. We can do this at a better level by legislating emissions requirements, not just requiring that vehicle manufacturers make x amount of natural gas powered vehicles each year."