Utica and Marcellus shale: Companies expect growth in 2014

PITTSBURGH, Pa. — While Utica shale drilling is still considered “new” when compared to other shale plays, drillers at the Hart Energy’s 2013 DUG East conference Nov. 14 said they are getting a handle on how and where to drill.

The future

Economists and drillers seem to agree there is a core area emerging in Ohio’s Utica shale: the southeastern Ohio counties of Carroll, Guernsey, Noble, Harrison, Belmont and Monroe.

In addition, drillers such as Gulfport Energy commented the northern portion of the Utica shale play is different and includes more faults, which results in lower production.

Numerous drillers agreed that as more midstream projects (pipelines) come online in 2014 and 2015, more wells will go into production.

“We are still in the very early days of the play and more is yet to come,” said Hsulin Peng, a senior analyst for Robert W. Baird and Company.

Peng told the crowd at the DUG East Conference the projections for the Utica shale will get closer to what is actually happening, as the Ohio Department of Natural Resources changes to quarterly well results in 2014 from annual reports.

Peng told the group that Magnum Hunter plans on drilling Utica shale wells in Washington County and there are plans to drill in West Virginia into the Utica shale.

Consol Energy

Consol Energy has big plans for 2014, including ramping up the Marcellus and more exploration in the Utica shale.

Nick Deluliis, president for Consol Energy, said the company has eight rigs drilling in the Marcellus shale in a joint venture with Noble Energy. He added there are plans for 75 wells in West Virginia.

In the Utica shale, nine wells have been drilled with the partner, Hess Energy. He expects the number to grow after midstream projects get underway, including an agreement made with Blue Racer.

“Both plays show great promise for Consol,” said Deluliis.

One project Consol is working on is at the Pittsburgh Airport in Allegheny County. Deluliis said there will be 50 wells drilled at the airport.

Range Resources

Drilling is also moving full force for Range Resources.

Jeffrey Ventura, president and CEO for Range Resources Corporation, said the company drilled the industry’s first horizontal well in the Marcellus and only sees growth in the future.

He said the company has developed only 7 percent of the land acreage Range has leased, adding there is enough property leased by Range that could result in as many as 6,750 Marcellus shale well locations.

Eclipse Resources

Eclipse Resources recently acquired some 185,00 acres in the Utica, split between Belmont, Guernsey, Harrison, Monroe and Noble counties and the emerging oil window.

Eclipse Resources is the company that purchased Oxford Oil in June 2013.

Benjamin Hulburt, president and chief executive officer for Eclipse Resources, said he hopes to grow the rig count to six by the end of 2014. There are three rigs drilling in Ohio now.

Eclipse has 25 wells currently drilled or waiting completion.

Hulburt said the company’s 10-year drilling plan includes three to five wells on a pad with 6,000 feet laterals. He said the company is testing spacing of the laterals to find out what works best with the Utica shale in the southeastern portion of the state.

Ener Vest

John Walker, Ener Vest Ltd. and executive chairman for EV  Energy Partners, said the Utica shale is still something that is hard to believe.

“No one  in 2002 or 2003 would have thought the shale would produce like it has,” said Walker.

Walker talked about the issues facing the industry including low gas prices. He said that many companies hedged the prices in 2008 not knowing what was ahead and that helped them achieve profit in 2012.

One thing that has to change for the local Utica and Marcellus shale regions is infrastructure. The infrastructure that is in place was developed for gas coming into the area. Now it has to reverse course and instead move it out of the region.

Gulfport Energy

Jim Palm, chief executive officer for Gulfport Energy Corporation, said the deepest well they have drilled so far was in Guernsey County. It is known as the Wagner Well, and has reached 8,700 feet. He said the average well cost is projected at around $9.5 million in 2014.

“If the Utica is just as good as the Marcellus shale, I’ll be tickled,” said Palm.

He said that plans are to continue drilling in 2014 and increase the leasing acreage held by the company in southeast Ohio.

“There’s no place where we have drilled a well that we wouldn’t go back and drill again,” said Palm.

Palm said his company budged $225-275 million to be spent on leasing acreage in the next year. However, he doesn’t expect to be paying any crazy high leasing prices. He did add that Gulfport would pay more for large acreage blocks over smaller pieces of land.

One thing that analysts and companies agreed on at the at Hart Energy’s 2013 DUG East conference was that the industry has never seen a shale play where so much success has been found so early.