Shell produces dry gas in the Appalachia Basin. This basin offers production with a low break-even point (BEP).
Shell’s operations in the Appalachia Basin are in the mainly rural north central parts of Pennsylvania. We entered the area in 2010 after acquiring 750,000 leasehold acres from East Resources. Since then, we have grown our leasehold acres to around 800,000 acres. In March 2017, Shell divested its shallow rights in the Bardford area to Pennhills Resources. This included around 1,500 shallow oil wells and associated facilities and infrastructure. Shell maintained its deep unconventional rights in the Bradford area. Shell employs around 300 staff and contractors in support of its work in the Appalachia Basin.
In May 2020 Shell announced that it had reached an agreement with publicly listed U.S. energy company National Fuel Gas Company to sell its Appalachia shale gas position for $541 million, subject to closing adjustments. The sale is subject to regulatory approvals and expected to close by end of July 2020.
Shell is currently focused on developing its acreage in both the Utica and Marcellus formations, that have large potential resources and low production costs. We have explored and analysed many areas within our acreage holdings and have advanced several areas into production. Shell focuses on multi-well pad drilling and long lateral wells to improve efficiencies and reduce surface impacts. Our capital expenditure on wells is lower than our competitors or at the same level as our competitors. Shell has driven down costs while increasing efficiency in all areas of its business, proving it can be as nimble as an independent operator. We have an active commercial programme to secure core acreage, while reducing holdings of non-core acreage in our operating area. We have made significant investments in supporting infrastructure such as gathering lines and other pipeline projects.
|Key Data (2017)||Values|
|Acreage||Shell owns interest in approximately 800,000 acres in the Appalachia Basin.|
|Type of Asset ||Dry gas|
|Rigs ||1 operated|
|Production||Approximately 390 mmscf/Day |
Shell puts safety of its staff, contractors and communities first, and will not pursue operations in the Appalachia Basin if they cannot be conducted in a safe and environmentally responsible manner. In our operations, we are committed to Goal Zero - no harm and no leaks. We have stringent safety standards in place covering personal, process and transport safety and expect all our employees and contractors to meet these standards. We work to share best practices, train our staff and strengthen our safety culture. We thoroughly investigate any safety incidents or near-miss events, identify lessons, communicate to staff/contractors and, as appropriate, additional mitigations put in place. Along with commercial and production indicators, Shell’s leadership constantly monitors safety performance across our sites in the Appalachia Basin.
Shell implements its Onshore Operating Principles, which cover safety and well integrity, air quality, water protection and use, footprint and engagement with local communities. These principles are designed to manage or mitigate impacts related to our operations. Shell is also a founding member of The Center for Responsible Shale Development (CRSD), an independent organisation that has developed 15 performance standards, in conjunction with non-governmental organisations and non-profit organisations, to address air and water concerns. Shell Appalachia was certified in early 2015 for meeting all the CSSD performance standards. In 2016, we converted the hydraulic fracturing fleet in our Appalachia operations to electric power, significantly cutting our air emissions and reducing noise and water use.
Shell supports a wide range of social investment programmes in the Appalachia Basin. Over the past three years, Shell has spent around $1.5 million in this area, focusing on education, environment, road safety and health. We support STEM (science, technology, engineering and math) education in schools across the Tioga County to help students meet future workforce needs. We have invested in a number of environmental and community projects within our operating area. Each year, Shell Appalachia sponsors the Pennsylvania Envirothon, which is a natural resource environmental education programme designed for high school students. As a supporter of health and safety, we also have partnered with local first responders to provide training and equipment, and have supported a range of road safety initiatives in our operating area.
Shell Appalachia has an active Community Feedback Program. Local communities in our operating area are able to contact us using a dedicated local telephone number to raise any inquires or concerns. We address these immediately and track them until they are resolved. We also have a detailed pre-and post-drill programme to ensure the safety of the residents and the environment. Throughout the year, we conduct many stakeholder engagement activities so that we can continually monitor and mitigate community impacts. Examples include an annual community open house and meetings with small groups of local residents.