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Ohio Utica Shale

Gulfport, Rex and Devon discuss Utica shale projects

By Bob Downing Published: November 7, 2012

By Bob Downing

and Jim Mackinnon

Beacon Journal staff writers

Gulfport Energy Corp. is so pleased with its first dozen wells in eastern Ohio that the Oklahoma-based energy company is prepared to spend up to $225 million in 2013 to drill 50 additional wells.

Ohio’s liquid-rich Utica shale is "a once-in-a-lifetime play…and a company-changer" for Gulfport, said CEO James Palm in a teleconference on Wednesday on the firm’s third-quarter earnings. Two other drilling companies also released third-quarter earnings reports and discussed the Utica shale.

Gulfport, Palm said, is making the Utica shale its primary focus and the center of its drilling operations. "We will be a Utica-focused company," he said.

The company, he said, is "pleasantly surprised" by the production results from the company’s first wells in Harrison, Belmont and Guernsey counties. The wells are producing equal amounts of oil, natural gas liquids and natural gas, he said.

The company, he said, has arranged the financing to accelerate its development plans in the Utica shale.

"Everything we’ve seen so far makes our original estimates appear pretty conservative," said company chief financial officer Mike Moore.

Production is likely to ramp up beginning in early 2013 with the completion of connecting pipelines and processing facilities that are built by Colorado-based MarkWest Energy Partners for Gulfport, Palm said.

The Utica shale is very comparable to the highly touted Eagle Ford shale in Texas, he said.

Gulfport intends to drill two additional Ohio wells late this year and 50 new wells in Ohio in 2013. It will own the rights to half the wells. An unnamed partner owns the rights to the other half.

Gulfport has said it plans to drill 400 wells in Ohio over the next four years.

The firm has about 128,000 leased acres in eastern Ohio and has added about 3,000 acres in recent months, he said.

The company has the three best-producing Utica wells in Ohio: with its Shugert well in Belmont County and two wells in Harrison County.

The company has had two rigs drilling wells in Ohio and will add a third rig next March, Palm said. The company intends to add two or three additional rigs later that year, he said.

The firm has earmarked $215 million to $225 million for next year’s drilling, he said.

It spent between $72 million and $76 million in developing Ohio’s Utica shale in 2012, the company said.

The company also released preliminary production number on its sixth well: the B,K. Stephens well in Harrison County’s Moorfield Township.

The well was drilled to a depth of 8,225 feet with a 5,276-foot horizontal lateral. It was hydraulically fractured or fracked in 19 stages.

After a 30-day resting period, that well produced 1,224 barrels of oil per day plus 6.9 million cubic feet of natural gas per day, It is believed that the well will also produce an additional 770 barrels per day of natural gas liquids. That is equal to 3,007 barrels of oil equivalents per day. That makes it the company’s fourth-most-productive well, to date.

The well is expected to begin full production by the end of January.

Drilling companies must report production data next spring to the Ohio Department of Natural Resources. Gulfport and Chesapeake have voluntarily released limited production numbers.

Palm said Gulfport had initially planned to drill 20 Ohio wells in 2012.

That number will actually be 14, but the wells being drilled have longer horizontal legs that make those 14 wells comparable to the 20 wells that had been envisioned, he said.

The company is also working to reduce its drilling costs and will spend this winter fine-tuning its drilling science, Palm said.

Rex Energy, based in State College, Pa., reported strong results from its first Utica shale well it has drilled and fracked in Carroll County and said it is continuing with plans to drill additional wells in Carroll, Guernsey, Noble and Belmont counties.

Rex Energy said it has completed acquiring 20,000 acres "in what the company believes to be the ‘wet’ corridor of Ohio." The company’s first Utica well, named the Brace 1H in what is called the Warrior North Prospect in Carroll County, produced a 24-hour average of 1,094 barrel oil equivalents" or 730 barrel oil equivalents per day over a 30-day period, the company told industry analysts on Wednesday.

The Brace 1H well is producing about 70 percent natural gas liquids, Thomas Stabley, Rex Energy chief executive officer, said in a conference call. "We are encouraged by the results," he said.

Rex Energy said the results from the Brace 1H site validated what the company calls its "Super Frac" process, which it said will make its Utica shale wells more productive. The company said it did a dual test of conventional fracking and the "Super Frac" process at the Brace 1H.

"Rex Energy plans to utilize the ‘Super Frac" completion technology on all future Utica completions," the company said.

In another part of its territory called the Warrior South Prospect — Guernsey, Noble and Belmont counties — Rex Energy has completed drilling three wells and will start fracking them this month, Stabley said. With the completion of drilling for those three wells, Rex Energy will move its drilling rig to the Warrior North Prospect site to start drilling a second well, he said.

The company said it invested $42 million to fund in its Marcellus and Utica shale operations. The money was used to drill nine wells, frack nine wells and place six wells into service. It also spent $10 million on leasing in the Marcellus and Utica shale areas.

In other action, Oklahoma-based Devon Energy said it still intends to drill three or four wells in 2012 in the eastern part of Ohio’s Utica shale.

The company in August had expressed disappointment in preliminary results from wells in Medina County’s Harrisville Township and Ashland County’s Clear Creek Township.

It said it still intends to drill farther to the east in the area where other drilling companies are reporting lucrative Utica results, said spokesman David A. Hager in a Wednesday teleconference on third-quarter earnings.

Devon has not said where that eastern drilling is planned.

The company has state permits to drill in Medina, Wayne, Ashland, Holmes, Knox. Coshocton and Guernsey counties.

 

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Utica and Marcellus shale web sites

Ohio Department of Natural Resources' Division of Oil and Gas Resources Management State agency Web site.

ODNR Division of Oil and Gas Resources Management. State drilling permits. List is updated weekly.

ODNR Division of Geological Survey.

Ohio Environmental Protection Agency.

Ohio State University Extension.

Ohio Farm Bureau.

Ohio Oil and Gas Association, a Granville-based group that represents 1,500 Ohio energy-related companies.

Ohio Oil & Gas Energy Education Program.

Energy In Depth, a trade group.

Marcellus and Utica Shale Resource Center by Ohio law firm Bricker & Eckler.

Utica Shale, a compilation of Utica shale activities.

Landman Report Card, a site that looks at companies involved in gas and oil leases.FracFocus, a compilation of chemicals used in fracking individual wells as reported voluntarily by some drillers.

Chesapeake Energy Corp,the Oklahoma-based firm is the No. 1 driller in Ohio.

Rig Count Interactive Map by Baker Hughes, an energy services company.

Shale Sheet Fracking, a Youngstown Vindicator blog.

National Geographic's The Great Shale Rush.

The Ohio Environmental Council, a statewide eco-group based in Columbus.

Buckeye Forest Council.

Earthjustice, a national eco-group.

Stop Fracking Ohio.

People's Oil and Gas Collaborative-Ohio, a grass-roots group in Northeast Ohio.

Concerned Citizens of Medina County, a grass-roots group.

No Frack Ohio, a Columbus-based grass-roots group.

Fracking: Gas Drilling's Environmental Threat by ProPublica, an online journalism site.

Penn State Marcellus Center.

Pipeline, blog from Pittsburgh Post-Gazette on Marcellus shale drilling.

Allegheny Front, environmental public radio for Western Pennsylvania.