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Panel: Expect Utica Development in 2013

"This is a 2013 development. It's not a 2012 development. The next year is about evaluation. It's about getting your head around the rock," said Michael Bodino with Global Hunter Securities LLC.

While analysts say they've been studying the Utica for years, the energy world didn't prick up its ears until Chesapeake Energy Corp. CEO Aubrey McClendon began shouting, first by comparing the Utica to the Eagle Ford Shale, then by estimating the value of the play at $500 billion and finally by releasing encouraging production figures (see Shale Daily, Sept. 29; Sept. 22; Aug. 1). Now, several players are permitting and drilling in the region, including Anadarko Petroleum Corp., a joint venture between Hess Corp. and Consol Energy Corp. and Devon Energy Corp. (see Shale Daily, Sept. 20; Sept. 8).

That list also includes Houston-based EnerVest Ltd., the largest operator in Ohio, a substantial acreage holder in the Utica and a joint venture partner of Chesapeake in the play (see Shale Daily, Aug. 16).

Because of its previous drilling into the conventional formations below the Utica and Point Pleasant, EnerVest claims to have more information about the play than anyone else in the business -- more than 600 penetrations -- but "we still have a lot to learn," EnerVest CEO John Walker admitted.

Speaking publicly about the play for the first time without McClendon on stage beside him, Walker thanked Chesapeake for "derisking the play for us" but said the current wells are "science projects" being used to gather information, and costly projects at that. "We're going to be doing science projects for at least another year or two. We're not going to be in pad drilling for a while," he said, adding that the joint venture has shot thousands of miles of seismic, but still plans to shoot more this year.

The biggest challenge for Utica will be finding a completion strategy, Walker said, noting that EnerVest continues to refine its completion strategy in the Barnett, a play approaching a decade in production.

While it is generally accepted that the Utica contains three phases -- dry gas, wet gas and oil -- there is still not enough publicly available information to pinpoint where those windows start and end, and, perhaps more importantly, where the oil window eventually becomes immature as it moves west.

When the U.S. Geological Survey mapped the Utica in 2006 they thought the immature window covered the western half of Ohio, but, "We've got a lot more data now. We know this map is very wrong and we're going to be changing it," said Larry Wickstrom, director of the Ohio Geological Survey. "We don't think there's really much, if any, immature zone over there in western Ohio."

While acknowledging that he does not have any expertise in geology, Walker disagreed, saying, "Our information would suggest that not that far out to the west its thermal immature."

The Chesapeake well data is all in the wet gas window, but a well Devon recently permitted in Ashland County, the farthest west to date in the Utica, would provide information the oil window, Wickstrom said (see Shale Daily, Nov. 10). "This will be a very important one for us all to watch," he said.

That well should not only provide information about the extent of the oil window, but also the characteristics of its rocks, particularly the crucial permeability and pressure measurements that will determine whether companies can economically extract larger oil molecules from the rocks, he added.

Infrastructure could also stall development, although perhaps not to the degree it has in the Marcellus.

Ohio, like Pennsylvania, won't be able to use much of its existing gathering infrastructure because of the higher pressures in the Utica, Wickstrom noted. There could also be a Catch-22 between midstream players reluctant to sanction large compression and fractionation projects before producers begin producing, and upstream players reluctant to start producing until they have a market for their product.

"It's a little bit of a cat and mouse game at the start here," he said.

Unlike every other shale play in the country, though, the Utica is starting its life as a home for major players with deep pockets, and those companies are already planning infrastructure solutions, Bodino said. The exploration activity currently underway should start to yield data in the next six to eight months, and "that's the time period a lot of those infrastructure issues will start to be resolved," he said.

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