ODNR Releases Shale Play Analysis

Shale Drilling

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Oil production in Ohio increased by 93 percent in 2012 and natural gas production increased 80 percent from 2011, according to an official study by the Ohio Department of Natural Resources.

ODNR presented on Thursday its analysis of the 87 producing gas and oil wells in the state, which increased from two wells in 2011. In December 2011, ODNR had predicted that Ohio would have between 200 and 250 drilled wells by the end of 2012 and there are currently 215. The agency also predicted that there would be 50 wells in production by the end of 2015 and 67 wells already have gone online.

ODNR Director James Zehringer said he believes these numbers make a compelling statement for what the Utica may hold for Ohio.

“Utica shale play in Ohio is the real deal and it has already brought unprecedented growth in oil and gas production in and it’s going to produce staggering amounts of oil and gas in the future,” Zehringer said. “We believe Ohio is now at the beginning of a historical era of oil and gas production.”

ODNR said it expects the Utica shale well production to exceed the yearly output of all of the state’s 51,000 existing conventional wells by 2015.

“That would still be with less than 1 percent of production wells within the Utica shale play,” Zehringer said.

Those promising production rates mean drilling may pick up in the Valley.

“I think over the course of the summer and into the fall, you’re going to see more drilling in that area, although probably not heavy drilling. It will be more exploratory drilling where the companies drill over a fairly wide area to try to define how good the play might be,” said Rick Simmers of the ODNR’s Division of Oil and Gas Resource Management.

“The production from these initial Utica wells make a compelling statement about the staggering amount of oil and gas resources Ohio’s shale appears to contain,”  Zehringer said in a statement. “As more data is collected and analyzed, ODNR will continue to report it and continue its careful regulation of this rapidly growing and economically vital industry.”

When comparing horizontal wells to conventional wells, the 2012 Utica shale production averages indicate that one Utica well produced as much oil as 312 conventional wells and another produced as much gas as 448 conventional wells, and Utica wells accounted for 12 percent of oil and 16 percent of gas production in 2012 statewide.

Zehringer said the state needs to make proactive, not reactive, laws to ensure the environment is protected while maximizing the shale’s potential. He said ODNR is working with the legislature and the drilling industry to identify regulations that can and should be updated.

He also said ODNR has proposed legislation that would require production numbers for the Utica wells to be submitted quarterly instead of annually to ensure best practices are being followed.

As oil and gas drilling companies define the play and the economics of the play, the midstream infrastructure needs to come online, and that includes the processing plants and pipelines.

“You have to have the midstream in order to separate the wet gas from the dry gas and those are big investments and they’ll have a lot of jobs with it that will last for decades,” said David Mustine, general manager of energy for JobsOhio.

As far as the supply chain, JobsOhio highlighted several of the facilities in the Valley, including V & M and Exterran.

Click here to see the ODNR report.

Click here to see the ODNR presentation.

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