Sunday, August 31, 2014

Utica Shale Ohio - 5 Counties with New Permits Issued Week of Aug 18, 2014.

The week of August 18th saw 14 new permits issued in 5 counties. Map below includes surface and bottom hole locations, well paths, and county outlines.

Belmont, 5 new wells, all HESS, all on one pad.
Guernsey, 2 new wells, Enervest, on one pad
Harrison, 4 new wells, Chesapeake, on one pad
Jefferson, 1 new well, Chesapeake
Noble, 2 new wells, Antero, on one pad

Surface locations purple, well paths and bottom hole locations are red.

Friday, August 22, 2014

LNG Export Projects Advance - A Comfort to Shale Operators

The U.S. Energy Information Administration (EIA) reported this week that another LNG export project has been conditionally approved by the Federal Regulatory Commission (FERC) and the U.S. Department of Energy (DOE).

Cameron LNG project joins the list
The new approval goes to the sponsors of the Cameron LNG export project out of Louisiana. The addition of the Cameron Louisiana project brings the total approved projects to three, adding to the Sabine Pass LNG (Louisiana) and the Freeport LNG (Texas) projects already announced.

LNG export approval status - DOE and FERC
The approval process for LNG export requires the DOE to approve LNG export and the FERC to approve the onshore and near onshore facilities, the latter involving a rigorous environmental impact study. Both the DOE and FERC maintain a list of projects and approval status.

The DOE has a longer list of approved LNG export projects listed here.
The FERC has a list of projects a various states, potential, proposed, and approved.
DOE LNG export applications from various companies can be found here.

Exports should ensure sustained drilling activity and new exploration
The winter of 2013/2014 was a harsh one, and to the delight of operators, many of which are razor thin on realizing profits on their shale investments. Without the recent cold winter that drew heavily on natural gas storage and kept natural gas prices at a price floor, we would not be seeing as much drilling as we are seeing now.

For all of the good wells that are profitable, there are those that are not, especially in the newer shale plays and the shale plays where brave operators venture out into less-proved areas. Unsatisfactory results in many of the northern and western areas of the Utica Shale in in Ohio is a case in point. BP abandoned efforts in the northern portion of the Utica after poor production results. And Devon, while still in the play, took a chance in the early days on some wells in the east and had a similar outcome.

In order to venture out into the untested areas and make more marginal wells profitable, natural gas prices will need to be at some level that supports investment. In fact, many areas, though having some amount of natural gas or liquids are not being developed based on the current price of natural gas. And even for those operators that want to experiment with new drilling, completion or production methods in non-core areas, the lower commodity prices increase the risk and dampen investment.

So while consumers and chemical companies cheer the lower prices, the price is sensitive to a number of things, including how cold it will be this coming winter. Opportunities to export LNG will help to sustain drilling activity and investment with operators banking on receiving higher prices overseas and the pressure that exports will have locally to sustain some reasonable pricing. LNG export also helps to create a pricing environment not so dependent on the U.S. weather and natural gas consumption patterns, offering much needed stability that investors need.

Thursday, August 21, 2014

Utica Shale's Top Driller Anticipates 835 New Wells

Most active current driller in the Utica Shale in Ohio
As of the August 16, 2014 Ohio DNR Utica Shale activity report, Antero Resources currently leads all operators in wells listed as "drilling" with 38. According to the Antero Resources August 2014 company presentation Antero anticipates "835 future gross drilling locations" in the Utica Shale in Ohio. This represents a significant capital investment when you consider the 5-7 million estimated cost to bring one of the wells into production.

Chesapeake leads historical numbers
And while Antero is currently the most active driller, they by no means hold the most active drilled locations, that distinction goes to Chesapeake with 494 locations reported as "drilled" or "producing". Gulfport reports 73 wells as drilled or producing. While the August 16, 2014 Ohio DNR report shows Antero Resources with 44 wells as drilled or producing.

Antero in the Utica "sweet, sweet spot"
As I've noted in a previous post, according to reported production numbers, Antero seems fortunate to have obtained some of the best of the best acreage when looking at BOEPD in the initial months of production of some of their recent wells. And it looks like capital spending is chasing these more prolific wells given Antero's aggressive drilling program, a program that currently exceeds all operators in the Utica in Ohio.

