As energy companies begin collecting production data from the few wells drilled so far in Ohio’s portion of the Utica Shale, a picture is starting to emerge that company executives and industry experts agree will determine how, where and when the play will ultimately be developed.

Meanwhile an energy industry analyst asserts that the Utica could yield as much as 500,000 b/d of oil, assuming explorers embark on an aggressive drilling campaign within the next few years.

“They’re starting to delineate out where the Utica performs well and where it doesn’t,” Ohio Oil and Gas Association (OOGA) Executive Vice President Thomas E. Stewart told NGI’s Shale Daily on Tuesday. “Everybody has acreage positions that are impacted by that phenomenon. Each well that’s drilled tells you more.

“There will be winners and there will be losers. This is not a home run for eastern Ohio; it’s a home run for certain areas of eastern Ohio.”

According to the Ohio Department of Natural Resources’ (ODNR) Division of Oil and Gas Resources Management, as of Aug. 5 there had been 335 permits issued to drill horizontal wells in the Utica. Of those, only 118 have been drilled. Carroll County led the field with 124 permits issued, followed by Columbiana (48), Harrison (28) and Jefferson (26) counties. Other counties with significant permits issued were Monroe (17), Guernsey (16), Stark (13), Mahoning and Noble (12 each), and Portage (10).

Seven permits were issued in both Belmont and Tuscarawas counties, three each were issued in Coshocton and Muskingum counties, two each in Knox and Trumbull counties and one each in Ashland, Geauga, Holmes, Medina and Wayne counties.

The ODNR data showed the Chesapeake Energy Corp.’s operator in the Utica, Chesapeake Exploration LLC, held the lion’s share of permits with 239. The other top operators are HG Energy LLC with 16 permits, Anadarko E&P Co. LP (12), Enervest Operating LLC (11), Hess Ohio Developments and Resources LLC (nine), Devon Energy Production Co. (eight) and CNX Gas Co. LLC and Gulfport Energy Corp. (seven each).

Five permits were given to RE Gas Development LLC, four to Antero Resources Appalachian Corp., three to Carrizo Utica LLC, Mountaineer Keystone LLC and XTO Energy Inc., two to Chevron Appalachia LLC and Sierra Resources LLC, and one each to Ohio Buckeye Energy, PDC Energy Inc., Petroleum Development Corp. and SWEPI LP.

During a second quarter earnings call on Aug. 8, Gulfport CEO James Palm said his company has drilled five wells in the Utica so far, the most promising one being the Wagner 1-28H well in Harrison County. Palm said the well was brought online earlier this month and tested at a gross peak rate of 17.1 MMcf/d of natural gas and 432 b/d of condensate.

“I can say without a doubt that our Wagner well is by far the strongest well that Gulfport has ever drilled,” Palm said. “We’re starting to feel like we’re already finding the sweet spot, and we continue to see that our acreage seems to be located right in the middle of it.”

Palm added that preliminary data from three test wells — Boy Scout 1-33H in Harrison County, Groh 1-12H in Guernsey County and Shugert 1-1H in Belmont County — show “very encouraging” high condensate volumes and low water recoveries.

“We believe there is a high volume of recoverable reserves packed into each acre in this very repeatable play,” Palm said. “And if you run the numbers, you’ll see that the Utica stands to be a real company changer for Gulfport.”

CFO Michael Moore said Gulfport planned to drill 20 wells in the Utica by the end of the year. The company has 50 drilling sites working and has filed permits for another seven. Moore added that Gulfport — which expanded its position in the Utica last summer (see Shale Daily, July 13, 2011) — planned to drill 200 wells in the play over the next four years.

Meanwhile Chesapeake officials said they were “very pleased” with the results they have seen from test wells so far, but conceded they are taking a cautious approach moving forward.

During a question and answer session with analysts to discuss Chesapeake’s 2Q2012 earnings on Aug. 7, CEO Aubrey McClendon backed away — on oil, anyway — from comments he made last year that the Utica is “likely most analogous, but economically superior to, the Eagle Ford Shale” in southern Texas (see Shale Daily, Aug. 1, 2011).

“I don’t think I would make that statement comparing the oil plays,” McClendon said. “It’s just way too early on the Utica side, and we’ve not focused much of our efforts in that area. Most of our acreage is in the wet gas and the dry gas side. So we’re basically allowing other companies to work on the oil side; we’ve got plenty of acreage over there.”

Chesapeake said that as of June 30, it had drilled 87 wells in the Utica, with 28 completed and creating production information on a post-processing basis. The company said peak rates from the completed wells have averaged about 1,000 boe/d, with 205 b/d of oil, 150 b/d of natural gas liquids (NGLs) and 3.8 MMcf/d of natural gas.

