SALEM - Last week, when 2012 production figures for Ohio oil and gas well production were released, Ohio Department of Natural Resources Director James Zehringer said, "The production from these initial Utica wells make(s) a compelling statement about the staggering amount of oil and gas resources Ohio's shale appears to contain."
But some investors were unimpressed, saying exploration was moving slowly and soaring expectations were falling short of predictions.
Almost all the analysis acknowledges a need for infrastructure, or put it in the most simple terms, pipe in the ground, as Consol Energy's General Manager for Utica Operations Harry Schurr said last year, before a more complete reading can be assessed.
Chesapeake Energy Corporation has the largest stake in Columbiana County and during a UBS Global oil and gas conference call May 22, Jeffrey L. Mobley, head of Chesapeake's investor relations, addressed the Ohio report. Transcripts of the teleconference are available at the Seeking Alpha website.
"I believe the state of Ohio put out some well information recently that I guess is a data point," Mobley said. "It's our view that's not very helpful data point in assessing the quality of the play. We talked about that a little bit on April 1 conference call. But most of the wells that we brought on line to date are at a very constrained rate.
"A lot of the wells that have been built in your existing infrastructure are drilled at more gassy locations because that's the infrastructure takeaway capacity that was available. But we are pretty excited about our opportunities here that we are projecting EURs (estimated ultimate recovery) of 5 billion cubic feet to 10 bcf per well, the larger end will be more gassy wells, the smaller are probably more liquids-rich wells with higher economic value per mcf ...
"We are currently operating 14 rigs in the play and we will continue to develop that with the benefit of a drilling carry from Total (French oil company) that will last at least through the end of 2014. The Utica Shale, we're very excited about, it's still very early in the play. Our production today is currently about 65 million cubic feet a day on a net basis. We expect to ramp that up to about 330 million by the end of the year as additional processing capacity comes on line. I believe the Natrium facility is coming on line right about now and mid- to late summer we should have incremental processing capacity at Momentum's plant at Kensington in Columbiana County. And that should also lead to strong growth."
Chesapeake said it will focus on drilling and completion activities on its existing leases for 2013, he said adding the company remains zeroed in on its 10 key plays.
There are new ventures Chesapeake is pursuing in its existing assets, Mobley said explaining the company will exercise reticence on them until "we find anything that's noteworthy and commercial."
If that happens, he said, "We don't anticipate having any new land expenditure to capture it, because we're going to focus only on our existing asset base."
The ODNR Division of Oil and Gas Resources Management report on oil and gas activities in Ohio for 2012, as of April 2013, showed 1,619 permits were issued, including 1,000 drilling permits; an estimated 625 oil and gas wells were drilled in 40 of Ohio's 88 counties and over 3.5 million feet of hole.
Wells produced over 4.85 million barrels of crude oil (1.4 percent increase over the prior year), with an average price of $90.06; produced over 73 billion cubic feet of natural gas (6.2 percent decrease over the prior year) with an average price of $4.28 per mcf.
The combined market value of Ohio produced oil and natural gas is over $747 million.