2012 Utica Results Show ‘Onset of New Boom'
YOUNGSTOWN, Ohio – Oil production in the state’s Utica Shale/Point Pleasant formation increased 93% in 2012 compared to 2011, and natural gas production rose by 80%, the Ohio Department of Natural Resources reported Thursday afternoon. While the increases are huge, just 87 horizontal wells were in production in 2012, officials emphasized, and their days in production were relatively few because midstream gas processing infrastructure has yet to come on line.
Still, the numbers are impressive (CLICK TO ACCESS). The 87 Utica wells collectively produced 12,836,662 cubic feet of natural gas --– wet and dry -- in 2012 and 635,806 barrels of oil (One barrel of oil is equivalent to 42 gallons.).
“We believe Ohio is now at the beginning of an historic era in oil and gas production, said James Zehringer, ODNR director, as he convened a news conference officials dubbed the “2012 State of the Play” and streamed online.
"The production from these initial Utica wells make a compelling statement about the staggering amount of oil and gas resources Ohio's shale appears to contain."
Zehringer praised the regulatory structure his agency oversees and the due diligence state officials performed as exploration companies began securing permits to drill horizontal wells. He then reviewed the 150-year history of Ohio’s oil and gas industry. “We believe we are on the onset of a new boom,” he said.
“We don’t want to diminish the importance of the vertical an conventional wells," Zehringer said. "A signle Utica well produced as much natural gas as 448 conventional wells."
Still, he said, “A single Utica well produced as much oil as 312 conventional wells.”
Horizontal wells in the Utica/Point Pleasant play make up only 0.2% of all the wells producing oil and gas in Ohio. But of the 87 Utica horizontal wells put into production in 2012, they collectively produced 12% of all the oil that came out of the state’s ground and 16% of all natural gas, the ODNR director reported.
With the infrastructure constraints, “Only three Utica wells produced for more than 300 days last year," he emphasized.
Ten oil and gas exploration companies reported their 2012 results March 31, and since that date another 10 wells have began production. Of the 87 wells listed in the 2012 ODNR report, 65 were commercial producing wells, 19 were tested and shut-in and 3 were dry and abandoned.
In Mahoning County, production numbers are reported for just one well, Chesapeake Energy’s Geatches well in Milton Township. While this well is listed as having 36 production days, just 816 barrels of oil came out of the ground and no natural gas, according to the report.
There are no production numbers for Utica wells in Trumbull County – none were producing in 2012.
In Columbiana County, numbers are reported for five horizontal wells, all of them drilled by Chesapeake. Three wells at the Ayrview Acres farm in West Township all showed good production numbers even though oil and gas flowed from each less than 35 days. The Sanor well in Knox Township also showed good flow rates while the Jan Paul Farms in Hanover was in production just four days.
In Carroll County, 2012 production numbers were reported for 40 wells. More oil and gas came from wells here, which also had more production days.
Zehringer called on Rick Simmers, chief of ODNR’s Division of Oil and Gas Resources Management, to provide context for the numbers.
“Thirty-seven percent of the wells cumulatively had less than one month of production,” Simmers began.
“We’re in the very early days of production,” and drilling companies are proceeding at a slower pace than they did in other shale plays. “Without infrastructure, the companies have stranded capital,” he explained.
The state has issued 660 horizontal drilling permits for the Utica shale and more than 300 wells have been drilled.
ODNR estimates 362 wells will be in production by the end of 2013, 662 by the end of 2014 and 1,000 by the end of 2015. "At this rate of growth ODNR expects Utica shale well production to exceed the yearly output of all of Ohio's nearly 51,000 existing conventional wells by as early as 2013," the agency said.
“As of this week, we have 31 active drilling rigs in Ohio,” Simmers said, more than the combined number of rigs active in the Marcellus play in West Virginia and Pennsylvania.
“Most of them are concentrated in Carroll County, Columbiana County with a trend down toward Noble, Monroe, Belmont and Guernsey County,” he said.
“There’s also a trend in drilling going northward through Columbiana County into Mahoning County and southern Trumbull County --– and that’s where a lot of the drilling may occur this year.”
COMPREHENSIVE COVERAGE:
Utica Exploration Marches North to Mahoning, Trumbull
Two New Wells Slated for Poland Township Site
Copyright 2013 The Business Journal, Youngstown, Ohio.
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