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Utica NatGas Production Inched Upward in 2Q as Oil Volumes Continued to Fall

The commodities downturn showed itself on Thursday when second quarter unconventional production data released by the Ohio Department of Natural Resources (ODNR) showed that sequential natural gas production in the state was essentially flat and oil production dropped for the second consecutive quarter.

Shale gas production was up to 334.3 Bcf, but it grew by just a little more than 1% from 1Q2015 volumes of 329.5 Bcf (see Shale Daily, June 20). The state has reported significant increases since 2011 when the first commercial production was reported from Utica Shale wells (see Shale Daily, April 3, 2012). The second quarter, however, did see a more than 50% increase from the year-ago period, when shale drillers reported 221.9 Bcf of natural gas production (see Shale Daily, Aug. 28, 2015).

Second quarter Utica oil production was a different story. It dropped to 4.8 million bbl, down from nearly 6 million bbl in 2Q2015. It was the second straight quarter in which shale oil production declined, after 1Q2016 volumes dropped to 5.5 million bbl from 6.2 million bbl in 4Q2015.

Natural gas production in the Appalachian Basin has remained resilient during the downturn, continuing to grow at a time when volumes across the rest of the country have declined. Low commodities prices have prompted many Appalachian shale drillers to focus more heavily on their dry natural gas acreage in favor of better economics. At the end of the second quarter, some of the basin's leading operators announced plans to begin adding rigs or completion crews in both the Utica and Marcellus dry windows by the end of this year or early next.

ODNR's second quarter report lists 1,415 horizontal shale wells, of which 1,362 reported oil and gas production. Natural gas liquids and condensate are included in the oil and gas production totals.

The average amount of oil produced by each well during the quarter was 3,553 bbl, while the average amount of gas produced by each was 245.4 MMcf. The average number of second quarter days in production was 87.

At the end of last week, according to ODNR data, there were 2,229 Utica wells permitted in the state and 1,784 drilled. There were also 44 Marcellus wells permitted and 29 drilled, but the Marcellus tallies have remained mostly unchanged for some time.

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