Some Say the Utica Shale is Already Busting Instead of Booming

From Reuters:
Chesapeake led the charge into Ohio, and others quickly followed. France's Total paid $2.3 billion to buy a share of Chesapeake's holdings, while major oil companies such as Exxon Mobil, Chevron and Anadarko joined in. Minors like Gulfport Energy Corp and Rex Energy Corp are also present.
Since then results have been mixed.
One of the first five Chesapeake wells in the Utica - called Buell 10-11-5 8H - spewed an impressive 9.5 million cubic feet per day of natural gas, according to data released by the Ohio Department of Natural Resources (DNR) in April. But with gas prices trading this spring at their lowest in a decade, the news spurred little enthusiasm.
In August, Devon said results from two wells in the western, oil-rich sections of the Utica were not encouraging.
Well permits, which hit a record high in August after doubling since the start of the year, dipped in September.
Marathon Petroleum, the Midwest's largest refiner, recently made changes at its 78,000 barrel-per-day refinery in Canton, Ohio, anticipating increased Utica crude output. So far it only processes 1,500 bpd of Utica oil and condensates.
"I would say the growth has been slower than we originally anticipated," Donald Templin, Marathon's vice president and CFO, told an energy conference last month.
Even Chesapeake has muted its trumpet.
In an SEC filing this May, the company said it was planning to drill a significant number of wells in Utica's "oil window" over the rest of this year, referring to an area that is expected to hold mostly oil. Three months later it said it "continues to focus on developing the wet gas and dry gas windows," with no mention of oil. Chesapeake declined to comment on the change in description.
Early comparisons between the Utica and the prolific Eagle Ford shale play in Texas are looking increasingly tenuous.
In 2011, one year after shale drilling commenced in earnest in the Eagle Ford formation, oil production had surged tenfold to nearly 120,000 barrels per day, state data show. It has pumped almost 300,000 bpd so far this year.
Ohio pumped around 13,000 bpd last year, a volume that has been almost unchanged for a decade, according to the U.S. Department of Energy. More recent figures are unavailable.
"Initial indications are that it is not quite living up to its promise," said Phil Weiss, an energy analyst at Argus Research in New York. "The Utica does not appear to be comparable to the Eagle Ford, but there is so little data."
Read the entire story here.

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