Friday, February 22, 2019

CNX Utica Well Accident Will End Up Costing Company Millions of Dollars

Last month CNX discovered a leak as they were finishing a Utica shale well in Pennsylvania, as mentioned on our blog.  Now the price tag from the problem is becoming clear.

From the Pittsburgh Post-Gazette:
The opportunity to complete the three wells that didn’t trigger the problem still exists, the company told investors on Monday. But that’s not on the budget for 2019 or the carryover budget for 2020. 
These large Utica wells — which CNX pioneered in this area of southwestern Pennsylvania — are voluminous, both in gas production and expense. They are about a mile deeper than their Marcellus cousins and the gas they tap is therefore at greater pressure than in the shallower layers. 
In the most recent company earnings call, executives said they’re spending around $14 million per well for development, but they’re shooting to get that down to $12.5 million. 
On Monday, CNX disclosed that all told, the Shaw pad will account for $30 million in capital spending this year. That includes the cost of drilling and partially fracking the four Utica wells, as well as the remediation costs, which are anticipated to include plugging the leaky well with cement.
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