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Tuesday, May 28, 2013

Ohio Energy Production Surges; The Best is Yet to Come

In 2010 there were only 7 rotary drilling rigs working in Ohio. That number increased slightly in 2011 to 11 and inched up to 18 by 2012. Today that number has almost doubled to 34. Looking eastward, the rig count in Pennsylvania has gone from 85 in 2010 to 110 in 2011 to 84 in 2012. Currently there are 58 rigs working in the keystone state. It's not that the Marcellus Shale is tapped out. Hardly. There is enough gas there to support drilling for another 50 years but the decline in natural gas prices has curtailed drilling. Ohio's Utica Shale, as I have noted in the past, contains both natural gas and oil and all but 4 rigs working in the state are drilling for oil. While optimism must always be tempered with caution there are some pretty impressive data already generated in the Utica.
From the Ohio Department of Natural Resources;
A total of 87 Utica wells -- representing less than 1 percent of all oil and gas wells in the state -- produced 12 percent of Ohio's total oil production and 16 percent of the total gas production for 2012, the state agency said.
Data from the 87 wells drilled by 11 companies showed they produced 12.8 billion cubic feet of natural gas and natural-gas liquids and 635,896 barrels of oil last year.
The department says it 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 2015.
Eleven drillers reported production from 87 Utica wells last year, but only two wells flowed for more than 300 days, and none for an entire year, according to the report.
Those wells churned out more than 600,000 barrels of oil and 12.8 billion cubic feet of natural gas. They also generated more than 600,000 barrels of wastewater, most of it from the hydraulic fracturing process, or fracking, in which pressurized water, sand and chemicals are used to crack the shale and free the oil and natural gas.
By comparison, in 2011, nine Utica wells, all drilled by Chesapeake Energy, produced 46,000 barrels of oil and about 2.6 billion cubic feet of gas.
Put another way, oil production increased 13 fold and gas increased 5 fold from 2011 to 2012. Presently the biggest impediment to more rapid development of the Utica a lack of infrastructure. Pipelines have to be built as do natural gas processing facilities that separate the natural gas from the sundry and valuable natural gas liquids such as propane and butane. This takes time and money but the money is available and it translates into more jobs added to the already 38,000 job created since the inception of Utica drilling. Ohio's future is getting brighter by the day!

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