Tue., 7:24am: ODNR well numbers lower than expected
SALEM – According to former Chesapeake CEO Aubrey McClendon, the Utica shale play was thought to be “the best thing to hit Ohio since the plow.”
But data from the Ohio Department of Natural Resources is a little more modest, according to the Motley Fool investment website that pointed out that the region’s wells are producing at a rate of about 82 percent natural gas.
The hope has always been for oil (liquids) and the investment site ran a headline story recently wondering: “Should Companies in the Utica Be Disappointed by These Numbers?”
This reflects a change in trajectory after repeatedly trumpeting the upside over the past seven months when it ran titles noting the Utica play “still continues to show signs of hope” and “delivers for Chesapeake” to it “might be the best shale play.”
The data shows that 25 percent of the Utica wells that have been drilled are actually producing oil and gas today.
It might be closer to 30 percent as Mike Chadsey, the director of public relations for the Ohio Oil and Gas Association, said there are some 600 wells drilled and 200 producing in the Utica, with a number yet to be turned on.
He had not seen the Motley Fool story, but was quick to point out there are 13 to 14 producers in Ohio now and “none of them have left.”
He said a key issue is tracking down the technology to more efficiently extract the oil and that is an ongoing process as the drilling area is still being defined, especially in Ohio.
He used U.S. Route 30 and Interstate 77 as boundaries. South of Route 30 and east of I- 77 are pretty much known, he said.
The question is how much is to the west in Holmes, Muskingum, Licking and other central Ohio counties.
“We don’t know yet,” he said, but noted there is gas and liquids in the ground.
“Technology is needed to figure it out, to get that oil out,” he said, zeroing in on fracking technology especially.
How long the laterals are, the stages of fracking length, all the engineering of pressing down the hole and putting the formula together, are a part of it, he explained, along with having the proper lease positions.
It will take time and Chadsey pointed to continuing operations at the Hickory Bend and Kensington plants in Mahoning and Columbiana counties.
“No one’s walking away,” he said, “permits are issued every week and no company has walked away.”