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Blowout of EOG Well in Marcellus
By: Zacks Equity Research
June 07, 2010

A Pennsylvania natural-gas well, located in the Marcellus Shale and owned by EOG Resources Inc. (EOG - Analyst Report), erupted with natural gas and drilling fluids last Thursday night. The well was in the final stage of completion when the incident occurred. Operators of the well were engaged with the extraction of the gas after using a technique called hydraulic fracturing, in which millions of gallons of drilling fluid are infused at high pressure to crack and open the shale rock and release the gas.

The blowout at a natural-gas well caused the eruption of explosive gas and polluted fluid (1.5 million gallons) as high as 75 feet into the air before squads were able to control about 16 hours after it started spewing gas and brine.

According to a spokeswoman of the EOG Resources, the emission did not turn into fire and no injuries were reported. However, Department of Environmental Protection cited that the incident could have turned tragic destroying life as well as property. The agency also promised to take preventive measures to avoid similar errors in future.

The Marcellus Shale, also referred to as the Marcellus Formation, is a Middle Devonian-age black, low density, carbonaceous (organic rich) shale that occurs in the subsurface beneath much of Ohio, West Virginia, Pennsylvania and New York. Small areas of Maryland, Kentucky, Tennessee and Virginia are also part of the Marcellus Shale. The presence of an enormous volume of potentially recoverable gas in eastern United States raises Shale’s economic implication. The speedy expansion in the shale has essentially boosted U.S. gas supplies, thereby reducing prices. However, environmentalists blamed that the use of chemical-laden water for shale drilling could contaminate water supplies, hampering the ecological balance.

The blowout from the EOG well is not the first in the area. In September 2009, Cabot Oil & Gas Corp. (COG - Analyst Report) stated that faulty piping connections had led to two spills totaling 7,980 gallons of drilling fluid in Susquehanna County and a third leak resulted from a ruptured hose during a pressure surge.

We continue to remain optimistic on the company’s operational excellence and steady management that will enable it to experience further organic growth in the resource base. However, the current incident makes us cautious as thousands of barrels of oil continue to pump into the Gulf of Mexico every day from the oil spill, thereby making this an extremely sensitive period for the energy industry.
aus der Diskussion: EOG Resources - unconventional Gas Producer
Autor (Datum des Eintrages): R-BgO  (07.06.10 15:16:16)
Beitrag: 9 von 12 (ID:39641813)
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