Posted on 10/23/2012 5:05:35 AM PDT by thackney
Analysts say that the Utica Shale, which is nearly equal to the size of the Eagle Ford play in Texas could become the third-largest shale play in the United States, producing as much as 250,000 to 500,000 barrels of oil a day. The Ohio Department of Natural Resources estimates that the Utica’s potentially recoverable reserves could range from 3.75 TCF of gas and 1.31 billion barrels of oil to 15.7 TCF gas and 5.5 billion barrels of oil.
In comparing the Utica to the Eagle Ford, the following: TVD in the Utica can be as shallow as 4,500 feet versus ~ 6,000 feet in the Eagle Ford, recovery factor can be 5% versus 4%, formation thickness 140 feet versus an average of 100 feet and porosity of 8% versus 5-8% in the Eagle Ford.
With regard to activity and players here is what's happening so far:
* Chesapeake holds more than 1 million net acres in the Utica and is by far the most active driller with a total of 87 wells with plans to finish 2012 with 15 operated rigs. They have significant funds to support their development through the end of 2014 thanks to the remaining drilling carry from their January 2012 joint venture with Total.
* After Chesapeake released data for five wells drilled in Carroll and Harrison Counties in the Utica/Point Pleasant play earlier in the year, everyone took notice. Their Buell well IP was 9.5 MMCFED of gas, 150 BD of condensate, and 1,275 BD of NGLs for a total of 1,040 BOED.
* Then came Gulfport Energy's Wagner 1-28H well in Harrison County producing 14 MMCFED of dry natural gas and 1,881 BD of natural gas liquids (after processing) along with 432 barrels of oil, significantly higher than the IP rate of Chesapeake's Buell well. Gulfport plans to drill 200 wells in the area in the next four years.
* There are other big players here also: BP has invested, then there’s Hess and CONSOL who entered into a 50/50 joint venture a year ago valued at almost $600 million to fund their drilling and development across 200,000 acres.
And there is more activity when it comes to deals taking place in the Utica involving acquisitions and infrastructure as indicated by the following examples:
* EnerVest Ltd. amassed a huge collection of Utica drilling rights beginning in 2003 with plans to harvest their investment. Accordingly they plan to sell drilling rights to about 70% of this acreage and retain slightly more than 200,000 net acres whose potential will be determined in the future. It's estimated this sale could generate more than $6 billion.
* In September Spectra Energy, EnBridge and DTE Energy formed a Utica pipeline joint venture with plans to commence operations by late 2015 depending upon demand at that time. Total investment for this new pipeline system is estimated at $1.2 billion to $1.5 billion.
* Also in September NiSource and Hilcorp Energy announced a joint venture to construct their Pennant Midstream gathering pipeline infrastructure with NGL processing in Northeast Ohio/Western Pennsylvania. Reportedly it will cost around $300 million.
Summary: There are more announced (and unannounced) deals and plans that will be adding to Utica momentum, supporting a transition from early-stage to a bigger development opportunity that will probably rank with the big shale plays in the future. It will depend, of course on continuing investment by larger players like Chesapeake, Hess, BP, CONSOL and others plus the near-term economics of crude oil and liquids to affirm a logical path forward in Utica development.
In the GIS info I see for the Bakken and Haynesville shale, I only see horizontal reaching in a single direction.
http://sonris-www.dnr.state.la.us/gis/agsweb/IE/JSViewer/index.html?TemplateID=341
https://www.dmr.nd.gov/OaGIMS/viewer.htm
That’s a good move on their part. But remember the employees will be drawing salaries and paying taxes themselves. They will also buy homes, cars, fo to movies, buy clothing food, etc. Thye economic spinoff of that plant will be enourmous for that whole region. AMERICA ON THE MOVE.
I attribute that rumor solely to a messed up AP title.
Her you can see the title:
Utica shale, below the Marcellus, contains large gas, oil reserves, study shows
http://www.pennlive.com/midstate/index.ssf/2012/10/utica_shale_below_the_marcellu.html
Next you find the exact same AP article with the title:
U.S. Geological Survey: Pennsylvania has natural gas and oil under Utica Shale
http://www.eveningsun.com/news/ci_21712618/u-s-geological-survey-pennsylvania-has-natural-gas
Neither article mentions anything about being beneath the Utica. Both reference the Utica being beneath the Marcellus.
