Seneca Energy Production Company

From Wikimarcellus

Houston, Texas-based Seneca Resources Corp. aka Seneca Energy Production Company is a wholly-owned subsidiary of National Fuel Gas Co. focusing on gas exploration and production. Seneca's leasehold of 730,000 acres is located primarily in Pennsylvania and western New York.

In September, 2008 Seneca was reported to have won four leases in competitive bidding for tracts in the State of Pennsylvania's forest lands in Tioga and Lycoming Counties. Eighteen tracts were offered for bid.

A January, 2009 report indicated that Seneca is the third largest holder of Marcellus shale. As of that date, it had not drilled in the Marcellus shale formation itself, preferring instead to participate through a joint venture with EOG Resources Inc. However, the company planned to become a driller of record during 2009. An August, 2009 report stated that combined, Seneca and National Fuel (parent) controlled roughly one million acres of drilling rights prospective for Marcellus shale.

By February, 2009, a report stated that the company planned 10 vertical wells in 6 different counties and would begin drilling immediately in Tioga County. These were to be Seneca-only wells, not involving EOG, and intended primarily for assessment and evaluation. Update #1:The company announced in April, 2009 that preliminary drilling results from the first three of these wells was positive and the company planned to drill additional ones on the same tracts. Horizontal drilling was expected to begin during the summer months of 2009. Update #2 A November, 2009 company update announced that Seneca had drilled 11 vertical wells in 7 counties. The company was in the process of evaluating log and core data while attempting to prioritize its acreage. During the third quarter of 2009 the company had also drilled and completed its first two operated horizontal wells in Tioga County. Together these wells had a joint 7-day initial production (IP) over 10 Mmcf/d, or 5.8 Mmcf/d and 4.7 Mmcf/d, respectively. The company had also fielded two rigs with a third one expected to be running by the summer of 2009. (Scroll down for additional updates)

Also in April, 2009, Seneca was reported to have walked away from signing a lease for two Pennsylvania state forest land tracks, totaling 4,400 acres, it had won in competitive bidding. A company official cited the main reason for declining this acreage was higher than expected pipeline construction costs. Later in April, Seneca announced that it had completed one vertical well on a forest tract in Tioga County known as Pennsylvania Department of Conservation and Natural Resources (“DCNR”) Tract Number 595. The company also announced in April that drilling was to begin immediately on Tract 100 in Lycoming County, PA. All of these tracts, including the ones declined, were acquired through the above mentioned competitive bidding from September, 2008.

In a May, 2009 company update, it was noted that Seneca and EOG were testing a Marcellus well that had an initial 7-day flow rate of 3 Mmcf/d.

Seneca's 2006 joint venture with EOG gave it the opportunity to earn a 50% share of EOG's 120,000 acre leasehold, and the latter could earn a 50% share in Seneca's acreage. However, the above May, 2009 update indicated that, in the well above, Seneca enjoyed a 60 percent net revenue interest. It has a 50% working interest, yet a 60% revenue interest in the joint venture. EOG was to operate this well. With the earliest two wells in the joint venture, Seneca had owned only a minority interest.

The company also mentioned in a May, 2009 update that it planned to drill 10 vertical and two or three horizontal wells during 2009. It also planned to work on 10 other wells with EOG during the year. These were believed to be the above mentioned ones.

A June, 2009 report found Seneca teaming up with Hess Corp to sign three landholder coalitions in Broome County, NY.

July, 2009 found Seneca and EOG having drilled 9 wells in Elk County, PA. Four of these wells were set up for real time monitoring. This allowed checking the status of the wells while hydro-fracturing was underway so that decisions on fracturing issues could be quickly made.

According to a second quarter, 2009 update that appeared in August, 2009, Seneca and EOG had completed and flow-tested four Marcellus shale wells. The initial production from these averaged 2.3 Mmcf/d and ranged from 1.4 to 3.3 Mmcf/d. It was unclear from the report whether these were the same as the above mentioned ones in Elk County.