Despite promising its shareholders earlier this summer that it would sell 337,481 net acres in the Utica (see Shale Daily, June 5), Chesapeake said three of its recently completed wells in the play had exceptional production:

“Right now we love what we see on the wet gas side and frankly the dry gas side is just as good as the Marcellus,” McClendon said. “We think when it’s all said and done, the wet gas in the Utica and the wet gas in the Eagle Ford are likely to be competitive. But I’m not willing to compare oil and oil yet because I just don’t have enough information out of Utica.”

Chesapeake has approximately one million net acres in the Utica. Other companies with significant positions in the play include EnerVest (760,000 net acres), Chevron (600,000 net acres), Anadarko Petroleum (240,000 net acres) and Hess Corp. (200,000 net acres).

Although it holds a much smaller acreage position in the Utica than Chesapeake, Antero Resources Corp. said it had also seen “encouraging” results from its own test wells in the play.

On Monday, Denver-based Antero said it had completed two horizontal wells and was currently drilling a third on its Utica leasehold, which totals 56,000 net acres. The company said the completed wells were shut-in awaiting connection to a pipeline and processing infrastructure.

Last week officials with Carrizo Oil & Gas Inc. disclosed that the company — along with joint venture partner Avista Capital Partners — was in the process of selling acreage in the northern Utica, while in an unrelated move it was simultaneously looking to purchase acreage in the southern Utica (see Shale Daily, Aug. 10).

But the Utica hasn’t been kind so far to Devon Energy Corp. David Hager, executive vice president for exploration and production, said results from the company’s first two horizontal wells in the play — Eichelberger 1H in Ashland County and the Richman Farms 1H in Medina County — were “not encouraging.”

“These wells are located on the northwestern-most acreage,” Hager said during Devon’s recent 2Q2012 earnings call. “We are currently completing our third well to the south, the Sensibaugh 1H located in southern Knox County. We will continue drilling in a liquids-rich window to the east, where industry has about 20 horizontal rigs running.”

Stewart said Devon is trying to follow the success of other companies that have produced good crude oil wells in the Utica.

“Devon’s out in the western side [of the play],” Stewart said. “They’re trying to find a latent crude oil window. I’ve got to hand it to that company — they’ve got guts. It’s been hard for them so far.

“All of the great wells [in the Utica] are natural gas wells. The hope is that they have high Btu value and the promise of liquids uplift. There have been some good crude oil wells, but they’re not overwhelming the gas play. This is a gas play. It’s just that it’s going to hopefully be a liquids-rich gas play. The best wells that I’ve seen are in the dry window. They’re great wells, if it weren’t for the commodity prices.”

Steve Fillingham, senior associate with Denver-based Energy Analysts International (EAI), told NGI’s Shale Daily that the Utica could become the nation’s third-largest producer of oil, natural gas and NGLs from shale, after the Bakken and Eagle Ford.

According to data provided by Fillingham, one EAI model suggests that if 15 drilling rigs were deployed in the Utica, the play could yield 300,000 b/d of oil, with an average well cost of between $4.5 and $5.5 million.

But the data also shows that the EAI concedes that the Utica’s success will ultimately depend on two factors: the rig count and the distribution of estimated ultimate recoverable (EUR) figures from wells.

“Using a simple combination of EUR and potential locations, the Utica fairway can generate [more than] 300,000 b/d of [crude oil and condensate] with 60 rigs by 2015-2016,” the EAI said, adding that such a scenario could yield 500,000 b/d of oil by the year 2020.

According to one projection, the arithmetic mean is a well count of 94 wells, producing about 16.5 million barrels of oil, at 169,000 barrels/well, with a EUR of between 150,000 and 200,000 barrels. That same projection shows a median average well count of 112 wells, producing about 14.0 million barrels of oil, at 125,000 barrels/well, with a EUR of between 100,000 and 150,000 barrels.

“We’re doing a North American crude study,” Fillingham said Tuesday. “We’ve gone through all the various plays and looked at them and tried to work out the economics and the output. The tendency has been a little bit to undershoot these things, but hopefully we’ve got Ohio right.

“Sixty rigs active is pretty aggressive, near-term rig growth. It’s something we’re calling our ‘base case’ and we feel pretty good about it.”

But Stewart derided the EAI’s calculations as “a pretty speculative statement,” and cautioned against Ohioans being too impatient to see results.

“Oil and gas exploration and production is a rational process,” Stewart said. “It takes time and the application of rational economic decision making. It’s going to take time for this to happen. It’s just not going to happen overnight.

“There’s this perception out there that all of sudden there’s going to be 4,000 wells producing millions of barrels of oil and gas. That’s just not true. That’s never been true.”