Chief Oil & Gas Welcomes Delivery of New Drilling Rig

Chief Oil & Gas Welcomes Delivery of New Drilling Rig

Chief Oil & Gas and Union Drilling, Inc. unveiled the new AC QuickSilver drilling system in Lycoming County, Pennsylvania, the first-of-its-kind rig designed for horizontal natural gas drilling in the Marcellus Shale.

“This is an exciting time for Chief Oil & Gas and the Commonwealth of Pennsylvania,” said William Buckler, Senior Vice President of Operations for Chief Oil & Gas. “Development of the Marcellus Shale is good for Pennsylvania and good for the environment. Natural gas is one of the cleanest fuel choices for electric generation, heating and transportation. This new drilling system and its cutting-edge technologies will enable Chief to efficiently and cost-effectively develop the rich natural gas deposits in the Marcellus Shale.”

Development of the Marcellus Shale is expected to provide a significant boost to Pennsylvania’s economy. According to Penn State’s Workforce Education and Development Initiative, production of natural gas in the Marcellus Shale will bring increased revenue and new jobs. Gross state product would increase by more than $500 million a year. For every $1 billion in royalty income paid to Pennsylvania residents, nearly 8,000 jobs will be created annually. And the economic benefits will have a rippling effect across Pennsylvania providing money for new businesses, schools and roads.

Scientists estimate that the Marcellus Shale holds 500 trillion cubic feet of clean natural gas. If even 10 percent of it is recovered, it could supply all of America’s natural gas needs for two years.

“This is a landmark day for Lycoming County and Pennsylvania. This brand new drilling rig represents a significant economic investment in our community, including new jobs and opportunities for local businesses,” said Rebecca A. Burke, Chairperson, Lycoming County Commissioners.

This is the first of several new-build rigs planned by Chief Oil & Gas for the Marcellus Shale region. The next new rig is expected to go into operation in early spring 2009. Chief expects to have six drilling rigs running in the Marcellus Shale by the end of 2009.

The 1600 horsepower rig is built by Houston-based IDM Group, operated by Union Drilling, Inc. and is under a three-year contract for use by Chief Oil & Gas.

Christopher D. Strong, Union Drilling’s President and Chief Executive Officer, stated, “We are very pleased to unveil this new technology for Marcellus Shale drilling. This new rig design is especially well-suited for Appalachia’s rugged terrain and the ‘Quick-Move’ technology will allow Chief to rig down, then rig up on a new location within 100 miles, in less than 48 hours. It also allows for faster, more efficient drilling and has the capability to drill longer horizontal laterals.”

The rig also employs QuickSkid technology which allows for more efficient drilling of multiple wells from one pad site, reducing the impact on the environment.

To remove the natural gas from the Marcellus Shale, the well is drilled straight down, or vertically, more than a mile below the surface and then turned to drill horizontally into the shale. After the drilling is complete, water and sand are pumped into the well causing small fractures in the shale to release the gas, a process called hydraulic fracturing or “fracing,” allowing the gas to be collected through a system of pipelines that take the gas to needed markets.

Chief has worked closely with Pennsylvania officials, the Department of Environmental Protection and the Susquehanna River Basin Commission to ensure that drilling is conducted in a way that will not have a detrimental impact on the state’s natural resources.

“Chief has been drilling and producing clean natural gas from shale for more than a decade, and we are proud of our environmental record. We are committed to protecting the ecological integrity of Pennsylvania’s resources,” said Buckler.

The Marcellus Shale runs from the southern tier of New York, through the western portion of Pennsylvania into the eastern half of Ohio and through West Virginia. In Pennsylvania, the formation extends from the Appalachian plateau into the western valley and ridge.

Based in Dallas, Texas, Chief Oil & Gas is privately held, independent oil & gas company engaged in the exploration, development and production of oil and natural gas reserves from fields throughout the continental United States.

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