Both reference the information coming from the recent USGS assessment of the Utica as the source of information. Neither the announcement, the abstract nor the report made an mention of anything beneath the Utica. It only mentioned the Utica being beneath the Marcellus.
USGS Releases First Assessment of Shale Gas Resources in the Utica Shale: 38 trillion cubic feet
http://www.usgs.gov/newsroom/article.asp?ID=3419#.UIbbxW9lV8F
Assessment of Undiscovered Oil and Gas Resources of the Ordovician Utica Shale of the Appalachian Basin Province, 2012 {Abstract}
http://pubs.usgs.gov/fs/2012/3116/
The full report you had in your link.
The energy social grapevine has taller tales than your average fishermen. Thanks.
We can drill four or more wells from a single location pad, and cover 8 square miles of formation with those wells, so it isn't out of line to say that 16 (320 acre spacing) to 32 (160 acre spacing) vertical wells would be replaced by the 4 laterals--between 4 and 8 wells per lateral.
While one well can replace 4-8 vertical wells (realistically), the cost to drill that well (about 10,000 ft. down, and about 10,000 ft. over) will run by completion roughly 8 to 10 million dollars. Break even price on most wells runs in the range of $70 to $80/bbl of oil.
As a rule, in unconventional gas/oil plays, this is the case. The vertical wells which are 'replaced' would not, individually, have reached payout as a general rule. The ability to frac two miles of pay (+/-) versus ten feet (or less) per well is what makes it work.
It’s an article a couple of years old but lists Euro shale plays.
http://www.epmag.com/Production/The-shale-frenzy-to-Europe_53280
I know someone in the biz who got in early and made a bundle on leases in Poland.
IMO, the big news is NATGAS, not oil. I suspect as more and more NATGAS is developed, that the byproduct condensibles will get cheaper and cheaper (relatively), and displace at least some oil.
The real business that is going to "take it in the shorts" is coal. I see no way for coal to compete with NATGAS over the long run, for both economic and environmental considerations....which is why I am glad to see that the shale plays are basically in the heart of coal country, and can give the miners new employment as the mines shut down.
Wages in the patch have finally risen to reasonable levels compared with, say, union auto workers, and be thankful there is no dead weight in the patch, no one sitting in the 'break room', just guys who work 12 hour days in virtually any weather, two weeks on, two weeks off.
Others of us do our jobs 'for the duration', and only get time off during rig moves and casing runs, and we're not going to work cheap after living off our savings during price crashes over the last few decades more than once. It goes out a lot faster than it stacks up. For many of the old hands out there, this is the shot at retirement. There are fewer than 20,000 people in the world who do what I do, and likely fewer than half that.
As far as building rigs, some are, but stop and consider that the drilling contractors aren't in a hurry to invest millions in rigs and the equipment to run them and the hands to man them to have them sit idle. They, too keep a sharp eye on demand, and will not oversupply the market or they could end up with a yard full of iron bought at top dollar and selling for scrap.
Some oil will be displaced by natural gas, which is already a prime heating fuel in this region (Northern Plains), and a lot will go to power generation.
With the ever moving target of EPA regs, coal has been hurt, but while it is down, I do not think it is out just yet. It is still a viable fuel, available in mind-boggling supply, and cheap. The destruction of the coal industry has been a government construct from day one, using regulations to pick 'winners' by eliminating the competition, one of the standard operating tactics of this administration. As the power plants got cleaner, they moved the bar. It amazes me that any UAW member would vote Democrat this time around.
Wages in the patch have finally risen to reasonable levels compared with, say, union auto workers, and be thankful there is no dead weight in the patch, no one sitting in the 'break room', just guys who work 12 hour days in virtually any weather, two weeks on, two weeks off.
