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.
FirstEnergy Corp. believes demand for power may increase quickly in the near future if shale gas development from the Marcellus and Utica shale spark a “manufacturing renaissance.” Chief Financial Officer James Pearson recently told analysts that he thinks that the manufacturing and industrial industries may grow at far greater rates than in the past because of the economic development potential of the Marcellus and Utica shale.
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.
Chesapeake Energy, the No. 1 driller in Ohio’s Utica Shale formation, projected an estimated ultimate recovery (EUR) of 5 billion to 10 billion cubic feet of equivalents over the lifetime of each of its wells drilled into the Utica Shale in Carroll County and the surrounding areas. Those EUR estimates are pointedly higher than what has been reported from wells drilled in the Marcellus Shale formation in Pennsylvania, where Chesapeake Energy has only reported EURs as high as 4.2 billion cubic feet of equivalents and the U.S. Geological Survey has reported an average EUR of 1.1 billion cubic feet of equivalents.
Ohio law currently authorizes two options for the disposal of the wastewater generated from natural gas production operations – injection into a Class II underground injection control (UIC) well or spreading on roads as a deicer. However, with the development of the Utica Shale in Ohio on the rise, and a significant percentage of the wastewater already being disposed in Ohio’s 179 operating UIC wells coming from out of state, alternative means for the transportation, temporary management, and disposal of the wastewater are being considered.
Industry is advocating the transportation of brine and other liquid wastes by river barge as more efficient, economical, and environmentally sound than transportation by tanker trucks. The U.S. Coast Guard, the agency authorized to regulate the nation’s waterways, plans to issue a decision on the permissibility of wastewater transport via barge in the near future. With respect to the temporary management of wastewater prior to disposal, the Ohio Department of Natural Resources (ODNR) is expected to initiate rulemakings addressing storage in pits and impoundments. ODNR currently requires wastewater to be stored in steel tanks.
The disposal capacity of Ohio’s UIC wells has also been an issue of concern. While no permits for new UIC wells were issued for nearly 11 months after seismic events in Youngstown, Ohio were connected to a nearby UIC well, ODNR has issued 10 permits for new UIC wells since November 2012 with another 30 permit applications pending. ODNR also encourages the recycling and re-use of wastewater from one well site for drilling and production operations at other well sites. Another recent development with the potential to alleviate the burden on UIC wells is the disposal of solidified brine in Ohio’s solid waste landfills. Interest in the process of accepting brine for solidification and, ultimately, disposal at solid waste landfills has increased since an Advisory contemplating the practice was issued by Ohio EPA in September 2012. Currently, one landfill in Stark County, one in Mahoning County, and two in Fairfield County have permitted solidification facilities.
City Council members in Brunswick, Ohio, the largest city in Medina County, are voicing concerns regarding state laws which give the Ohio Department of Natural Resources the sole authority to issue oil and gas drilling permits throughout the state. Council members are concerned that the laws do not take local zoning into consideration and effectively pre-empt any authority to regulate hydraulic fracturing operations at the local level. The mayor of Brunswick has urged the council to consider the economic benefits brought to the area by oil and gas exploration prior to voting on a proposed resolution which would formally voice their disapproval on the issue.
The Ohio Department of Natural Resources (ODNR) reports that during the week of January 13 through January 19, 2013, it approved 3 new horizontal well drilling permits regarding the Utica/Point Pleasant Shale, all of which were issued to Chesapeake Exploration LLC for its operations in Carroll County. Through January 19, ODNR has issued 500 horizontal well permits for the Utica/Point Pleasant Shale, 212 horizontal wells have been drilled under such permits, and 48 wells are in production. Of the producing wells, Gulfport Energy Corp. has released production data from two new Utica Shale wells; one in Belmont county and one in Harrison County that are showing impressive numbers. Gulfport’s Stutzman well in Belmont County ranks fourth in production totals among all wells in Ohio, and its Clay well in Harrison County ranks eighth among all producing wells. Gulfport also operates Ohio’s most productive well, the Shugert well in Belmont County which reportedly is producing 7,482 barrels of oil equivalents per day, which includes 28.5 million cubic feet of natural gas per day, plus 300 barrels of oil and 2,907 barrels of natural gas liquids per day.
West Virginia, Pennsylvania, Ohio and New York could benefit from more than $10 trillion dollars in new economic activity as a result of the full development of the Marcellus and Utica shale plays, according to an analysis from New York-based Kroll Bond Rating Agency that was reviewed by Business First. Kroll’s economic prediction is based on the sale of shale gas and indirect economic benefits, such as higher employment, increased tax revenues and improved infrastructure.
On January 18, 2013, the Muskingum Watershed Conservancy District (MWCD) announced that it has negotiated a 6,700 acre non-developmental oil and gas lease with Antero Resources. The lease will prohibit drilling or surface development on MWCD property, but will allow Antero to drill under MWCD land from other nearby wells. Financial terms of the lease are still being negotiated. The MWCD staff plans to recommend to the Board of Directors to enter into the lease with Antero at the Board’s February 15, 2013 meeting.
The Ohio Department of Natural Resources (ODNR) reports that during the week of January 6 through January 12, 2013, it approved 17 new horizontal well drilling permits regarding the Utica/Point Pleasant Shale, 6 of which were issued to Chesapeake Exploration LLC for its operations in Carroll, Harrison and Jefferson Counties. Through January 12, ODNR has issued 498 horizontal well permits for the Utica/Point Pleasant Shale, 208 horizontal wells have been drilled under such permits, and 48 wells are in production. Carroll County remains at the top of the list for permits issued with 179.
Houston-based energy company, Carrizo Oil and Gas, Inc., announced its 2013 capital spending plan for land, seismic, and related activities. The plan includes the purchase of additional acreage in the southern Utica play. After the purchase, Carrizo will own approximately 14,000 acres predominantly located in Guernsey, Noble, and Tuscarawas Counties, Ohio. Carrizo is encouraged by recent drilling results and expects an increase in production.
CONSOL Energy Inc. announced today that it expects to invest $835 – $935 million in its gas operation in 2013. According to a press release from CONSOL, (i) an estimated $160 million will be used to maintain production; (ii) $600 million will be used to develop Marcellus Shale assets; and (iii) $122 million will be invested in the CONSOL/Hess Corporation joint venture in the Utica Shale. According to the press release, CONSOL projects its gas production to increase by 8 to 15 percent in 2013 to approximately 170-180 Bcfe.