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With three defined hydrocarbon windows in eastern Ohio and northwestern Pennsylvania, the Utica/Point Pleasant play is drawing rave comparisons to the South Texas Eagle Ford shale.
A core sample from a well in Coshocton County in eastern Ohio was displayed on the podium at Hart Energy’s DUG East conference in Pittsburgh in November 2011. Larry Wickstrom, division chief and state geologist, Ohio Department of Natural Resources (ODNR) Division of Geological Survey, pointed out the rich blackness of the rock, which is interlayered with organically rich limestone and shale. “It just looks like it’s going to ooze oil out of it,” he said.
Operators like Cheseapeake Energy and EnerVest have rushed into Ohio for early entry into the Utica/ Pleasant Point play and have seen oil produced at a much higher rate than oozing. Chesapeake’s Buell 10-11-5 8H in Harrison County, Ohio, piqued the interest in the Utica shale in September 2011 when the well flowed more than 3,000 boe/d, which included 1,500 b/d of NGL and oil.
With the Buell on pace to become the top-producing well in the history of Ohio within four years, it is no wonder that the majors are lining up for acreage in the play.
The biggest story in most of the small-town newspapers in southeastern Ohio and northwestern Pennsylvania deals with the first well in the township being drilled into the Utica shale.The Meadville (Pa.) Tribune on July 20 wrote about the first Utica well being drilled in Crawford County, Pa. As the paper noted, “Crawford County has more of a prevalence of the Utica shale formation.”
Range Resources is drilling the Lippert Unit #1H well off Pettis Road in East Fairfield Township outside of Cochranton. The Utica is at a depth of about 2,121 m (7,000 ft). Range plans to drill a second well in Greenwood Township and is preparing to submit a permit application. The newspaper reported leasing prices have gone from US $50/acre at this time in 2011 to $3,000/acre and higher this year.
Utica/Pleasant Point geology
The Utica/Point Pleasant play runs across Kentucky, West Virginia, Ohio, Pennsylvania, New York, and Quebec, Canada. The Point Pleasant virtually disappears outside Ohio and western Pennsylvania.
The Utica shale has three defined hydrocarbon windows. A more geologically mature band of dry gas trends through southeastern Ohio and into western Pennsylvania, which abuts a diagonal strip of liquids-rich wet gas and condensate-rich rock that runs from northeastern Ohio into south-central Ohio. Finally, light and black oil was found in the trend in Ohio further west of the wet gas strip through the state.
While the Utica shale covers a wide swath from Tennessee into New York and Canada, the best geology is in Ohio, Wickstrom explained. The Point Pleasant formation is a carbonate underneath the Utica shale section. The interbedded limestone and calcareous shale of Point Pleasant is more than 61 m (200 ft) thick. It is an organic-rich marine facies that was deposited during the end of the Middle Ordovician and sits below the Upper Ordovician Utica shale that is 45 m to 91 m (150 ft to 300 ft) thick.
“The big difference is the Point Pleasant formation. That’s what gives us some of the best production in Ohio,” he said.
In looking at the source rocks for the Utica play, Michael Bodino, director of energy equity research, Global Hunter Securities, said, “Perhaps the most important variable is the high organic content in the black shales as well as the high calcite percentage, which allows fracability.”
Total organic content averages 2% to 3%. The rock has high calcite content, low clay content, reasonably good porosities, and low water saturations, he added.
The Utica “sweet spot” in Ohio can be narrowed down to the following counties, where the biggest operators in the play are focused: Noble, Monroe, Guernsey, Belmont, Jefferson, Harrison, Tuscarawas, Carroll, Stark, Columbiana, Mahoning, Portage, and Trumbull. In Pennsylvania, the Utica wet gas window is in four western counties: Beaver, Lawrence, Mercer, and Crawford.
In early July, the Ohio Department of Natural Resources reported that to date 291 horizontal drilling permits had been issued, 98 horizontal wells were drilled, and 14 were producing. Of those 14 producers, nine are operated by Chesapeake.
Chesapeake claimed to be the largest leaseholder in the play with about 1.3 million net acres. As of July 2012, the company had drilled 59 wells in the play. Of those, nine wells are currently producing, 15 wells are being completed, 15 are waiting on completion, and 20 are waiting on pipeline.
Houston-based EnerVest, as the largest operator in Ohio with exposure to more than 1.6 million gross acres, has approximately 600 penetrations of the Utica from its legacy drilling program into the Knox formation.
Of course, the two companies are working together on about 628,000 acres. Chesapeake bought out Anschutz Exploration’s 50% interest in the acreage of which EnerVest owned the remaining 50%.
EnerVest entities control about 1.2 million gross acres. The company has about 700,000 net acres, of which 60% is operated by EnerVest. The company, along with Chesapeake, has been at the leading edge of evaluating the resource potential and producibility here.
For 2012, EnerVest has seven wells permitted and will drill three to five operated wells. The company is continuing to derisk the play. Part of the wet gas window has been derisked, and the average cost per well has dropped by 33%. A process for monetizing part of its Utica shale working interest position has been launched. The company began the process near the end of June with Jefferies & Co. as its financial advisors and expects to complete it by the end of this year. EnerVest plans to retain an overriding royalty interest in the assets.
The success has caught the attention of majors, mid-majors, and a Chinese national oil company, including Chevron Corp., BP Plc, ExxonMobil Corp., Shell, Con-sol Energy, Hess Corp., Total SA, Devon Energy Corp., Anadarko Petroleum Corp., and Sinopec.
