September 1, 2008

Charleston GIS Center Helps Chesapeake Formulate Strategy

By Williams, Walt

CHARLESTON - From offices tucked away on the 10th floor of Chesapeake Energy's base of operations in the capital city, Keith Bell and the rest of the GIS department are sorting through mountains of data.

The 10-person department is responsible for collecting data from all the company's sites along the Appalachian Basin, which runs up and down the mountain chain. The data is fed into computers to be stored and later sortedby category, giving company officials a broad yet in-depth look at their natural gas drilling operations at any time.

"We work with every arm of the company," Bell said. Among the information fed into the system are acreage,pipeline and well depth.

"It is all coming together in one depository of data for management to look at the assets," he said.

Chesapeake Energy is the third-largest producer of natural gas in the United States and the second largest among independent producers, according to the company Web site. It holds interests in roughly 39,200 producing natural gas and oil wells that currently are producing about 2.3 billion cubic feet equivalent, or bcfe, per day, of which 92 percent is natural gas.

The Appalachian Basin consists mainly of West Virginia, eastern Kentucky, eastern Ohio, Pennsylvania and southern New York. In previous decades, companies such as Chesapeake had to rely on hand- drawn maps to monitor their assets, but now they can turn to geographic information systems technology to quickly and more effectively do the job.

Chesapeake gained a foothold in West Virginia and the surrounding states a few years ago with its acquisition of Columbia Natural Resources, which it purchased for $2.95 billion, according to news reports. GIS technology has been around for a while now, but Bell said the acquisition resulted in a major upgrade for the company's eastern division.

"We went from an older, less robust GIS system to a new GIS system, which entailed a monumental task of converting the data from one platform to another," he said. "So in that respect, the technology is new to us because of the new platform, and it gave us a much more efficient way to analyze the data."

The GIS department does a lot more than make maps, he said. Staffers are able to ask it questions and get answers. For example, the department can refine its search only to look for gas wells that are producing at a certain depth in a specific geographic area.

"It is just going to make you a map and graphical representation of wells that fit that criteria," he said.

The GIS department monitors Chesapeake's existing operations. Another division tracks its gas reserves and helps to determine where new wellheads will be located.

Chesapeake has GIS staff in Charleston, the Dallas-Fort Worth area and the company's corporate office in Oklahoma City, Julie Parker, the company's GIS supervisor, said in a telephone interview.

"If you look back 20 to 25 years ago, the oil and gas industry was primarily drawing based," she said.

Old maps were hand-drawn on linen, Parker said. However, that is too slow for today's business world, so the oil and gas industry embraced desktop computing when it came along.

"We track just not where our assts are, we also inform our board with where our competitors are," she said. "It helps us therefore formulate our strategy. It helps us refine our areas of interest, where we want to focus on. And we do it every day with every area that we operate in."

The electronic database also helps the companies develop "what if?" scenarios to make the best guess about which strategies likely will be the most successful in the future.

"There was no way you could do that 20 years ago hand drawing a map," she said.

Copyright State Journal Corporation Aug 1, 2008

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