By Marc Kovac
Marcellus and Utica shale deposits in eastern Ohio and Pennsylvania are poised to become the most-prolific natural-gas liquids production fields in existence, energy-industry groups told an audience near the Statehouse this week.
“This is one of the most ethane-rich plays I’ve ever seen in the world,” said Greg Davis, vice president of marketing at Range Resources Corp., which has been active in the Pennsylvania Marcellus region. “Some of our wells are up to 18 [percent], 20 percent ethane out of the ground. ... We’re talking about 500,000 barrels a day including ethane out of this play by 2018. That’s an enormous number.”
Questions remain about the boundaries of the best-producing areas, the ability to process and transport the resulting natural-gas liquids to market and ways to reduce production costs to boost profits.
But Davis indicated such questions could be resolved over time, and there’s much economic potential for the region’s natural gas.
“Do I believe in doom and gloom for the play? No,” he said. “I believe that we are going to have cycles that are up and down over time because you have to wait for things to be developed to consume the product. ... I believe there’s a lot of upside to demand.”
Davis was among the speakers at a two-day conference in Columbus focused on horizontal hydraulic fracturing, or fracking, in the Utica and Marcellus regions.
It took place a couple of weeks after the Ohio Department of Natural Resources reported that 87 wells extending horizontally into eastern Ohio Utica shale formations produced nearly 636,000 barrels of oil and 12.8 billion cubic feet of natural gas last year.
State officials called the results “the beginning of a historic era of oil and gas production” and the “onset of a new boom,” though analysts were less excited about the results, saying they fell short of expectations.
Tom Stewart, executive vice president of the Ohio Oil and Gas Association, said it’s too early to draw definite conclusions. Most of the production wells were in operation for short periods of time.
Stewart said it’s clear that eastern Ohio will be more focused on natural-gas production than oil.
Therein lies part of the challenge — producers are still feeling out the market and awaiting processing capacity, while processors are awaiting a better picture of production.
Processors, including so-called cracker facilities, are needed to separate natural-gas liquids, but those facilities are expensive to build.
Plus, there isn’t an adequate manufacturing market yet for the resulting ethane and other liquids in Ohio, and there isn’t adequate infrastructure to move the production elsewhere in the country or beyond.
“We’re talking about building more processing here than anywhere in the United States already,” Davis said, adding, “People think this is going to be a small liquids play? It’s not. ... If you guys think there’s perfect infrastructure here for liquids, think again. We’ve got to build it. The hardest thing about these two plays is everything has to be built from scratch.”