A professor at Ohio’s Cleveland State University (CSU) said permitting activity in the Utica Shale this year is in line with projections but further success in the play depends on obtaining accurate decline curve data for production over a longer period of time.
Iryna Lendel, assistant director for the Center for Economic Development at CSU’s Maxine Goodman Levin College of Urban Affairs, told NGI’s Shale Daily that Ohio “is right on track for this year” with regard to permitting in the Utica.
Economics and geology experts from CSU, Ohio State University and Marietta College were commissioned by the industry-led Ohio Shale Coalition to conduct the permitting study earlier this year. The results were published in February in the 81-page report, “An Analysis of the Economic Potential for Shale Formations in Ohio” (see Shale Daily, Feb. 29).
The researchers projected that 160 wells would be drilled in Ohio’s portion of the Utica by this year, with 193 wells in production. According to the Ohio Department of Natural Resources (ODNR), 134 horizontal wells had been drilled in the Utica as of Monday.
“If we are going to exceed , it won’t be significantly,” Lendel said Wednesday. “I think we are right on track. I do believe that we might have 160 by the end of this year.”
Lendel said there weren’t any surprises in the drilling totals. “I think we pretty much thought this is what it’s supposed to be. But it’s always amazing to see an individual well’s production [totals]. Some of them I think are somewhat extreme cases in terms of amount of oil producing.”
The ODNR had issued 375 horizontal drilling permits for the Utica as of Monday. Of the 134 drilled wells, 32 are in production.
Production data is only available for nine wells in 2011, all owned by Chesapeake Appalachia LLC. According to the ODNR data, the well with the highest number of days in production is the Calvin Mangun 8H in Carroll County’s Augusta Township. The ODNR said the Mangun well, which began commercial production July 24, had been in production for 206 days, produced 12,334 bbl of oil, 322.4 MMcf of natural gas, and had its first oil sale on June 1.
Only two other Chesapeake wells — Kenneth Buell 8H (198 days) and Neider 3H (130 days) had been in production for 100 days or more. The Buell well had produced13,472 bbl of oil and 1.5 Bcf of natural gas, while the Neider well had produced 9,444 bbl of oil and 395.3 MMcf of natural gas, ODNR reported.
According to ODNR, Chesapeake’s Ohio operations in 2011 produced 46,327 bbl of oil and about 2.6 Bcf of natural gas, or a total of 2.8 Bcfe.
“Production data is still scarce and it’s not enough to make any statistically significant averages to say that it supports our prediction or disproves it,” Lendel said. “Some cases are really looking good, but we need more data. More importantly, we need production data for a longer time period because oil and gas, especially in shale, you can have very good initial production but then you hit the point where the decline curve kicks in.
“I don’t believe we are seeing the decline curve yet in the public data. There are few wells that have been producing long enough that might already show it. This is the last very guarded piece of information that defines companies’ competitiveness, so we don’t believe it would be so easily given out to the public. But next year, or the year after that, [producers] will need to reveal their production for tax purposes, and that’s where you can get the decline curve.”
Although Lendel and her CSU colleagues had projected there would be 650 wells drilled (and 843 well in production) in Ohio’s portion of the Utica in 2013, she said reaching that milestone would “very heavily depend” on producers releasing more production data.
“The key point is that companies need to see that production is sustainable for a certain level of investment,” Lendel said. “650 wells will tell you that this is a really serious investment that is coming. And if [producers] are going to make that investment decision on behalf of both drilling and midstream companies, they will need to see sustainable production, not just high flow tests.
“We need to be patient and let time go. Everybody is rushing and bragging about results and getting excited, but we need to understand that we can’t rush [the data from] short economic periods and force them into long economic periods.”
Reflecting similar findings in August (see Shale Daily, Aug. 16), the ODNR said of the 375 permits issued in the Utica, 262 (70% of the total) went to Chesapeake Exploration LLC. The other top operators were HG Energy LLC with 16 permits, followed by Enervest Operating LLC and Gulfport Energy Corp. (13 each); Anadarko E&P Co. LP, Devon Energy Production Co. and Hess Ohio Developments and Resources LLC (12 each); and CNX Gas Co. LLC (eight).
Four permits were issued to both Antero Resources Appalachian Corp. and XTO Energy Inc., three were given to Carrizo Utica LLC and Mountaineer Keystone LLC, two permits went to Chevron Appalachia LLC, Petroleum Development Corp., RE Gas Development LLC and Sierra Resources LLC; and EQT Production Co. and SWEPI LP each received one permit.
© 2021 Natural Gas Intelligence. All rights reserved.
ISSN © 2577-9877 | ISSN © 2158-8023 |