Wyoming County, New York
In 2009, MEI acquired the Java Field, which was discovered in 1978, from which the sandstone member of the Medina Formation is the productive natural gas interval of 17 of the 19 producing natural gas wells in the field. The total depth range of these vertical wells is approximately 2,850’ – 3,500’. Besides the exploitation potential of the Medina Formation, a development project targeting the Marcellus Shale, as is present in a large area of the Appalachian Basin in the northeastern United States, is an additional target for MEI.
The acquisition included 19 producing natural gas wells, their associated leases, units and all equipment; two surface tracts of land totaling approximately 36 acres; and two pipeline systems; a 12.4 mile pipeline and gathering system that serves the existing field, as well as a separate 2.5 mile system located northeast of the field. The company owns approximately 78% net revenue interest in leases covering 2,851.50 gross and net acres, more or less.
Production is nominal from the wells but serves to hold the acreage for future development. In late 2009, we evaluated a number of the existing wells in order to determine the viability of the re-entry of existing vertical wellbores for plug-back and recompletion of the wells in the Marcellus Shale. The Marcellus Shale is approximately 1,240’ above the productive Medina Formation in the Java Field. As a result of this evaluation, we selected the Reisdorf Unit #1 well and the Ludwig #1 well as our initial targets and these two wells were recompleted in the Marcellus Shale and fracked in May and June of 2010. The initial round of testing and analysis provided a solid foundation of data that strongly supports further development of the Marcellus Shale in western New York. Formation pressures and flow-back rates were much higher than expected providing a clear indication of the potential of the resource.
We believe that horizontal drilling, successfully done at this depth in other basins, is ultimately what is needed to maximize the resource.
The State of New York has placed a moratorium on high volume frac stimulation in order to develop new permitting rules. The new permitting rules have not been completed and there can be no assurance when such permitting rules will be issued or what restrictions such permits might impose on producers. Accordingly, we are unable to continue with our development plans in New York for the time being. Unless the moratorium is removed and new permitting rules provide for the economic development of these properties, production on these properties will remain marginally economic.