Marcellus and Utica Shale: A Positive Outlook for 2014
2014 continues to look promising for drilling activity in the Marcellus and Utica Shale region. The Ohio Department of Natural Resources forecasts an estimated 1,180 Utica wells will be drilled in 2014. Already over 1,000 Utica wells have been approved, with 737 drilled and nearly 400 more in production. Projections will become more accurate as the Ohio Department of Natural Resources completes the change to quarterly well results in 2014 from the annual reports of previous years.
As new technologies for tapping the shale’s crude oil are developed, this number has the potential to go even higher. For now, some efforts have gone unrewarded, but companies remain optimistic about the future, intending to do some experimental drilling for crude oil soon.
Other high-energy natural gas and liquids found within the “oil window” include ethane, butane, and propane, and drillers in Ohio are considering the Washington County and Morgan County as promising possibilities for these natural energy sources.
The core area emerging in the Utica shale of Ohio includes six counties in the southeast. These are Belmont, Carroll, Guernsey, Harrison, Monroe, and Noble. Carroll County continues to have the area that has been most thoroughly drilled, while Harrison County has the best overall wells in Ohio. For the most productive wells in the state, Belmont and Monroe counties are emerging as the clear frontrunners.
Magnum Hunter has plans for drilling wells in Utica shale in Washington County, and down into West Virginia. Drillers have not determined if the fairway they have discovered extends northward into the counties of Trumbull and Mahoning. Portage and Stark counties are still a possibility, as well.
Chesapeake Energy, based in Oklahoma City, is one of the most active players in the Upper Ohio Valley. The company’s Utica shale operations in Ohio had an average daily natural gas output of 189 million cubic feet this past year, which was over 300 percent more than 2012 numbers. In spite of the positive output, Chesapeake points to the reorganization of the company to explain why the numbers were not higher in 2013, and expect more out of 2014.
Some Ohio drillers have expressed concern over the on-going discussions by the state of Ohio about taxation and regulation, fearing that these results have the potential to an outcome that is less than favorable. There are also potential issues with proposals in the Ohio legislature over the Ohio severance tax. Companies are keeping a close eye on these developments.
In spite of all the promising comparisons with the Eagle Ford Shale region in Texas, the Utica shale play continues to have problems with lack of data. Many drillers and investors are tentative about moving forward until more data is available.
In the Marcellus shale play, investments are also growing steadily with a number of rig operators and increased rig activity. National Fuel owns drilling rights in nearly 800,000 acres in the Marcellus in Pennsylvania, with numerous rigs that are producing well. It appears that there will be no sudden spikes in gas prices, which bodes well for a continued climb in natural gas production.
Output in both the Marcellus and Utica shale plays are expected to climb, and plans are being made for pipeline to transport the end products around the Midwest.