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North America Map - Click to enlarge

North America: Appalachian Basin

Note: updated as of November 2009

Epsilon is focused on two natural gas plays in the Appalachian basin: natural gas production from medium-low risk unconventional Devonian-aged shale gas formations in Pennsylvania, New York and Ohio, and natural gas production from high potential conventional gas reservoirs in New York.

Shale Project Map - Click to enlarge

Unconventional - Shale Gas

Unlike conventional gas targets, Devonian-aged shale gas formations contain both the source rock and reservoir for natural gas. The trapped natural gas is stored in one of three ways: onto insoluble organic matter called kerogen; trapped in the pore spaces of the fine-grained sediments; or inter-bedded with the shale and confined in fractures within the shale itself.

In the Appalachian basin, the Devonian-aged Marcellus, Lower Huron, and Rhinestreet members contain accumulations of natural gas trapped in stratigraphic shale formations over large contiguous areas at depths ranging from 400 to 8,000 feet.

In addition, the older Ordovician aged Utica shale is also prospective in the Appalachian basin in the United States, as well as in the province of Quebec in Canada.

Shale Well Types - Click to enlarge

Over 21,000 shale gas wells have been drilled in the Appalachian basin in the United States to date, producing an estimated amount of 120 Bcf per year. Estimated technically recoverable shale gas reserves in the Appalachian basin currently range from 14.5 to 27.5 Tcf.

Shale gas is characterized by low permeability, which in turn requires the existence of extensive fracture systems to sustain commercial gas production rates. As such, the primary risk in drilling shale gas wells is obtaining economically viable gas production rates. Epsilon intends to minimize this risk by drilling a mix of vertical, directional and horizontal wells utilizing the latest frac technology available to maximize production rates and ultimate reserve recoveries.

Conventional Gas - Trenton-Black River

The Trenton-Black River is a conventional gas play which encompasses the area from New York to West Virginia, with additional potential in Ohio and Kentucky. This high potential play is dependent on identifying structural targets on 2D and 3D seismic at depths of 8,000 to 10,000 feet. In New York, production is limited to areas where the fault related hydrothermal dolomite has replaced host limestones in the Black River formation.

Individual structures tend to be long and narrow; up to ten miles long and as wide as one-half mile and are readily distinguished on 2D and 3D seismic. The porosity of these structures has proven to be extremely variable in quality and distribution. As such, horizontal drilling has increased the statistical chance of intersecting sections where the reservoir porosity is higher, resulting in higher production rates and reserves.

Historically, production rates of successful Trenton-Black River wells vary widely, ranging from 1.0 MMcf/d to as high as 40.0 MMcf/d or more, with typical production rates in the 6.0 – 7.0 MMcf/d range. Production decline rates also vary widely. Many of these wells have robust economics, with typical payouts of one year or less due to high initial production rates. Typical reserves per well in New York’s Trenton-Black River formation range from a low of 1.0 Bcf to as high as 40.0 Bcf.