Pa. Officials Optimistic About Continued Drilling Success

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Preliminary numbers are starting to pour in from gas well sites in Mercer County but regardless of whether the numbers are better or worse than analysts predicted, local officials said the county wins either way.

Halcon energy is starting to release results from its Phillips Well in West Salem Township, which is producing both wet gas and natural gas. Mercer County Commissioner John Lechner said it doesn’t matter to him whether the results are above expectations or below, he doesn’t pay attention to numbers.

“My position is if they weren’t good lucrative wells, they wouldn’t keep drilling them,” said Lechner.

In fact, Lechner said applications from energy companies continue to come across his desk for approval.

Right now, there are about a dozen wells between Halcon, Hillcorp, Shell and Chevron.

Chad Mabry, an analyst at the energy investment bank KLR Group, said even though the Halcon wells drilled so far in Mercer and Venango counties in Pennsylvania have been slightly disappointing, there is not enough data yet to be discouraged.

He said there had been high expectations from oil and gas drillers for that area of western Pennsylvania, but the data right now is showing there is more promise for the shale play in southeast Ohio. He said preliminary results from the two Halcon wells showed more gas than oil, but Mabry said that is what analysts expected.

Mabry said Halcon’s well in Mercer County outputted at a decent rate, but there was a lower liquid ratio. He said the results showed a peak rate of 730 barrels of oil equivalent per day, while the company’s well in Venango County had a rate twice as high.

“It is very early in the process and only one company, Halcon, has gotten results. More results can be expected in the weeks and months to come and more data is needed to determine the wet gas, dry gas and oil windows,” Mabry said.

With each new well that’s drilled, the county, townships and municipalities receive a portion of the impact fee.

“Any place that we were using general fund money to support an agency, we will now have the flexibility to partially or fully withdraw general fund money from that and apply the impact fee to it,” said Lechner.

There is a trickledown effect happening across the county as well. Bob McCracken with the Shenango Valley Chamber of Commerce said business is picking up. Everything from local tire and part suppliers to electrical contractors are seeing an increased demand thanks to the industry.

“In the hotel industry, they are seeing 90 to 100 percent occupancy and that’s increasing the room tax,” said McCracken. “The tourism agency spends that room tax to advertise more which in turn is attracting more visitors to the market who are spending more money.”

Infrastructure is also continuing. Jobs will be created and local steel makers will be needed to build pipelines.

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