Typically, midstream or infrastructure investments by oil and gas companies follow drilling. But in Ohio billions of dollars are currently being poured into pipelines and facilities, including those currenlty under construction in Kensington and Scio, in anticipation of production of the Utica Shale formation. Given the estimated ultimate recovery projected for wells drilled in the Utica, and the recent surge in natural gas and oil production around the United States, experts predict that such investments will occur for the next twenty years. The midstream projects include laying more than a thousand miles of pipeline and the construction of processing facilities and compressor stations. In each kind of midstream project there are dozens of business opportunities that are providing jobs to local companies, ranging from biologists, arborists and chemists to construction specialists, mechanics, manufacturers and laborers.
Magnum Hunter, working through its subsidiary Triad Hunter, spudded its first horizontal well in Ohio’s Utica Shale formation. The well is located in Washington County, just north of Noble County. It is just the second well permitted in Washington County.
Magnum Hunter has approximately 79,000 acres in the Utica play with about half being in the “wet gas” window located in southeast Ohio. The Washington County well will be fractured and tested this summer.
Akron city council has approved plans for the first natural gas filling station and truck terminal in the city, operated by J Rayl Transport. The company plans to convert their entire truck fleet from diesel to natural gas, or a combination of the two. The company cites the cheaper cost of natural gas, its ready availability and the fact that it is a cleaner burning fuel source as its reasons for the changeover.
The Winter 2013 edition of Chesapeake Energy Corporation’s quarterly newsletter, “The Play,” introduces a new technology to readers. Chesapeake subsidiary Nomac Drilling is using a new type of rig called a PeakeRig, which is able to “walk” on a multiwall padsite. This new capability increases efficiency, and reduces the cost of drilling multiple wells from a single site. Thanks to the PeakeRig, and other techniques and equipment, Chesapeake hopes the Utica play will achieve profitability faster than any other play.
On March 31st, energy companies must report data showing well production for 2012. Industry watchers say that the annual production report will provide the most insight yet about whether the Utica is the next big oil and gas play in North America. Some 50 to 60 new wells were drilled in Ohio in 2012. Unlike other states, Ohio publishes well data only once a year. The reports should be available to the public on April 2nd or 3rd.
PDC Energy Inc. will be sending its Utica production to MarkWest Utica EMG for processing. Under the terms of a new agreement, liquids-rich gas from Guernsey county will be processed in the Seneca complex in Noble County. PDC joins Antero Resources Corp., Rex Energy Corp. and Gulfport Energy Corp. as partners of MarkWest.
The Ohio Department of Natural Resources posted revised maps last week, indicating that drilling opportunities for oil and natural gas may extend further west and south than initially expected. Information gleaned from wells drilled last year, as well as samplings from test wells, indicate a new potential “hot spot” for production on the border between Marion and Wyandot counties. The revised maps also indicate that production may be greater than expected in Hancock, Hardin, Wyandot and Seneca counties.
Governor John Kasich recently proposed an increase in the severance tax rates on the production of oil and gas to 4% for oil and natural gas liquids and 1% for gas. This is up from the current rates of 20 cents per barrel of oil and 3 cents per 1,000 cubic feet of natural gas with no tax on natural-gas liquids. The proposal has sparked a debate in the Ohio legislature. State Treasurer Josh Mandel and Ohio House Speaker William Batchelder have publically opposed the severance tax increase. Batchelder decried the severance tax increase calling it “nonsense” and suggested that it will fail to be put in to law.
The Ohio House and Senate introduced legislation this week to impose tougher penalties for illegal dumping of oil and gas drilling wastes. If passed, the legislation will elevate illegal dumping to a felony and impose a minimum prison term of three years and a $10,000 fine. In addition, the legislation would revoke current permits and deny any future permits to individuals and companies convicted of illegal dumping.
A spokesperson for the Ohio Oil and Gas Association opposes the legislation and describes it as the “death penalty” for waste disposal operators.
Kinder Morgan is reportedly eyeing Tuscarawas County for a natural gas processing plant and a fractionation plant. The reports surfaced when EV Energy Partners referenced a “recent announcement” by Kinder Morgan on the two plants. Kinder Morgan has since denied that it made any such announcement. However, other reports revealed that Kinder Morgan was planning to build natural gas processing plants to handle up to 300 million cubic feet of natural gas per day. Industry estimates indicate that there has been $6 billion invested in pipelines in the Utica Shale play to date.
Industry officials announced at a conference in Columbus, Ohio, that a series of infrastructure investments over the next year will begin to unlock access to the Utica Shale play. Projects currently underway by Dominion Transmission Inc. and Enterprise Products Partners LP, will respectively raise the regions capacity to separate valuable ethane from shale gas streams and help to deliver ethane from the Utica and Marcellus shale deposits to petrochemical plants on the Gulf Coast. Marc Halbritter, managing director for commercial midstream operations for Dominion Transmission Inc., believes “these developments will break the bottleneck that has so far held back Utica Shale development,” allowing for growth and expansion of the play. Other major infrastructure additions are also under construction or planned.
Gulfport Energy Corp. announced that it plans to accelerate its Utica shale drilling program in 2013. Gulfport currently holds about 128,000 net acres in the Utica shale play. Gulfport’s third party engineers estimate that its year-end 2012 probable reserves are 12.84 million barrels of oil and 80.62 billion cubic feet of natural gas. In all, Gulfport expects to produce 21,000 barrels of oil equivalent per day.
Unimin Corporation has announced a new facility for distributing proppants used in hydraulic fracturing. The facility will be located in Navarre, Ohio, about 10 miles west of Canton. Strategically placed to be accessible by rail and highway, the facility will be open 24 hours daily, 365 days a year. The new facility joins six other Unimin facilities distributing proppants in the northern Appalachian basin.
Ohio Governor John Kasich’s budget proposal includes additional provisions regulating the oil and gas industry in Ohio. The proposals include a $25,000 horizontal-well impact fee to be paid into county escrow accounts, a requirement to notify landowners of oil and gas lease transfers within 30 days of the transfer, new testing requirements and limits on the disposal of materials containing naturally occurring radioactivity and a ban on the use of brine on roads. These provisions are all part of Ohio’s two-year, $63 billion spending plan.
Youngstown city council approved a citizens group’s charter-amendment proposal to ban fracking in Youngstown and placed the proposal on the May 7 primary election ballot. Backed by over 3,800 signed petitions, the group, Frack Free Mahoning Valley, appears to have the required number of signatures, and therefore the Youngstown city council was required to approve the ordinance to be placed on the ballot. Other cities throughout Ohio, including Niles, Cincinnati, Yellow Springs and Mansfield already have voted to ban oil and gas extraction and/or injection wells in their communities. Regardless of the outcome of the May 7th vote, the city council and the Ohio Department of Natural Resources asserts that any such municipal ordinance is preempted by state law, and accordingly any such ordinance would likely be unenforceable.