The Race to Drill America’s Longest Oil and Gas Wells

quote:

---

Elite runners long chased the 4-minute mile. Major-league sluggers competed for decades to beat Babe Ruth’s 60 home runs. For Dennis Degner, the next milestone is 25,000 feet.

Oil and gas wells stretched just a fraction of that length laterally underground in 2010, when the now-chief executive of Range Resources joined the natural-gas producer. Back then, innovations in horizontal drilling and fracking were just beginning to transform global energy markets.

Now, with the end of the shale boom in sight, Wall Street is pressuring companies to cut spending and pony up returns to boost their share prices. Growth at all costs is out. The slow grind of achieving efficiency—alongside the office downgrades and recruiting struggles that come with it—is in.

The maturing market has pushed oil and gas producers to idle drilling rigs and bore fewer—but longer—wells. In Pennsylvania, a nearly 22,000-foot Range Resources gas well has put Degner’s target within striking distance.

---

quote:

---

As Wall Street becomes more skeptical of the U.S. shale patch’s growth prospects, executives are trying to win over stock pickers and potential acquirers by trumpeting the contiguous property leases and operational prowess needed to drill longer wells.

Improvements that range from souped-up drilling rigs to specialized drill bits to technologies that provide better underground steering have helped firms recently pump out better-than-expected production—and dividends and buybacks for shareholders. The energy sector has been the S&P 500’s best performer over the past three months, outpacing even the information-technology and communications-services industries.

But some producers are boring so far underground with each lateral well that analysts say they are nearing the point of diminishing financial returns. Longer term, energy experts warn that the technological advance won’t be enough to reverse a structural decline in U.S. shale output in the coming years.

“How else can they show their investors that they’re getting better?” said Alexandre Ramos-Peon, head of shale research at Rystad Energy.

“We have probably reached the maximum we can do on a per-well basis,” he added. “Then it’s just a matter of being a volume game or waiting for the next technology breakthrough.”

---

quote:

---

By drilling longer, companies have propped up and in some cases expanded their output despite much of the best land already being tapped.

ConocoPhillips, Occidental Petroleum and Pioneer Natural Resources all recently said they would churn out slightly more crude in 2023 than previously projected. Such performances contributed in August to U.S. officials bumping their forecasts for oil and gas production this year and next to new records.

---

quote:

---

The gusher has blunted the impact of crude-production cuts in recent months by Saudi Arabia and Russia, weighing on prices at the pump. Front-month futures for West Texas Intermediate crude have traded at levels below traders’ projections for much of the year, only recently rallying to $87.51 a barrel.

Benchmark natural-gas futures have remained relatively stable this summer, trading Friday at $2.6050 per million British thermal units, even as Americans cranked up air conditioners in record-setting heat.

Boring farther to extract such supplies leads to more technical difficulties and geologic uncertainties, analysts say. Unexpected fractures in shale rock can destabilize operations and lead to costly equipment issues.

---

quote:

---

Analysts say the longest laterals are concentrated among gas producers, rather than their oil-focused counterparts, in part because of the makeup of the prolific Marcellus formation that stretches across Appalachia. Outside Pittsburgh, Range Resources boasts a contiguous position of about 450,000 net acres.

That helped the company drill lateral wells of more than 14,800 feet on average last quarter, according to state regulatory data compiled by Stifel, greater than any other domestic gas producer.

“It’s a differentiator for us,” Degner said.

---