Players expect Utica shale work to grow

SALEM – What’s going on in the Utica shale play in 2014?

According to Hess Corp., it expects to increase its Utica shale play investment by almost $100 million by drilling 35 wells in Ohio for $550 million.

Last year it spent $455 million in the Utica.

Based in New York, the company has a presence in Ohio as Hess Ohio Developments and Hess Ohio Resources LLC with drilling activity mostly in Belmont, Guernsey, Jefferson counties with it biggest presence in Harrison County. It has no wells in Columbiana County.

Overall, Hess plans $5.8 billion in capital expenditures in 2014 with almost half of that developing the North Dakota Bakken oil fields and shale resources such as the Utica play.

Consol Energy, which has an office in Leetonia, is expecting to pour some $24 million into Monroe County in Ohio while building its presence and at the Pittsburgh International Airport where it spent an estimated $500 million for leasing rights and plans to drill upwards of 47 Marcellus wells beginning in the fall.

Consol will also use electric-powered rigs instead of diesel equipment.

The company said it expects 2014 natural gas production to be between 215 – 235 Bcfe, of which 5 to 8 percent is expected to be NGLs/condensates/oil. Consol, like other drillers in the Marcellus/Utica plays, is pursuing the liquids (oil) and expects the gas-oil mix to increase to 10 to 15 percent in late 2016, with a 30 percent bump in combined totals.

Economic changes and trends, tracked by Cleveland State University’s Maxine Goodman Levin College of Urban Affairs, show that most of the Ohio businesses benefiting from shale drilling provide basic services such as earth-moving, construction, landscaping and transportation.

The Ohio Shale Coalition – a partnership of energy interests formed by the Ohio Chamber of Commerce – commissioned the study called the Ohio Utica Shale Gas Monitor to look at how shale gas development is affecting counties throughout the state by analyzing sales tax receipts, employment rates, well activity and gas prices.

The study shows that sales tax receipts in eight of the state’s leading shale gas counties saw year-over-year growth.

Employment gains were offset by job losses in other industries in the same areas.

“If you look at the growth in sales taxes in some parts of the state, shale development is clearly having an impact with the indirect spending from royalties and out-of-state workers,” said Ned Hill, an economics professor and dean at CSU, who led the study.

“Employment is a little bit harder to track because the numbers are based on where a person lives, not works. Ohio in particular has a terribly irrational exuberance and outrageous expectations, thinking that the economics of this play will somehow wave a wand and billions of dollars worth of infrastructure and investment will appear overnight.”

But growth in sales tax receipts and well activity during 2012, and more specifically from April through August of last year, can’t be discounted as incremental, Hill said, with the study repeatedly demonstrating continued growth throughout the state, and mainly in eastern Ohio, where Utica shale drilling is occurring.

Here’s an interesting take-away from a big player in the worldwide gas and oil industry scene.

National Oilwell Varco CEO Merrill “Pete” Miller was interviewed by the Motley Fool website earlier this month.

With over 60,000 employees, National Oilwell Varco (NOV) is a big player on and off-shore operating from 1,160 worldwide locations with a hand in everything from drilling rigs, parts, supplies and a highly sophisticated distribution system.

During the interview Miller, the 2012 Morningstar CEO of the year, was asked about NOV’s management and “company culture.”

The interviewer asked Miller to talk “about the feeling, both for you and the company, when that award was bestowed.”

Miller told Motley Fool it was an award for the company.

“It’s not just me. I mean, I’m kind of lucky to have the job that I’ve got. People just made mistakes and put me here, I guess; I’m not sure,” he said in the interview that is posted on the website.

The point being, Miller said, “Is I think it really showed the people in the company that, ‘Hey, the outside understands who you are.’ We talk about three things around here. I’m kind of different in the fact that I don’t think a company like ours can have a culture. We’re too spread out. In 62 countries, you’ve got all different cultures, you’ve got all sorts of things.

“But what we can have are things that we demand out of our folks. The three things we talk about all the time are integrity, accountability, and the third one – and most important – is have fun and enjoy what you’re doing.”