Skip to comments.Utica Shale Development: How do early-stage characteristics equate to other N. American shale plays?
Posted on 10/23/2012 5:05:35 AM PDT by thackney
Analysts say that the Utica Shale, which is nearly equal to the size of the Eagle Ford play in Texas could become the third-largest shale play in the United States, producing as much as 250,000 to 500,000 barrels of oil a day. The Ohio Department of Natural Resources estimates that the Uticas potentially recoverable reserves could range from 3.75 TCF of gas and 1.31 billion barrels of oil to 15.7 TCF gas and 5.5 billion barrels of oil.
In comparing the Utica to the Eagle Ford, the following: TVD in the Utica can be as shallow as 4,500 feet versus ~ 6,000 feet in the Eagle Ford, recovery factor can be 5% versus 4%, formation thickness 140 feet versus an average of 100 feet and porosity of 8% versus 5-8% in the Eagle Ford.
With regard to activity and players here is what's happening so far:
* Chesapeake holds more than 1 million net acres in the Utica and is by far the most active driller with a total of 87 wells with plans to finish 2012 with 15 operated rigs. They have significant funds to support their development through the end of 2014 thanks to the remaining drilling carry from their January 2012 joint venture with Total.
* After Chesapeake released data for five wells drilled in Carroll and Harrison Counties in the Utica/Point Pleasant play earlier in the year, everyone took notice. Their Buell well IP was 9.5 MMCFED of gas, 150 BD of condensate, and 1,275 BD of NGLs for a total of 1,040 BOED.
* Then came Gulfport Energy's Wagner 1-28H well in Harrison County producing 14 MMCFED of dry natural gas and 1,881 BD of natural gas liquids (after processing) along with 432 barrels of oil, significantly higher than the IP rate of Chesapeake's Buell well. Gulfport plans to drill 200 wells in the area in the next four years.
* There are other big players here also: BP has invested, then theres Hess and CONSOL who entered into a 50/50 joint venture a year ago valued at almost $600 million to fund their drilling and development across 200,000 acres.
And there is more activity when it comes to deals taking place in the Utica involving acquisitions and infrastructure as indicated by the following examples:
* EnerVest Ltd. amassed a huge collection of Utica drilling rights beginning in 2003 with plans to harvest their investment. Accordingly they plan to sell drilling rights to about 70% of this acreage and retain slightly more than 200,000 net acres whose potential will be determined in the future. It's estimated this sale could generate more than $6 billion.
* In September Spectra Energy, EnBridge and DTE Energy formed a Utica pipeline joint venture with plans to commence operations by late 2015 depending upon demand at that time. Total investment for this new pipeline system is estimated at $1.2 billion to $1.5 billion.
* Also in September NiSource and Hilcorp Energy announced a joint venture to construct their Pennant Midstream gathering pipeline infrastructure with NGL processing in Northeast Ohio/Western Pennsylvania. Reportedly it will cost around $300 million.
Summary: There are more announced (and unannounced) deals and plans that will be adding to Utica momentum, supporting a transition from early-stage to a bigger development opportunity that will probably rank with the big shale plays in the future. It will depend, of course on continuing investment by larger players like Chesapeake, Hess, BP, CONSOL and others plus the near-term economics of crude oil and liquids to affirm a logical path forward in Utica development.
Cheap energy is the answer to our economic woes. That and dismantling Obama’s EPA. Billions of investment in refineries and chemical plants are already planned—if they can get the permits.
Now that they’re discovering all these recoverable reserves in the US, are similar claims being made around the world? (ie Is there more oil than we can shake a stick at?)
Plenty of unpopulated areas in the southern tier to frack.
If you think wells/streams are being contaminated...then you don't know how it works.
More in the chemical plant than refineries planned as of today.
We already refine more than the US can use. The decades of expansions and upgrades at our existing refineries combined with the fallen demand has given us a surplus in refining capacity.
You are right on your points. Just to give you a little more ammunition, hydraulic fracturing is now 63 years old. Since Stanolind Oil introduced hydraulic fracturing in 1949, close to 2.5 million fracture treatments have been performed worldwide. (as of 2010)
The end of the tan area extends down into Scott County Tennessee. I have a map with hand written notes by my grandfather and Howard Baker about Scott county leases way back in the 30’s. Howard Baker was the father of Senator Howard Baker Jr.
There has been some additional exploration outside the US to take advantage of the combination of hydraulic fracturing with steerable horizontal drilling. However, it appears the shale resources seem to be largest in the US, giving us advantage in this area.
Sorry, I meant to reference your statement:
We KNOW how fracking works. It’s been around for 50 years.
Naw. Shale is not found outside the boundaries of the US.
But seriously, folks. Shale oil and gas will never be “cheap energy.” It costs too much to drill and maintain such a field.
But they are monumental game changers politically. All large countries, and a lot of small ones, are going to have major plays. This in the long run will destroy OPEC’s and the Arabs’ political and economic power, which was based on inability to get the oil anywhere else.
In the shorter run, OPEC will have a major incentive to keep prices down so these countries aren’t incentivized as much to develop their plays.
Philly is re-opening 2 refineries and keeping 6 others open. The surplus will drive energy prices down. The results of that will be transformative. And kill solar companies. NATGAS is a whole other discussion.
Meanwhile, Ohio, PA, and WV are creating jobs by the thousands.
Anyone seriously interested in the future of America should read this industry report on unconventional gas by IHS a Denver-based consulting company:
Here’s an excerpt from the Executive Summary:
Unconventional gas is expected to lead future growth in US natural gas productive capacity. By 2015, the share of
US natural gas produced from unconventional sources will increase to 67% and, by 2035, will reach 79%. Increased
unconventional gas activity will contribute to capital investment, job opportunities, economic growth, government
revenue, and lower prices across the country including:
Nearly $3.2 trillion in investments in the development of unconventional gas are expected to fuel the increase
in production between 2010 and 2035.
In 2010, unconventional gas activity supported 1 million jobs; this will grow to nearly 1.5 million jobs in 2015
and to over 2.4 million in 2035.
By 2015, unconventional gas activities will contribute nearly $50 billion in federal, state and local government
tax and federal royalty revenue; between 2010 and 2035, continued development of unconventional gas will
generate a cumulative total of nearly $1.5 trillion in federal, state, and local tax and royalty revenue.
This study, which focuses on 58 unconventional gas plays across the lower 48 US states, assesses their economic
impact on each individual state. Three types of gas plays are analyzed in this report: natural gas extracted from shale formations, tight sands, and CBM. These are referred to collectively throughout this report as “unconventional gas.”1
ENJOY. America’s future is bright. Just get Obama out of the Whoite house.
The article mentions a pipeline being planned. Any info on where that will run and tie in to the existing network???
The EPA was another bad idea from Nixon. Anyone should have known that giving the government power to regulate every phase of business and development in this country would inevitably lead to a bureaucratic power grab that would shrink the private sector and increase the government.
Government never stays within its bounds because power corrupts, as the Founders well knew.
Sorry. Not buying that. With steerable horizontal drilling and fracking ONE well can replace dozens of vertically drilled wells, and access broad swaths of "tappable volume" from a single platform (reducing environmental impact).
Let's see your data.
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