A convoy of trucks hauled water through the snow for a frack job at the Rice Energy Gold Digger Utica shale well along Ohio 9 last week, a sign the Ohio natural gas rush is not stopping in the face of lower selling prices.
Figures released by the Ohio Department of Natural Resources show there are now 1,800 permits for Utica Shale drilling across the Buckeye State, with the vast majority of the activity taking place in Belmont, Monroe, Harrison, Noble, Guernsey, Carroll and Columbiana counties.
“Our operators are continuing to see positive results from the Utica shale. That will continue to foster development in this area,” Shawn Bennett, executive vice president of the Ohio Oil and Gas Association, said. “Reaching that 1,800 permit milestone shows this is a viable play.”
Information from the U.S. Energy Information Administration shows the Utica is now producing 1.86 billion cubic feet of natural gas per day. This is about a 12 fold increase from the 155 million cubic feet per day worth of production the play averaged three years ago.
According to Cabot Oil and Gas, 1 Bcf can power 24,315 homes for a year, or fuel 559 roundtrips to the moon.
Chesapeake Energy leads the way with 750 permits in the state. Although Chesapeake recently sold its West Virginia assets to Southwestern Energy Co. for $5 billion, the Oklahoma City-based driller maintains its Ohio operations, most of which are located in Carroll, Columbiana and Harrison counties. Gulfport, Rice, XTO, American Energy Partners and Antero are the most active companies locally.
Bennett, however, admits he does anticipate some slowdown in drilling this year because of the lower prices for oil and natural gas. He said the price Ohio producers receive for their material is actually less the the selling price at the New York Mercantile Exchange because of a relative lack of pipeline infrastructure. West Virginia industry leaders describe a similar problem.
“We continue to have a bottleneck for all the natural gas we produce,” Bennett said. “We are looking to get it out of here to fetch a higher price for our product.”
Numerous interstate pipeline projects, including the Atlantic Coast Pipeline, the Nexus Pipeline, the Rover Pipeline, the Leach XPress and the Mountain Valley Pipeline, plan to eventually transport Utica and Marcellus shale gas to new markets. However, Bennett said getting a pipeline into service can take time.
“It’s sort of like the chicken and the egg. No one wants to build pipelines until they know the gas is there, but producers can’t get their gas to market without the pipelines,” Bennett said.
Greg Hill, president and chief operating officer for Hess Corp., also cited infrastructure issues as one of the reasons his company is reducing spending in the Utica this year.
“In the Utica, we plan to spend $290 million compared with approximately $500 million last year, as we transition to early development at a measured pace in this price environment and as infrastructure builds out,” Hill said.
THE 30-PERMIT CLUB
Companies with at least 30 Utica Shale Drilling permits in Ohio: Chesapeake Energy, 750; Gulfport Energy, 213; Antero Resources, 130; American Energy Partners, 123; Eclipse Resources, 105; Hess Corp., 68; CNX Gas Corp., 49; R.E. Gas Development, 41; XTO Energy, 40; Hilcorp. Energy Co., 38; PDC Energy, 36; Rice Energy, 30.
From The Intelligencer, Wheeling News Register | February 16, 2015
By CASEY JUNKINS