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We attended the Marcellus-Utica Midstream Conference this past week. If there was one consistent theme, 2013 will definitely be a better year than 2012.  Almost everyone told me about increased drilling in all parts of PA and OH.  It was also very apparent that for the Marcellus and Utica Shale region to maximize its potential the gas and oil has to move to the Gulf Coast and overseas.  Look for a continued push to export LNG and Natural Gas Liquids.

The latest facts and a rumor from the Marcellus and Utica Shale

  • Chesapeake drilling strong in Carroll, County, OH.  Chesapeake is talking about aggressive drilling program in Carroll County.  There are currently 7-8 rigs in Carroll County and Chesapeake expects to have 12-14 by the end of March and 20 rigs by the end of 2013.  We’ve heard Chesapeake’s having 20 rigs in OH by the end of the year before.  It looks like it could happen. (Rumor)
  • EQT has aggressive drilling in 2013.  EQT will continue to spend aggressively in the Marcellus in 2013, well in excess of its operating cash flow, which likely indicates that the company sees compelling returns in the current commodity price environment. EQT plans to drill 153 wells in 2013 on its 530,000-acre leasehold position in the Marcellus, with projected average drill & complete cost of $6.1 million and EUR of 7.3 Bcfe per well. Almost 90% of the wells will be drilled in the Southwest corner of Pennsylvania and the adjacent area in West Virginia.
  • Shell drilling in Jefferson County.  Shell will be drilling 28 wells in the Brookville, Jefferson County, PA. (Rumor)
  • Chevron will be expanding its workforce.  As you know, we have discussed how Chevron will be drilling 165 wells this year.  At the Marcellus-Utica Midstream Conference, I heard that Chevron will increase its workforce from 750 to 3,000 by the end of the year.  It seems consistent based on other information we’ve heard.  (Rumor)
  • An interesting piece of information. The current low natural gas prices are motivating the conversion of motor vehicles from gasoline and diesel power to compressed natural gas (CNG). At $3.50 per mcf, oil would have the same cost efficiency at $21 a barrel -- but crude oil lately has been more than $90 a barrel.
  • More conversion to LNG on the well site.  CONSOL Energy Inc. has contracted with Linde to supply LNG and related equipment and services for all of its operations in the Marcellus and Utica basins.
  • More good news for Gulfport.  The Intelligencer / Wheeling News-Register newspaper reports: "The positives keep coming for Gulfport Energy's Utica Shale operations, as the Stutzman well in southwestern Belmont County could be producing about $100,000 worth of revenue per day.
  • McClendon leaving Chesapeake.  McClendon will step down as chief executive officer even though Chesapeake says a review of his business dealings has not revealed improper conduct.
  • Shell moves to export LNG. Royal Dutch Shell and Southern Liquefaction Company, a Kinder Morgan affiliate and unit of El Paso Pipeline Partners, announced that they will jointly develop a natural gas liquefaction plant at El Paso's existing Elba Island LNG Terminal near Savannah, Georgia.
  • Rig Activity.  Top counties with most rig activity as of January 31st.
    • OH Counties
      • Carroll 10 rigs
      • Harrison 5 rigs
      • Monroe 4 rigs
      • Noble 4 rigs
    • PA Counties
      • Lycoming 14rigs
      • Washington 13 rigs
      • Susquehanna 12 rigs
      • Bradford 11rigs

All indication is that these PA counties are scheduled to be busy all through 2013.

Baker Hughes Rig Counts

  • Baker Hughes Rigs count for the February 1reporting week. 
    • PA Marcellus 66 rigs – down 1
    • PA Utica 3 rigs – 0 unchanged
    • Ohio Utica 28 rigs – 0 unchanged
    • WV Marcellus 24 rigs  – 0 unchanged

Take advantage of a bullish 2013 and become a member.

Joe Barone 610.764.1232
Vera Anderson 570.337.7149
Andrea Bagnell 610.256.1898

Utica Summit 2019