Ohio gets its 1,000th shale well – Cleveland Business News – Northeast Ohio and Cleveland – Crain’s Cleveland Business

Ohio gets its 1,000th shale well

By DAN SHINGLER

Originally Published: August 08, 2014 4:30 AM  Modified: August 08, 2014 10:03 AM

This rig, drilled just east of Canton in early 2012, was one of the first to tap Ohio’s Utica shale. Now, it’s just one of a thousand such wells across eastern Ohio.

It’s official: There have now been more than 1,000 wells drilled into Ohio’s shale for gas, oil, and natural gas liquids.

According to the Ohio Department of Natural Resources, which permits, regulates and tracks all drilling activity in Ohio, 1,024 shale wells had been drilled in the state as of Aug. 2. That includes 997 wells in the Utica shale and another 27 drilled into the Marcellus shale. It’s likely that by Friday morning, Aug. 8, as this story is posted, there will be 1,000 Ohio wells in the Utica alone, given the pace of more than one well being drilled per day, on average, this year.

It wasn’t long ago, perhaps 2009, that few could have imagined that Ohio would get 1,000 such wells, especially given that the deep, horizontal high-volume slick-water wells — also known as fracking wells — cost $6 million to $12 million each to drill.

But by early 2012, the writing was on the wall, not to mention in a report by Cleveland State University, which predicted the rush to drill — though it somewhat overestimated it .

That report predicted Ohio would have 1,918 wells drilled by the end of 2014. That’s unlikely to happen, given that there have only been about 330 wells drilled in the Utica so far this year, according to state data.

Cleveland State researcher Andrew Thomas said the university is working to update its report with, among others, Youngstown State University’s Jeff Dick. Dick chairs the school’s Geological and Environmental Sciences Department, where he also teaches.

Thomas and Dick said there are a number of reasons that drilling has been a bit slower than anticipated, chief among them that the pipelines needed to gather gas from scattered well sites still are being built and only began reaching most drilling areas this year. But other factors, such as continued low prices for natural gas and a potentially smaller geographic window for drillers, have had an effect, the two said.

Going forward, Thomas and Dick think that drilling will soon reach a pace of about 600 to 1,000 wells completed in Ohio per year, where it likely will plateau. That’s down a bit from the 1,000 or more wells per year predicted in 2012.

On the bright side, the wells that have been drilled have so far been more productive and profitable than was first envisioned, primarily because Ohio’s wells are producing more ethane and other natural gas liquids (NGLs) than many thought they would bring up.

“We were low on our per-well production estimates, and also on the amount of liquids that would be produced,” Thomas said. “It’s turning out to be quite a bit more and definitely better than we had projected. That’s good for the industry.”

Typically, production is reported in simple terms of gas and oil, with little specifics on how much of the natural gas brought up is actually NGLs, which are more valuable. Dick said he pored over the data of more than 50 individual wells in Ohio, and found that the natural gas they’re producing is between 25% and 70% NGLs, which makes it some of the wettest and most profitable gas in the nation.

Higher prices for natural gas, its liquids, or both, likely would cause the number of wells drilled to increase at a more rapid pace. Dick, a landowner in eastern Ohio who has leased his mineral rights to drillers himself, said he doesn’t mind that drilling has progressed slower than once thought. He’s willing to wait for higher prices, which would bring him more in royalties.

“I would just as soon wait until gas was $7 or $8 (per mcf),” Dick said.

Neither man expressed any pessimism about drilling in Ohio generally. But they said the future pace of it will be determined by the price of gas, the price of ethane, continued improvements in drilling practices and technology and many other factors.

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