Monroe and Noble counties prominent
Reported Q1 2013 through Q 1 2014 production for Antero Resources is confined to Noble (18 wells, more liquids rich) and Monroe (6 wells, more gas rich) counties.

Antero Utica Shale Ohio Production through Q1 2014. Source Ohio DNR data.

August 16 report shows increase since end Q1 2014
The August 16 Ohio DNR report shows an additional 6 Antero wells classified as "producing" in Noble county when compared to the Q1 production report. The report shows 14 wells "drilled", 38 "drilling", and 12 "permitted". A map of all Producing, Drilled, and Drilling Antero wells here is below.

(Surface locations in blue, bottom hole locations in red.)
Click for large map view

(Surface locations in blue, bottom hole locations in red.)
Click for large map view

Tuesday, August 19, 2014

Utica Shale Activity in Ohio - Latest Maps and Data

The August 16, 2014 Utica / Point Pleasant well activity data is out. The report shows:

202 Ohio wells reported as currently drilling, map

Utica Ohio drilling activity by county

Harrison county leads all drilling activity with 49 wells classified as drilling, followed by
Guernsey (43)
Monroe (42)
Noble (35)
Carroll (17)
Belmont (12)
Jefferson (1)
Morgan (1)
Portage (1)
Trumbull (1)

Utica Ohio drilling activity by operator

Antero leads the pack with 38 wells classified as currently drilling, followed by
Chesapeake (34)
Gulfport (32)
American Energy (22)
Eclipse (16)
Hess (14)
PDC Energy (8)
Triad Hunter (8)
HG Energy (6)
Carrizo (5)
CNX Gas (4)
Hall Drilling (4)
XTO (3)
EQT Production (2)
Rex Energy (2)
Chevron (1)
Devon (1)
Halcon (1)
Mountaineer Keystone (1)

In addition:
467 wells are classified as Producing, map and
228 wells as Drilled, map. 

20 new permits were issued for the period (August 10-16 2014)

New permits were lead by American Energy with 10 new permits followed by
Hess (5)
Chesapeake (4)
CNX (1)

Harrison county led Utica permitting with 8 followed by
Belmont (7)
Carroll (4)
Tuscarawas  (1)

A map of the newly permitted wells is below, note that these are surface locations where they are often more than one well on a pad, zoom in to view separate locations on a pad.

Saturday, August 16, 2014

Ohio Counties with the Most Impressive Utica Production

In each of the last five quarters (Q1 2013 to Q1 2014) the Ohio DNR released production data for Utica / Point Pleasant wells. The data included the county and the number of "producing days" for each of the wells in the county. Combining all the producing days for all of the wells in a county gives us the numbers in the chart below.

Total producing days in a county = the total number of producing days for all wells in a county combined.

Carroll County
Carroll County is noted as leading by a wide margin in the number of well producing days, representing approximately 56% of the total. Other counties should make gains on Carroll county going forward given the shift in permitting and drilling activity. In the recent August 9, 2014 Ohio DNR report, Harrison, Noble, Guernsey, and Monroe, each showed more than twice the drilling activity of Carroll County.

Chesapeake does appear to be seeing some nice profits in their Carroll county wells and are drilling at a steady clip. In the Q1 2014 data we see that the six Putnam wells in Union Township in Carroll County showed nice initial production. The first 53-67 days of production show an average of ~200-250 Barrels of Oil per Day. As a result, I don't see Chesapeake slowing down Carroll County drilling anytime soon.

Carroll County, Data Source Ohio DNR

Noble County
Though many of the Noble County wells are showing even more impressive oil production results with the Antero wells below averaging 630 to almost 1,000 Barrels of Oil per Day in the first 32-68 days of production.

Noble County, Data Source Ohio DNR

Harrison and Guernsey Counties
Some of the Harrison and Guernsey County wells are also putting up some nice numbers, showing around 500 Barrel Per Day of production the first two or three months that they come online. Some Gulfport, Hess, Carrizo wells in those counties are seeing the 500 BOPD production numbers.

Monroe and Belmont Counties
Monroe and Belmont Counties, while not showing much oil production, are showing some of the most prolific gas production.

Single well production records to come
The technology mix and process used to exploit the wells is evolving so we should expect to see production records broken as operators learn more and hone their methods of exploiting the Utica / Point Pleasant play in Ohio. Stay tuned.