As Bob Daniels, Anadarko senior vice president, Worldwide Exploration, said in an April press release, “Though it is very early in our exploration program, the strong initial results are encouraging. We expect to begin flowing back our fourth Utica exploration well in the next few days and are currently drilling our fifth exploration well in the play. We plan to continue an active drilling program throughout the year as we evaluate the liquids-rich potential of our 390,000-acre [gross] position in the Utica shale.”
In April the company reported it had drilled and was producing from three wells in the Utica shale, the most recent of which had delivered more than 9,500 bbl of light-gravity crude oil during its first 20 days online. The Brookfield A-3H well in Noble County had produced about 9,500 bbl of oil and approximately 12 MMcf of high-Btu natural gas during that time.
Ramping up in Utica/Point Pleasant
Even with the successes in the wet gas window, EnerVest is “at months, not years” in understanding and developing the Utica, according to President and CEO John Walker. “When you enter a play, you’re doing a lot of science projects, and some of these wells are very costly,” he explained at the DUG conference. “We’re going to be doing science projects for at least another year or two – we’re not going to be pad-drilling for a while.”
Attention also is focused on the oil window further west. Last November, Devon Energy was drilling the most western Utica well in Ashland County in the oil window. But there is little information on the well itself. The only comment on the July 8 ODNR report is that Devon is moving the rig. “This is an important one to watch,” said Wickstrom. “We’ll finally get a look at the producibility [of the oil window].”
Acknowledging limited production data from the oil window, he remained conservative when extrapolating recovery potential. Using a volumetric approach, with a 1.2% recovery factor, he figured the state holds 2 Bboe underground. At 5%, the state would be able to recover 8 Bboe.
Walker acknowledged a range of unreported results in both the NGL and oil windows. Most of the wells are being drilled as tight holes since there continues to be a scramble for leasing acreage in the oil window.
In the wet gas window, though, activity is moving ahead at full speed. The majority of Chesapeake’s drilling permits are in Carroll, Columbiana, and Jefferson counties. The company currently is operating 10 rigs and plans to average 13 rigs in 2012 and 20 rigs in 2013.
Chesapeake completed a sale of 25% of its acreage in the wet gas window to Total in 2011 for $2 billion and future drilling carries. During 2011, the company invested about $1.5 billion to drill 371 gross (149 net) wells in its Eastern Division, which includes the Marcellus and Utica. It expects to spend $1.2 billion in the division this year, net of carries.
Consol Energy is another big player in the region, with 200,000 gross acres in the Utica shale in a joint venture with Hess Corp.
In Consol’s 2Q 2012 report, the company noted that in its operated acreage in the Utica shale joint venture with Hess, Consol had completed its first horizontal well (the TUSC 3A) in the western portion of Tuscarawas County, Ohio. During initial flowback, commercial amounts of light crude oil with 38°API gravity and 1,440 Btu gas were encountered.
Consol Energy was operating two horizontal rigs in the Utica shale, one in Noble County and another in Portage County. For 2012, the company expects to drill about 12 wells on its acreage in the Ohio Utica shale, down from earlier expectations of 16.
On Hess-operated acreage, its joint venture partner was operating one joint rig in Belmont County. In total for 2012, Hess expects to drill six wells on its acreage in the Ohio Utica shale.
In May, Rex Energy completed drilling its first Ohio Utica well, the Brace #1H, in Carroll County. The well encountered about 41 m (135 ft) of Point Pleasant formation and about 43 m (143 ft) of overlying Utica shale formation. Rex shut in the well for approximately 60 days following fracture stimulation to allow dissipation of frac water before flowing the well back.
Another company in the region, PDC Energy, established a position in the emerging Utica shale play in southeastern Ohio during 2011. The company is focused on the wet gas and oil windows and is seeking an industry partner to help develop this play. PDC drilled one vertical well in 2011 and plans to drill three horizontal wells and one vertical well in 2012.
Sinopec entered the Utica shale in a $2.5 billion transaction with Devon Energy for interests in five oil and liquids-rich plays. The Utica portion of the deal includes 235,000 gross acres. Sinopec agreed to participate in drilling about 15 wells in 2011-12.
Quebec stops hydraulic fracturing
There are a number of Canadian companies wanting to engage in the development of the Utica and Lorraine shales and the deeper Trenton Black-River carbonate. However, in March 2011, the Bureau d’ Audiences Publiques sur l’Environment (BAPE) in Quebec banned hydraulic fracturing for further study, which put a stop to the nascent shale play in the province.
One of the major players with about 1 million gross acres is Questerre Energy. As the company noted on its website, the area is prospective for natural gas in several horizons, with the primary target being the Utica shale.
Questerre and its partner Talisman Energy completed a successful vertical test well program in 2008-09. The companies started a pilot horizontal well program in 2009 with the drilling of the St. Edouard No. 1A and Gentilly No. 2. In 2010, two additional wells were completed, the St. Gertrude No. 1 and Fortierville No. 1.
The St. Edouard No. 1 had initial flow rates from the Utica of more than 12 MMcf/d with a 30-day average flow rate of approximately 5.7 MMcf/d. After 134 days of testing, the well was producing at a rate of 1.4 MMcf/d.
This is an example of the flow potential for this particular fairway in Canada. Questerre also completed permitting for a 3-D seismic program in this area to identify potential multiwell pad locations as a follow-up to the St. Edouard No. 1A discovery well. More than 90% of the landowners supported this permitting process. The company awaits the BAPE recommendations to continue its operations.