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Monday, June 30, 2014

Despite Early Disappointment, Northern Utica is Not Dead Yet

From NGI's Shale Daily:
Despite poor results and the unabashed early decisions of some unconventional operators to abandon altogether what was once thought to be the core of Ohio's Utica Shale, neither the oil and gas industry nor the communities waiting for economic opportunity have written off the play's northern tier.

Even as operators push farther south into West Virginia to replicate the dry gas success of southeast Ohio and as a similar pattern slowly unfolds nearby in southwest Pennsylvania (see Shale Daily, March 26; June 5), optimism for the future of the Utica Shale in the northwestern part of the keystone state has not subsided. 
In nearly a dozen interviews with oil and gas professionals, local landowners and community leaders in Ohio and Pennsylvania, and through the analysis of both state production data and the plans of some of the Appalachian Basin's leading operators, there appears to remain significant enthusiasm about the Utica's black and volatile oil windows. It's only a matter of time, sources say, before operators learn how to move those molecules through the small pores of shale rock underneath a five-county region in northeast Ohio and a larger area to the west, while some acreage in northwest Pennsylvania is believed to hold the same potential.
In the last four months alone the Utica's northern tier in Ohio, which today is generally perceived to consist of Mahoning, Trumbull, Stark and Portage counties, and to a lesser extent Tuscarawas County, received a series of signals that spelled trouble for the oil and gas industry's future in the region (see Shale Daily, June 3; March 12; March 11)

Among the biggest announcements was BP plc’s $521million impairment. The company said in April that it would market its roughly 100,000 acres in Trumbull County and the surrounding area, saying only that the acreage did not match the needs of the "company's portfolio" (see Shale Daily, April 29; Nov. 18, 2013
Around the same time, Halcon Resources Corp., citing poor results and inconclusive data, decided to suspend its drilling program in northeast Ohio and northwest Pennsylvania (see Shale Daily, March 5). 
Those events, among others, prompted local news media to question the Utica Shale's long-term role in what has recently been a regional economic rebound. They set off local discussions and stirred further speculation about what the industry and investors have for some time accepted about the uneconomic results in the northern tier (see Shale Daily, Jan. 2). 
"I don't think any of us familiar with oil and gas in the state of Ohio have written-off areas that have thus far proven disappointing in the north," said the Ohio Oil and Gas Association's Executive Vice President Thomas Stewart. "You can't have a boom if the geology doesn't exist under current technology, and it's just not there yet in some of the areas north of Carroll County."
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