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Early Utica drilling results ‘encouraging’ says IHS

Early drilling results from the Utica shale in Ohio are encouraging, a report by consultancy IHS Cera, released on 3 October, said

But it stressed that more work is needed to determine whether the Utica could prove as productive as the multi-billion barrel Eagle Ford shale play in southern Texas.

The shale plays share some encouraging characteristics. Both cover an extensive area, have a vast resource potential and contain three hydrocarbon-prone areas: oil, wet gas, and dry gas. However, IHS cautioned that few horizontal wells have been drilled across the Utica to date, making any comparisons with the prolific Eagle Ford premature. The Utica’s most productive liquids-rich wells so far have been located in Harrison and Carroll counties in eastern Ohio near the West Virginia and Pennsylvania borders, and are operated by Chesapeake Energy.

IHS said two-thirds of the horizontal wells drilled to date have reported 24-hour initial production rates of 1,000 barrels of oil equivalent per day (boe/d) or more. “However, the Utica is still in the very early stages of exploration – only in late 2010 did the industry start moving from drilling vertical exploratory wells in the play to permitting horizontal wells,” Andrew Byrne, the head of energy equity research at IHS, said.

More than 135 drilling permits have been granted for Utica horizontal wells, but only 11 wells have been completed and recorded initial test volumes. Drilling depths range from approximately 6,000 feet to 9,000 feet, shallower than most Eagle Ford wells, which range from 9,500 feet to 11,500 feet. This should make Utica shale wells cheaper to drill than wells in the Eagle Ford.

But determining accurate initial rates, which will ultimately determine economic profitability, is difficult given that Ohio only reports annual production numbers.

The three most productive wells in the Utica have calculated production rates greater than 750 boe/d. However, all three are located in the gas-prone window and are reported to have flowed 100% natural gas.

Early results in the oil-prone window are just becoming available, IHS said. The best performing oil-weighted well drilled to date is the Anadarko Brookfield well in Noble County, which tested at 731 boe/d consisting of 82% oil and condensate.

The study further notes that the vast majority of the Utica liquids volumes are lower-value natural gas liquids (NGLs). Therefore, much of the play’s economic outlook relies upon not only natural gas prices, which remain low, but also volatile NGL prices.

Based on an early assessment of the Utica’s well distribution analysis, IHS gives the productivity advantage to the Eagle Ford.

“Successful de-risking of the oil-prone window would greatly enhance the attractiveness of the play,” says Byrne. “We also believe that additional experience and technological advancements, as well as infrastructure build-out, offer the potential for improved well performance over the early data.”

As well as Chesapeake and Enervest, major Utica players include Anadarko, which has 390,000 gross acres. Devon Energy is also drilling in the oil-prone window, which IHS believes will deliver critical insights into the relative attractiveness of the area.

 

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