July 23rd Ohio DNR report
In the latest July 23, 2012 report from the Ohio DNR the spread looked like this.
- Permitted only: 157 (drilling not yet started)
- Drilling: 35 (currently drilling)
- Drilled: 77 (drilling done, waiting on completion*)
- Completed*: 12 (not yet producing)
- Producing: 14
*The term "completion" or "completed" defined.
The total wells from above is 295, 2 short of the Ohio DNR's report of 297 total permitted wells, explained by the situation of two wells classified as either "lost hole" or "plugged".
The backlog of wells permitted vs. active grows
As of July 23rd, 157 wells are awaiting a sequence of steps before the well can be drilled. After a well is permitted, and before any drilling takes place, there is a great deal of activity that must occur. The drill site needs to be prepared, and much of that preparation is done with local resources and manpower.
At the end of May 2012 the gap between wells simply permitted and wells active was 133, a backlog that grew by 24 to reach 157 as of July 23rd . As long as the gap holds steady or increases Ohio's economy can count on years of support, and with natural gas prices starting to rise and some projecting greater increases ahead, the belief that the trend will continue is warranted.
Royalty checks and tax revenue in the early stages
With only 14 wells classified as producing and 124 at least drilled and most likely heading for production, there will be many more royalty checks and much more tax income yet to come. What remains unclear is how long the wells will flow and at what rate.
Production uncertainties
Shale plays tend to be heterogeneous and production variability can be great from well to well. Variability and uncertainty plagues shale production. How a well is completed (number of stages, size and type of proppant used, pump schedule, etc) and exactly where a well is drilled (depth, target horizon within the formation, well bore inclination, etc) will result in varying production results.