Ohio Utica drilling applications soar in October

OREANDA-NEWS. November 23, 2015. The state of Ohio permitted 79 drilling applications for the Utica shale in October, up by 72pc from the prior month as producers sought to ramp up activity there amid positive well test results and pipeline projects that should improve takeaway from the region.

The number of Utica applications processed in October is up by 84pc from a year earlier, according to data from the Ohio Department of Natural Resources.

Despite natural gas prices plumbing three-year lows amid low demand and mild weather, the Utica in recent months has become the fastest growing shale in the US, with output topping 3 Bcf/d (85mn m?/d) in October, up by 2pc from the prior month and a whopping 69pc higher than in October 2014, according to US Energy Information Administration data.

Producers have taken a mixed approach to development in the Utica. Some have sought to sell off acreage there amid low energy prices, such as Dominion Transmission, which earlier this month sold 16,000 acres of its Utica land and is looking to farm out another 160,000 acres.

But others are energized by promising dry-gas well results in the shale and are now seeking to switch their focus from other plays. EQT last month said it will cut its capital spending program but will still expand operations in the Utica as one of its dry-gas wells there reached a production rate as high as 72.9mn cf/d, far exceeding expectations.

Another likely reason for the bump in applications is Spectra Energy's Ohio Pipeline Energy Network expansion, which the US Federal Energy Regulatory Commission authorized to commence service earlier this week. The 550mn cf/d project provides 76 miles (122km) of new pipeline in eastern Ohio designed to move production there to an interconnect with Texas Eastern Transmission's existing line in the southern part of the state. Producer Chesapeake said in August that the project would allow 85pc of its Utica output to receive premium Gulf coast pricing.

Of the 79 applications permitted in October, six wells have been drilled, 36 are currently being drilled and two are already producing.