Published: July 10, 2015 |

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Corky DeMarco, executive director of the West Virginia Oil and Natural Gas Association.
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A dollar and 24 cents. That’s the amount the price of 1,000 cubic feet of natural gas will have to increase before industry experts expect West Virginia’s natural gas industry to explode.

As of press time, the price of 1,000 cubic feet of natural gas was at $2.76. Corky DeMarco, executive director of the West Virginia Oil and Natural Gas Association, said when the price per 1,000 cubic feet reaches $4 or more, gas companies currently drilling in the area - including Lawrence County, Kentucky, across the Big Sandy River from Wayne County - will likely make the trip over the border.

“The price of gas today is probably the limiting factor,” DeMarco said about why, as of now, only one test well is operating in the area, in Putnam County near Hometown, West Virginia. “The reason everyone is concentrated on the western part of the Marcellus and Utica shales is because in addition to the price of gas, they can sell off other hydrocarbons produced from drilling such as ethane, butane, propane, isobutane. The gas stream has more value than just the price of gas. At its current price, unless we create more supply in the United States, it is not conducive to major exploration. We got so much of the commodity in this country that we don’t have enough outlets.”

But the anticipated boom in West Virginia is deeper than the Marcellus and Utica shales, literally. The future of southern West Virginia’s natural gas industry is the Rogersville Shale, which lies anywhere from 9,000 to 14,000 feet beneath several counties in the southwestern part of the state and eastern Kentucky. Pittsburgh-based Cabot Oil and Gas operates the test well in Putnam County. Although DeMarco has no specific numbers, he said he has been told the well has produced positive results.

“Time will tell about drilling in the Rogersville Shale in West Virginia,” he said. “I don’t know what the numbers are on the well in Putnam County. I can only go by the assumption that production is good because Cabot is interested in taking leases.”

It’s more of a “when” than an “if” drilling begins in the Rogersville Shale in West Virginia, DeMarco said, and when it does, he anticipates a jolt in the economy similar to the one in the other parts of West Virginia.

“I think you will see the type of development that’s going on in the northern part of the state if (drilling in the Rogersville Shale) proves to be everything people think it’s going to be,” he said. “You’re going to see all of West Virginia drilled again. Every place that has been previously drilled all over the state, except the three counties in the eastern panhandle, will be drilled again.”

If the price of natural gas increases to the point natural gas production becomes conducive, additional wells would likely be drilled in Wayne, Putnam and other counties in West Virginia that are above the Rogersville Shale, DeMarco said. For now, however, the lack of drilling in the Rogersville Shale is economics in its simplest form.

“If the demand and supply increase, we’ll see some activity,” DeMarco said. “Natural gas is a commodity, and just like any other commodity, it’s all about supply and demand. The price is what’s holding the gas companies back. Price is the driving force on production. In order to drive that price the demand has to go up. At some point in time companies are going to stop drilling because drilling costs money and the wells aren’t profitable. You could drill all the wells in the world, but if you can’t sell the gas there’s no point.”

The anticipated increase in drilling activity was the subject of a workshop to educate mineral owners about the Rogersville Shale and other formations that took place May 16 at Morehead State University’s campus in West Liberty, Kentucky.

“There has been a lot of leasing and drilling activity in (the Rogersville Shale) over the past two years,” said Dick Wilson, National Association of Royalty Owners-Appalachia Chapter board member and owner of Wilson O&G LLC. “It’s important we partner with people to bring in experts who can discuss economics, geology, leasing language and other topics for mineral owners with rights in the Rogersville Shale.”

Wilson said the Rogersville formation could be one of the biggest in the Appalachian Basin, if not North America, and could “drastically benefit” citizens in parts of eastern Kentucky, West Virginia and Ohio.

“In a region left behind by development of the Marcellus and Utica shales of bordering states, leasing and producing oil and gas from a deep geological zone such as the Rogersville Shale could bring substantial newfound personal income and jobs to this region similar to what has happened in other oil and gas areas of the northeast,” Wilson said.

In a press release dated March 31, Reid Porter, spokesperson for the American Petroleum Institute, said a survey conducted by API in 2014 concluded the oil and natural gas industry is already an important economic engine in West Virginia, supporting more than 80,000 jobs and contributing $5.8 billion annually to the state’s economy.

DeMarco said there are wells being drilled today that will not be completed, and the completion process is what begins the process of natural gas production. He said companies drill the wells with the intent to begin hydraulic fracturing, or “fracking,” when the price increases.

According to Merriam-Webster’s Dictionary, fracking is the process of injecting liquid at high pressure into subterranean rocks to force open existing fissures and extract oil or gas. Fracking is a controversial process that is often a target of environmental groups. DeMarco said fracking, however, is likely to allow wells in West Virginia to economically produce gas at 30,000 feet below the earth’s surface.

“We know there’s gas there,” he said.

An uptick in natural gas production in West Virginia, DeMarco said, could create an economic ripple effect.

“West Virginia’s natural gas industry thriving is huge in terms of job creation and boosting the economy,” he said. “If we could get back the chemicals and the plastics and all the things we had here in the 1950s, ‘60s and ‘70s, you would see the Appalachian basin explode. We were once industrialized from Pittsburgh to Portsmouth and on all the navigable rivers. We need to get back to that place. It doesn’t make good sense to send all the resources to the Gulf of Mexico only to have chemicals and products made and brought back this way.”

— By:  Brandon Roberts, The Herald-Dispatch