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Catching up on the Utica


I have seen a few of articles lately on the Utica Shale in eastern Ohio.  I thought I would take some time to summarize some news-worthy tidbits on this emerging play.

Recently, CNBC and NBC news focused on the resurgence of Ohio, a once thriving area of the steel industry, now reborn with the frenzy of drilling operations in the Utica Shale.   Eastern Ohio hasn’t seen this kind of growth in decades, yet now stores, hotels, restaurants are full and small towns struggling with tight budgets are feeling revitalized.  In Youngstown Ohio, the city council voted 5-2 for an ordinance to allow the city to lease land for drilling.  Revenue from leasing city land could possibly erase a $5 million budget deficit with extra to be spent on city revitalization projects.  Other cities like Scio, Ohio in Harrison County, are selling minerals rights to add extra revenue.  The funds from leaseholds would go to pay for sidewalks, a water treatment plant, and ultimately fund operations for decades down the road.  According to the Ohio Oil and Gas Energy Education Program, early estimates of investments into the Utica were projected to be $1.4 billion by year end 2012.  However, that figure was a bit short and the actual investment is around $3.4 billion.

Here is a look at Utica/Point Pleasant permits filed in the past 2 years using Drillinginfo.  Notice how the bulk of permits filed to date has been in the wet gas window of the play.  This is most likely an indication of operators needing to drill economic wells and get acreage held by production, while the oily areas are further de-risked.  I would expect to see a lot more oily wells being drilled in 2013.

The USGS also recently reported on the opportunities provided from the Utica Shale.  According to the USGS survey, the Utica holds an estimated 38 Tcf of undiscovered, technically recoverable natural gas, which happens to be less than half of the Marcellus Shale.  Nevertheless, an estimated 940 million bbl of unconventional oil resources and 9 million bbl of natural gas liquids are trapped in the shale formation.  The assessment covers a 15 million-acre section of rock across Ohio, New York, Pennsylvania, West Virginia, Virginia, and Maryland.  USGS also went on to say that the Utica, lying almost a mile below the Marcellus, is the “longest producing petroleum province” in the country.  Since the Utica has little production data, analog data was supplemented from the Marcellus, Eagle Ford, and Niobrara formations.  The Marcellus was used mainly for its proximity and comparable geologic setting, while the Cretaceous-aged Eagle Ford and Niobrara formations were used for their facies similarity, according to USGS.  Analog data includes estimated ultimate recoveries (EUR), average drainage area of the wells, and well success ratios.  The assessment also stated that the Utica contains both sweet and non-sweet spots.  De-risking the oil window of the play will greatly enhance the attractiveness of the play.  However, most wells drilled so far have been drilled in the wet gas window.

In other Utica Shale related news:

Trio launches $1.2 billion Utica Shale pipeline project.  DTE Energy, Enbridge Inc. and Spectra Energy Corporation agreed to develop the NEXUS Gas Transmission (NGT) system to move growing supplies of Ohio Utica gas to markets in the Midwest.  The NGT will include 250 miles of pipe capable of transporting 1Bcf/d.  The project is estimated to cost between $1.2 to $1.5 billion.

EnerVest Ltd., the second largest leaseholder in Ohio’s Utica Shale, plans to sell the majority of their property in several bundles in order to earn $6 billion plus.  The company plans to sell 539,000 net acres by year-end and keep about 231,000 net acres for future development.  By selling the Utica acreage the company hopes to free up proceeds for other fields that require less capital and risk, according to EnerVest executives.

Rex Energy recently brought online their first Utica Shale well.  The Brace #1H was drilled to a total measured depth of 12,332 feet, with a lateral length of 4,170 feet and 17 frac stages.  The well had an average five-day sales rate, assuming full ethane recovery, of 1,008 boe/d (43% NGLs, 30% gas, and 27% condensate).  The oil from the Brace #1H is 60.1 degree API gravity and the gas is about 1,250 BTU, according to composition analysis.

For even more information on the Utica/Point Pleasant check out the Utica folder in the DNA section of Drillinginfo.

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