Utica Shale activity continuing to move south
By Burton Speakman
The latest report from the Ohio Department of Natural Resources proves what already had become apparent in the Mahoning Valley: Utica Shale drilling activity has moved to southern Ohio and doesn’t appear to be coming back.
The core of the Utica is in a narrow swath in Belmont, Monroe, Noble and Harrison counties, said Gabriele Sorbara, an analyst for Topeka Capital Markets.
The issue in the northern part of the shale play, which includes Columbiana, Mahoning and Trumbull counties, boils down to production, he said. It takes pretty solid results to make wells financially viable when they cost $9 million to $10 million to drill and frack.
“The production results simply weren’t there for the northern [Utica] wells,” Sorbara said. “The shale play [exploration] appears to be moving from southeast Ohio into West Virginia and will continue into southwest Pennsylvania in Washington and Green counties.”
It became clear when companies such as BP and Halcon started to sell their leases in the northern Utica that Valley wells didn’t have high-enough production, he said.
“It just looks like anything north of Carroll County isn’t going to work,” Sorbara said.
Experts from Wells Fargo Securities also state that most companies are seeking the Utica’s natural-gas-heavy portion, which is based in Belmont, Guernsey, Monroe, Noble and Carroll counties.
“It’s still early in the play with industry still zeroing in on the ‘core’ while optimizing completion techniques — but the uptick in permitting activity in Monroe and Belmont indicates, at least for now, that operators are chasing the dry-gas window,” according to Wells Fargo Securities’ statement on Utica exploration and production.
The wet gas — it contains oil or heavier gases such as propane — is great, but there remain issues with processing it and other infrastructure in the Utica that make that portion of the play more challenging, Sorbara said. Those issues are why a number of wells have been tested and then capped, he added.
Sorbara said there is a chance wells in the northern part of the Utica could become fiscally viable if the price of gas increases.
But production in Mahoning, Trumbull and Columbiana counties pales in comparison with the best wells in the state.
There are wells within the shale’s core as Sorbara defined it that have higher production than all the wells in Columbiana combined, according to the ODNR report.
A good well would produce 18 billion cubic feet of natural gas or 3 million barrels of oil over a 30-year lifespan, Sorbara said.