Others of us do our jobs 'for the duration', and only get time off during rig moves and casing runs, and we're not going to work cheap after living off our savings during price crashes over the last few decades more than once. It goes out a lot faster than it stacks up. For many of the old hands out there, this is the shot at retirement. There are fewer than 20,000 people in the world who do what I do, and likely fewer than half that.
As far as building rigs, some are, but stop and consider that the drilling contractors aren't in a hurry to invest millions in rigs and the equipment to run them and the hands to man them to have them sit idle. They, too keep a sharp eye on demand, and will not oversupply the market or they could end up with a yard full of iron bought at top dollar and selling for scrap.
Some oil will be displaced by natural gas, which is already a prime heating fuel in this region (Northern Plains), and a lot will go to power generation.
With the ever moving target of EPA regs, coal has been hurt, but while it is down, I do not think it is out just yet. It is still a viable fuel, available in mind-boggling supply, and cheap. The destruction of the coal industry has been a government construct from day one, using regulations to pick 'winners' by eliminating the competition, one of the standard operating tactics of this administration. As the power plants got cleaner, they moved the bar. It amazes me that any UAW member would vote Democrat this time around.
Hey Guys!
As a layman, I appreciate all your information on this topic. The dynamic between just the US supply and demand, pump prices and the general health of the economy is amazing and complicated.
On any of these oil/gas production, refining, import/export topics; if any of you have a ping list, please put me on it.
I promise I’ll sit quietly and take notes...and try to ask only the occasional good question.
Thanks.
“Break even price on most wells runs in the range of $70 to $80/bbl of oil.”
This tends to support my assumption that oil in the $100 range is necessary if drillers are to be incentivized to produce this oil.
See post 49.
I am as unexpert in these matters as it is possible to be. I am working on the not necessarily valid assumption that the posters here who sound like they know what they are talking about actually do.
You’re correct. Also to add... historically, vertical wells were drilled into sand formations. Sand providing porosity that shale doesn’t. Even then sand formations were often fracked. We’ve known for years that there was gas in the shale, but did not have the ability to produce it in commercial quantities without the advent of horizontal drilling.
In a forum, we all benefit from meaningful discussion. The only stupid question is the one that didn't get asked, so no answer could be provided.
Not all see Euro Shale as being nearly as productive as the US.
Why European Shale Is Totally ‘Fracked’
http://www.forbes.com/sites/matthewhulbert/2012/07/12/why-european-shale-is-totally-fracked/
7/12/2012
Let’s put aside the fact that European rotary rig counts only number around 120 compared to 2,000 in the US, 700 in Canada and 450 in Latin America, or that Europe has no serious in-house fracking expertise, ropey corporate finances, unclear mineral rights and ‘nimbymania’. A 10% fall in European gas demand (2011-12) hardly helps either, but it’s in the political realm that most concern rests to get shale going across Member States.
Despite sitting on 180tcf of shale, France buried the shale idea deeper than their nuclear waste sits in the Champagne region. The Netherlands doesn’t need to bother with shale given they still have Groningen fields to play with. Germany remains clinically schizophrenic on energy, splitting its energy mix between lots of wind and even more lignite coal, using Russian gas to fill any residual (Nord Stream) gaps. That doesn’t leave much room for North-Rhine Westphalia shale plays. Over in the UK, it’s only a handful of Conservative parliamentarians who think shale might offer a British version of the US shale revolution in North West England. Sweden has no such delusions despite sitting on larger (41tcf) prospective reserves. Further North, Norway has played with a very conventional bat so far keeping its 83tcf of shale under wraps; Southern Europe hasn’t even bothered looking. Spain remains plugged into Algerian production, while Italy has been oversupplied with Russian and on-going Libyan deliveries.
more at link
I think the current world recorded extended reach well in now in Russia's Sakhalin Island by ExxonMobil.
The Odoptu OP-11 had a horizontal reach of 37,648 feet and a total measured depth of 40,502 feet.
The Liberty field/rig on the Alaskan North Slope was going to reach out farther. However that project continues to be delayed with BP suing Parker drilling for non-compliance issues on building the monster rig that was going to be used.
Parker CEO resigns; default with BP on Alaska rigs unresolved
http://www.petroleumnews.com/pntruncate/951444158.shtml
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