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How long will the shale boom last?
The Columbus Dispatch ^ | Friday May 17, 2013 | Dan Gearino and Spencer Hunt

Posted on 05/17/2013 10:23:27 AM PDT by Deadeye Division

How long will the shale boom last?

ODNR official sees ‘beginning of a historic era’ for oil and gas; other observers aren’t sure

By Dan Gearino and Spencer Hunt Friday May 17, 2013 3:32 AM

Oil and gas companies nearly doubled their production from Ohio’s Utica shale last year, part of an energy surge that is still in its early stages and whose potential is far from clear.

The companies extracted 635,896 barrels of oil and 12.8 billion cubic feet of gas from the Utica in 2012, which is a year-over-year increase of 93 percent and 87 percent, respectively, according to figures the state released yesterday.

“We believe Ohio is now at the beginning of a historic era of oil and gas production,” said James Zehringer, director of the Ohio Department of Natural Resources, at a news conference.

Industry leaders and analysts were more cautious in their response to the report, however, saying there is not enough information to make any broad statements about the shale formation’s potential. They noted that the oil and gas from the Utica last year is worth about $100 million at current market prices, which isn’t much, considering the high cost of developing shale wells.

“It’s still very preliminary data,” said Ben Ebenhack, professor of petroleum engineering at Marietta College, who previously worked in the oil industry. “Of the wells producing, the average producing time is about four months. That’s a pretty narrow window of observation.”

Some of the most-relevant data will be how much production drops in each well over time, something that cannot be seen in annual figures for a bunch of new wells, said Mark Jordan, president of Knox Energy, a Columbus oil company.

“It’s too early to make many conclusions at all,” he said. “It’s really all in the testing phases.”

State officials were less guarded in their optimism, with Zehringer saying he thinks the state is at “the onset of an energy boom” and describing the Utica as “the real deal.”

His agency is projecting that the Utica will have more than 1,000 wells producing by 2015, more than 10 times the number producing today, resulting in 7.2 million barrels of oil and 146 billion cubic feet of gas.

Right now, though, Ohio is not a major energy producer, falling outside the top 10 in both oil and gas, according to the Energy Information Administration. Development is farther along in other shale regions, such as the Marcellus, which has helped Pennsylvania become a top gas producer, and the Bakken, which has made North Dakota second only to Texas in oil.

The Utica is a rock formation that runs deep beneath the eastern and central parts of the state. Drilling activity has transformed a band of rural Ohio counties east of I-77. Rural roads are jammed with trucks tied to the energy industry, and hotels and campgrounds are booked with traveling workers.

But the output from the Utica remains a small share of the state’s oil and gas production — 12 percent of oil and 16 percent of gas. That means most of the resources come from conventional wells, which are drilled much closer to the earth’s surface than shale wells.

Notably, the Utica results came from 87 wells, compared to the roughly 50,000 conventional wells in the state.

Chesapeake Energy had the most wells in production with 53, and it produced more than half the oil and three-fourths of the gas in the Utica last year.

Several companies, including Devon Energy, have pulled back or completely withdrawn from the Utica after disappointing results. That follows a period when energy companies were rushing to the state and paying escalating prices to lease mineral rights.

“The fervor with which the companies were moving was stunning,” Ebenhack said. “It wouldn’t be surprising if they slow down a little bit.”

On environmental issues, Zehringer said Natural Resources officials are asking state lawmakers for additional powers to deal with radioactive and liquid wastes produced during drilling and hydraulic fracturing, or fracking.

One provision in the state budget bill would give the agency the ability to regulate and permit businesses that recycle the fracking fluids and wastewater that bubble out of freshly drilled shale wells.

Zehringer said he’s also hopeful that Senate lawmakers will add rules to the proposed state budget bill that would put limits on the amount of radioactive drilling waste that could be dumped safely in Ohio landfills.

Environmental groups oppose that plan, in part because drilling companies would be allowed to dump waste that exceeds a safe limit for radioactivity in landfills if it is first diluted by mixing it with other non-radioactive wastes.

“That should be put on a siding in a different bill for more study,” said Jack Shaner, spokesman with the Ohio Environmental Council.

As of May 11, the state had approved 660 drilling permits in the Utica shale region. Of that total, 215 have been drilled and 97 are producing resources that might include oil, natural gas or natural-gas liquids; the 87 in the state report are the ones that were producing as of Dec. 31.

Carroll County has the most permits with 257, followed by Harrison County (91), Columbiana (68) and Noble (40).

Though the Utica extends to the Columbus metro area, there has been almost no permit activity in the region. The closest has been in Knox County, with two permits, and Muskingum County, with three.

dgearino@dispatch.com

@dispatchenergy

shunt@dispatch.com

@CDEnvironment


TOPICS: Business/Economy; Miscellaneous; News/Current Events; US: Ohio
KEYWORDS: energy; oil; shale

1 posted on 05/17/2013 10:23:27 AM PDT by Deadeye Division
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To: Deadeye Division
Environmental groups oppose that plan, in part because drilling companies would be allowed to dump waste

But mostly because they are a bunch of earth worshiping Luddites and Marxists who despise freedom and prosperity.

2 posted on 05/17/2013 10:29:58 AM PDT by ChildOfThe60s (If you can remember the 60s.....you weren't really there)
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To: Deadeye Division

As of May 11, the state had approved 660 drilling permits in the Utica shale region.
But I thought president Obama was responsible for the nation’s increased petroleum production.


3 posted on 05/17/2013 10:33:01 AM PDT by Straight8
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To: Deadeye Division; thackney

Sort of a ping.


4 posted on 05/17/2013 10:35:15 AM PDT by Dr. Bogus Pachysandra ( Ya can't pick up a turd by the clean end!)
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To: Deadeye Division

408 years, 6 months, 14 days, 18 hours, 6 minutes and 32 seconds.

There someone has put a number on it.


5 posted on 05/17/2013 10:35:16 AM PDT by edcoil (If you can't change the rules, then ignore them.)
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To: edcoil

Might want to play that on the Powerball?


6 posted on 05/17/2013 10:47:30 AM PDT by RS_Rider (I hate Illinois Nazis)
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