The Ohio Department of Natural Resources (ODNR) last week said 87 wells in the Utica Shale collectively produced 12.84 Bcf of natural gas and more than 635,000 bbl of oil in 2012.
According to the ODNR, oil production has increased 93% and natural gas has increased 80% since 2011 (see NGI, April 9, 2012). At that rate, the agency predicts Utica production will exceed the annual output from the state’s nearly 51,000 existing conventional wells as early as 2015.
Of the 87 wells in the Utica with reported production, 65 were commercial producing wells and 19 were tested and subsequently shut in. The agency said 17 of the 19 wells not placed into production “did report incidental volumes of crude oil and natural gas that were recovered during flowback of hydraulic fracturing fluids.”
Some industry experts said they were disappointed by the oil production figures, but they believe a clearer picture is beginning to emerge of where the play’s sweet spots are located.
“It doesn’t look like the oil is going to work,” Morningstar analyst Mark Hanson told NGI. “It’s obviously not going to be a repeat of North Dakota or South Texas. Whether or not it can be a low-cost source of gas and NGL [natural gas liquid] content, I think that remains to be seen.”
Hanson said production results so far pose an issue. “People are trying to put pins in the corner of the map to try to figure out exactly which counties work and which don’t,” he said. “I think your concentric circles are going to be winnowed, and you’re going to figure out quickly which are the sweet spots. It looks like there are three or four counties right now: Carroll, Harrison, Jefferson and maybe Noble.”
Tom Stewart, executive vice president of the Ohio Oil and Gas Association, told NGI the ODNR’s figures were “modest numbers that I would expect to come from a play that’s in its infancy. We have always said that we believe this is a natural gas play with the possibility of liquids uplift, and that’s exactly what it’s shaping up to be.”
Chesapeake Energy Corp.’s Utica operator Chesapeake Exploration LLC was top gas producer with 10.1 Bcf, or 78.6% of the Utica output. Hess Corp.’s Hess Ohio Developments LLC and Hess Ohio Resources LLC combined to come in a distant second with 923.0 MMcf. Gulfport Energy Corp. was third at 767.1 MMcf. Chesapeake also led the field in oil production with 372,212 bbl, or 58.5% of the total. Anadarko Petroleum Corp. had 118,726 bbl, and Gulfport was third with 63,167 bbl.
The ODNR said gas was produced at 82 wells in the Utica Shale, with production volumes equal to approximately 16% of the total gas produced in Ohio in 2012. The agency said about 50,000 conventional wells produce gas in the state. Gas production is projected to climb to 49.2 Bcf in 2014 and hit 146.5 Bcf in 2015. Oil production was projected to increase to 2.4 million bbl next year and 7.3 million bbl in 2015. The number of wells is forecast to increase to 362 in 2013 and climb to 1,012 in 2015.
“They’re nothing but estimates and wishful conjecture,” Stewart said, adding that he believes the ODNR purposely didn’t release the figures until May because “these numbers are not as spectacular as you would hope that they would be. They’re certainly not supportive of a political agenda.”
Hanson said the projections “seem doable. It’s not a lot. It seems achievable, if only because it seems like it’s a low number relative to some of the other areas that produce [oil and gas]. You’ve got to take everything with a grain of salt. Obviously, there’s a lot that still needs to be done in this area, with building out all the pipelines and figuring how to optimize oil and gas flow out of the wells.”
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