Chesapeake Energy Corp. remains convinced that Ohio’s Utica shale will be productive, once needed natural gas pipelines and processing plants are completed.
“Processing is really the holdup,” Chief Operating Officer Steven Dixon said Wednesday in the company’s first-quarter 2013 operational and financial update.
An expanded processing plant at Natrium, W.Va., is expected to open this month, and a second processing complex in Columbiana and Harrison counties is scheduled to open midyear, and those will provide a big boost to the Oklahoma-based energy company, said Jeffrey A. Fisher, executive vice president, production.
Through March 31, Chesapeake had drilled 249 wells in the liquid-rich Utica shale that is mostly in eastern Ohio. A total of 66 wells are in production, 86 wells are awaiting pipelines and 97 wells are in various stages of completion.
The company has 14 drilling rigs in the Utica shale.
Chesapeake, the No. 1 drilling company in Ohio, said it is confident it will meet year-end projections and produce 330 million cubic feet of natural gas per day from its Ohio wells.
That would be more than enough natural gas to fuel Ohio on a daily and yearly basis. In a typical year, Ohio consumes about 820 billion cubic feet of natural gas.
In the first three months this year, the company said it produced an estimated 60 million cubic feet of natural gas per day in Ohio.
It expects to more than quadruple that natural gas volume with the completion of the pipelines and processing plants and the drilling of new wells this year, officials said.
The company is getting average peak rates of 1,200 barrels of oil equivalents per day from 13 Utica wells that began production in the first quarter.
Company officials raved about the results from one of the Coe wells, a cluster of six wells in Carroll County.
That well is producing 7.6 million cubic feet of natural gas per day, plus 235 barrels of oil and 470 barrels of natural gas liquids. That is equal to 1,980 barrels of oil equivalents per day, the company said.
The six wells, all built from one well pad in Lee Township, are averaging 4.9 million cubic feet of natural gas per day, plus 75 barrels of oil and 280 barrels of natural gas liquids including butane and propane. That is equal to a daily average of 1,170 barrels of oil equivalents.
The cost of the first Coe well was nearly $8.5 million. The other five wells averaged $5.9 million.
Ohio approved 627 Utica permits through April 27, of which 310 wells have been drilled. A total of 89 wells are in production, with 32 drilling rigs working in Ohio.
Chesapeake officials offered no new information of the proposed sale of its noncore Utica leases.
In April, the company had said it intends to keep its core area in Carroll and nine surrounding counties. It is attempting to sell about 94,000 acres of leased land in Stark and Portage counties, plus other acreage in Ohio, to reduce debt.
The company’s net income was $58 million, or 2 cents a share, compared with a loss of $28 million, or 11 cents per share, a year earlier. Stripping out hedging losses and other one-time items, Chesapeake reported a profit of 30 cents a share.
Chesapeake, the No. 2 natural gas producer behind Exxon Mobil Corp., has been hurt in recent years by low natural gas prices that are starting to climb.
Bob Downing can be reached at 330-996-3745 or firstname.lastname@example.org.