Seneca also drilled wells outside its joint venture with EOG, yet EOG was retained as operator. The second of these horizontal wells had been drilled in Tioga County. This was probably one of the wholly-owned Seneca wells mentioned above in February, 2009. In August, 2009, it was further reported that the company had been laying approximately 30 miles of gas gathering pipeline through Tioga and Lycoming Counties to collect its Marcellus shale production and ship out through larger capacity interstate pipelines to eastern markets.

According to a September, 2009 report, Seneca Resources had drilled a Marcellus shale well starting on Aug. 5, 2009 just northwest of Hemlock Creek in Tionesta Township in Pennsylvania's Forest County. On August 8th the company had also begun two vertical Marcellus wells in Warsaw Township east of Brookville in neighboring Jefferson County.

Also in September, Seneca announced that its first wholly-owned and operated horizontal Marcellus shale well had produced at the initial flow rate of 5.8 Mmcf/d for six days with virtually no decline. This well is located in Tioga County, PA. A second horizontal well was also completed in the third quarter of 2009 with an initial 7-day production (IP) of 4.7 Mmcf/d. Update #1: In November, 2009 the company stated that it was in the process of drilling its fifth operated horizontal well and expected to have additional fracs completed by yearend. This included a zipper frac that involved fracing two side-by-side wells--alternating between first fracing a stage in one well and then fracing the next stage in the parallel well and then back again to the other, etc. Update #2: A late December, 2009 update from the company stated that the third Seneca-operated well had come in with an initial 24-hour rate of 10 Mmcf/d and averaged 9.5 Mmcf/d over the next 7 days. The same report noted that the 7-day initial production for all of Seneca's Tioga County horizontals had been averaging 6.7 Mmcf/d.

Regarding the EOG joint venture, the November, 2009 update stated that 10 horizontal wells had been completed in the program with 4 more horizontals still in various stages of completion. A number of these had been drilled in the Punxsutawney focus area. Two of the wells were already on production and several more were expected to be so in the following months. In total, 17 vertical wells and 18 horizontal ones had been drilled. 12 of the horizontals ones had been fraced and completed, and 3 were already producing. Update: As of a January, 2010 company update, 22 horizontal wells had been drilled in the joint venture, 12 had been fraced and 5 were producing. None of the Punxsutawney wells were online.

At the close of 2009, Seneca had fielded 2 horizontal rigs on its Marcellus shale acreage and planned to drill 50-70 horizontal wells during 2010 including those part of its EOG joint venture.

According to a January, 2010 update from the company, it brought two Marcellus shale wells online in December, 2009 flowing them into the Covington system. These two wells had a combined production of 8.5 Mmcf/d. Two Tioga County wells had also recently been completed. The first had 9.5 Mmcf/d initial production. It had a 5700 foot lateral and had been fraced in 15 stages. The other well was still in the process of being flow tested. Other items in the update were that:

• Seneca had average production of 6.7 Mmcf/d on its first three operated horizontal wells.
• It had also won two blocks in a state lease sale adding 18,000 acres in Tioga and Potter Counties to its total leasehold. These block were located in close proximity to the Covington area activity.
• Seneca planned to field four rigs during 2010--two in the eastern part of the play and two in the west--and planned to drill 35 to 45 operated wells during 2010.
• It was nearing total depth on a well in McKean Co. and was about to frac a well in Elk Co.
• 80% of Seneca's Marcellus production came from three of its own operated wells.

An August, 2010 company update mentioned that the company had deployed a third company-operated rig in the Marcellus shale.

In October, 2010 Seneca had been fined $40,000 by the DEP for apparently running afoul of Pennsylvania regulations regarding a one acre impoundment for fresh water to be used in hydro-fracturing located at a well site on wetlands in the Tioga State Forest. The site was in Bloss Township in Tioga County. The company had submitted a plan to PDEP for correcting the situation. It had been approved, and was in the process of being implemented.

• Matthew D. Cabell is President of Seneca Resources.
• Michael (Mike) T. Donovan is Seneca's Land Manager and in charge of business development in Pennsylvania.
• Nancy Taylor, Doug Kepler, and Julie Coppola Cox are spokespeople for the company.