Oil Find Shifts Attention in Utica

YOUNGSTOWN, Ohio – More than 10 years into the exploration of the Utica/Point Pleasant shale region, energy companies are just now obtaining a clearer picture of what this formation holds.

This is especially important for northeastern Ohio, where surprising discoveries of large volumes of oil are changing the entire nature of the play.

The combination of data from legacy horizontal oil and gas wells, advanced technology, and a more in-depth understanding of the geology of the Utica have helped to narrow the search for more productive rock, industry specialists say. This information has also led to more efficient means of drawing out oil and gas molecules that have been sealed underground for millions of years.

At the forefront of the rush is Encino Energy, whose Utica subsidiary, EAP Ohio, has emerged as the leading oil producer in the state. Moreover, the company has found productive oil wells in pockets that earlier were thought relegated to natural gas production.

“Over the past five years, Encino has grown oil production by 250% and natural gas production by 15%, becoming the largest producer of oil in Ohio,“ says Jackie Stewart, Encino director of external affairs.

Encino entered the market in 2018, acquiring most of Chesapeake Energy’s Utica assets in eastern Ohio, including Columbiana County.

Through the first nine months of 2023 – the most recent production figures available from the Ohio Department of Natural Resources – the Texas-based energy company reported it’s produced more than 10.35 million barrels of oil from the Utica, more than half of the nearly 20 million barrels produced in the entire state during the period.

Columbiana County Oil Boom

A major addition this year to the oil assets of Encino is a handful of wells in Columbiana County that have shown promise in the northern tier of the Utica, according to ODNR production records. Drilled in Hanover and Knox townships, eight Encino wells accounted for 728,443 barrels of oil during the first nine months of 2023.

Three of those wells, the Sanor 6H, 8H, and 10H in Knox Township, were ranked respectively the 6th-, 7th- and 8th-most productive oil wells in Ohio during the third quarter, ODNR records show. 

What is unusual is that this section of the Utica is known for its natural gas production, not oil.

“There is some shifting where the money’s being invested,” observes Andrew Thomas, executive in residence at the Energy Policy Center of Cleveland State University’s Maxine Goodman Levin School of Urban Affairs. “The focus of drilling has been moving north.”

Thomas observes as early as five years ago, energy companies all but ignored prospects for oil in portions of the northern and other parts of the Utica.

“Five years ago, that entire oil window had been written off as uncommercial,” he says. “They’re coming back now. We’ve seen a handful of companies drilling in areas that are predominantly oil.”

The Energy Policy Center at Cleveland State publishes a Utica shale investment study twice a year and is now compiling data, Thomas says, and analyzing trends for the first half of 2023. “Oil production has been on the rise – about 10% a year – over the last several years,” he observes, driven mostly by higher oil prices and a renewed push into the oil windows.

This trend is likely to continue, Thomas says, along with steady volumes of natural gas production. And the Utica should continue to see drilling activity migrate northward from the southern tier, he says.

“What caught my eye during the first half of 2023 was that it’s the first time we’ve seen total production from Jefferson County exceed Belmont County as the leader in state for production,” Thomas says.

The potential for strong oil production across the Utica has been known for years, says Mike Chadsey, director of public relations for the Ohio Oil and Gas Association. The trick, however, was finding a way to drill for this oil that made economic sense.

“There’s a saying in the industry, ‘Oil is where oil was,’ ” Chadsey says. “There’s been oil production in shale and conventional production in Columbiana County and elsewhere such as Tuscarawas and Guernsey counties for a long time now.” 

The precise extent of the Utica oil play has yet to be determined, Chadsey says.

Between 30 and 40 wells in the Utica oil window – some of which are in Columbiana County – should be commissioned by the first quarter of this year. Production results from these wells should present a better indicator of the oil potential in the Utica, he says.

“Each well is a data point,” Chadsey says. “The most telling will be the first quarter of 2024, when a lot of these wells come online and production is reported.”

As of now, Chadsey says, there’s not enough information to project with certainty the course of oil production in Columbiana County. “We have an indication. We’ll know more in the first and second quarters of 2024,” he says.

Nevertheless, the early results are encouraging for the industry, Chadsey says. “Everything we have heard – they’re cautiously optimistic if not downright excited about the opportunities in Columbiana County,” he says.

Technology, Efficiency, Impact

Higher oil production in places such as Columbiana County is likely attributed to improved technology and an understanding of scientific data gleaned from years of drilling experience in the Utica, Chadsey says.

“What has changed is technology,” he continues.  Energy companies over the last decade now have fewer rigs in operation in the Utica – not because they’re less interested, but because advances in drilling techniques and methods have allowed these companies to produce more oil and natural gas from a single horizontal well than a decade ago. 

“The length of lateral, drilling depth, pressures and profits – all the things you put together when you drill a well – our companies have learned and adapted,” Chadsey says.

At the height of the Utica frenzy in October 2014, Chadsey recalls there were more than 50 rigs operating in eastern Ohio. “We’ve had about a dozen for awhile now,” he says. “There are fewer rigs but they’ve gotten more efficient, smarter. They can drill longer laterals with more stages.”

For energy companies such as Encino, these innovations are starting to pay off because the company has developed more efficient means to complete wells faster and at a lower cost. 

“We brought vast experience and new ideas to the Utica, enabling profitable development in areas our industry had written off,” Stewart says. Using new rotary steerable drilling tools in addition to machine learning has allowed Encino to complete wells with laterals as long as four miles, she says. These improvements have also helped to reduce the footprint of each well to less than half a percent of the total acreage in the drilling unit, she says.

Many of these efforts began in 2019 as Encino embarked on sustainable growth in the Utica and navigated traditional boom and bust cycles across the industry, Stewart says. “As a result of this deliberate approach, we’ve brought large parts of the Ohio Utica back to life and to compete against top-tier oil and gas basins in the country.” 

Technology has also reduced the impact these drilling operations have on the environment. 

Over the past five years, Encino has reduced its methane emissions by 40% while greenhouse-gas emissions have dropped 35%, Stewart says. “We are recycling the vast majority of the water we use, dramatically reducing our use of local fresh water and the related truck traffic.”

Columbiana County is home to three active oil and gas producers in the Utica: Encino, Hilcorp Energy Co., and Geopetro. While Encino proved the sole oil producer of the three, collectively the companies yielded 69.1 billion cubic feet of gas through the first nine months of 2023. That easily outpaces the production of the previous year, which stood at 66 billion cubic feet.

“In 2023, the United States became the largest producer of natural gas and oil and the largest exporter,” Stewart says.  “Through technology, efficiencies and a state that encourages innovation, producers kept on investing and are now reaching new highs and doing so while driving down emissions, resulting in the largest decline in U.S. CO2
emissions in the last 20 years.”

Energy production out of the Utica also helps to provide Ohio with a reliable supply of energy, reducing costs for large-scale development projects such as Intel’s $20 billion chip factory near Columbus and other business ventures, Stewart says. It also helps to support other Ohio businesses, such as Vallourec’s mill in Youngstown, which produces steel tube used by Encino. 

“As we look forward to 2024, I can tell you with great confidence that we’re just getting started,” Stewart says. “Affordable and reliable energy gives Ohio a competitive advantage, which is why we are seeing megaprojects like Intel onshoring major manufacturing and steel being made in Youngstown again.”

Pictured at top: Encino Energy acquired most of Chesapeake Energy’s Utica assets in 2018. It has since grown oil production by 250%.