Drilling Down

Southern Utica Sees More Permit Activity, Drilling

YOUNGSTOWN, Ohio – While drilling in the central and northern portions of Ohio’s Utica shale has ground to a halt, permit activity and exploration continues in the southern tier, albeit at a much slower pace than two years ago.

The Ohio Department of Natural Resources issued six new permits for horizontal wells for the week ended April 9, the agency reports. All of these new wells are targeted for Noble and Monroe counties, areas in southeastern Ohio whose geology has proved the most productive for oil and gas.

Five permits were awarded to Antero Resources Corp. for two well pads in Noble County — its Perseus and Brion units in Beaver Township. Antero reports that drilling has already started on three wells at the Perseus pad.

A single well permit was issued to Statoil USA Onshore Properties Inc. for a new horizontal well in Monroe County, ODNR reports.

There were no new permits issued for Mahoning, Trumbull or Columbiana counties last week, ODNR reports. The last permits issued in the northern tier of Ohio’s Utica were Nov. 3, 2015, for two new Chesapeake Energy wells in Franklin Township in Columbiana County.

Last year, just 16 permits were issued in Columbiana County and none were issued in Mahoning or Trumbull counties.

The last Mahoning County well permit was issued Oct. 24, 2013 to Halcon Resources Corp. in Jackson Township. The last horizontal well permit issued in Trumbull County was to BP America on Aug. 8, 2013. Both energy companies have since cancelled their drilling programs in the Utica.

Drilling and permit activity in northwestern Pennsylvania’s section of the Utica has also dried up, according to the Pennsylvania Department of Environmental Protection.

No new permits have been issued this year in Lawrence County and just one recorded for Mercer County in western Pennsylvania, which border Mahoning, Trumbull and Columbiana counties in Ohio, according to DEP records. The last permit issued for Lawrence County was on Dec. 7, 2015 for a well owned by Hilcorp Energy Co. in North Beaver Township.

The last permit issued in Mercer County was recorded on Jan. 19 this year – the first awarded in the county since Feb. 26, 2015.

However, permit activity was far more robust last year in this section of the northern Utica, DEP records show. In 2015, 71 new permits for horizontal wells were issued throughout Lawrence County. Mercer County proved less active with 11 new permits issued in 2015.

Energy companies have substantially curtailed new drilling operations in the face of low commodity prices.

Those energy companies that continue to drill do so in areas where the return is much greater, evidenced by strong production numbers in Ohio’s southeastern counties.

According to the latest production reports from ODNR, wells in Belmont County in the Utica play’s Ohio southern tier yielded the most natural gas for a 92-day period. The well with the most output during the fourth quarter of 2015 was Rice Energy’s Mohawk Warrior 12H, which elicited 1.626 billion cubic feet of natural gas. Rice Energy owns eight out of the top 10 best-producing wells across the Utica.

Other counties in the southern tier have witnessed similar results. Antero’s Kahrig 1H well in Noble County yielded 1.018 billion cubic feet of natural gas during the quarter, while a Gulfport Energy Corp. well in Monroe County reported production of 1.021 billion cubic feet of gas for the period.

As oil and gas prices remain low, production in the Utica continues to rise, although at a slower pace.

According to the Energy Information Administration’s monthly Drilling Productivity Report, natural gas production from the Utica is expected to rise at a rate of 1 million cubic feet per day in May. Oil production is expected to decline by 4,000 barrels.

The Utica is the sole shale formation out of the seven major plays in the country to project a gain in natural gas production in May.

Natural gas production per rig is expected to increase 79,000 to 7.1 million cubic feet per day. Oil output per rig is to increase by 12,000 barrels in May, according to EIA.

To date, ODNR has issued 2,158 permits in Ohio’s Utica. Of that number, 1,721 horizontal wells are drilled and 1,259 are in production. As of last week, there were 11 rigs operating in the Utica, one fewer than the previous week, according to ODNR.

Published by The Business Journal, Youngstown, Ohio.