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Ohio Exceeds 1,000 Horizontal Drilling Permits

Ohio has reached a milestone of sorts, surpassing its 1,000th drilling permit last month in what sources say represents the oil and gas industry's early satisfaction with the Utica Shale and highlights the continued push to develop the play.

As of Nov. 30, the Ohio Department of Natural Resources had issued 1,006 horizontal drilling permits, giving the state an informal distinction that moves it in line with Pennsylvania, where thousands of wells have been permitted in the Marcellus, and in West Virginia, where state regulators confirmed late last month that 1,030 horizontal permits have been issued.

"Whenever you have big numbers it's a milestone in my book, but the pace of the play is on target just as people expected it to be," said Linda Woggon, executive vice president of the Ohio Chamber of Commerce. "Things are being heavily influenced by the cost of natural gas. In Ohio, the play is also being influenced by the development of midstream. We've seen a tremendous amount of activity, which will continue into 2014; that's not so much determined by permitting, but it all matters."

Ohio issued its first horizontal drilling permit in 2010. Many maintain that landmen started arriving in the state between 2008 and 2009, and by 2011, Chesapeake Energy had drilled a series of the state's first horizontal wells. It wasn't until last year that operators put the first commercially producing wells into operation.

At the end of 2012, a total of 419 horizontal drilling permits had been issued, according to state records. Between this year and last, midstream companies have been racing to meet demand in the play, and 2013 saw a sharp spike in permitting activity that surpassed initial projections, as operators mobilized equipment and devoted more money to their drilling programs in the state.

Shawn Bennett, an Ohio spokesman for the industry outreach group Energy In Depth, said the state projected a total of 525 permits by the end of this year. That's already been surpassed by 62 permits as 2013 draws to a close.

"This says that people are satisfied with development in the Utica. It shows continued investment all the way up to Trumbull County and down to Washington County," Bennett said. "Now we're really getting a good sense of where development will occur in the core counties and some that's reaching into new counties."

As the 1,000th permit mark approached, PDC Energy was issued the first three permits in Morgan County, in the south of the state. That paperwork marked the farthest west any operator has gone since Devon Energy pushed into Ashland and Wayne counties on the western fringes of the play in its early days before pulling out and moving back east after disappointing results there.

Chesapeake Energy, Antero Resources, EQT Corp and American Energy Utica LLC (former Chesapeake CEO Aubrey McClendon's new venture) were among the companies landing some of those final permits before the 1,000 mark was breached. 

ODNR reports that 617 horizontal wells have been drilled in the state, while Baker Hughes said this week that 35 rigs were operating in Ohio, up from 25 at the same time last year.

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