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Environment


Ohio tries to answer question of whether the drilling boom is going bust
ODNR report says delays in midstream construction, quality of early production and cutbacks by major drillers had an impact, but better times are coming
by WKSU's TIM RUDELL


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Tim Rudell
 
Spherical processing vessels under construction at the Hopedale fractionator in Harrison, County
Courtesy of tpr
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In The Region:

Is the “Utica Shale Play” in Ohio going to be an economic boon, or a big bust…a pipe-dream, or a mainline to a revival of the State’s fortune?  Those are questions a lot of people have been asking, and as WKSU’s Tim Rudell reports, the Ohio Department of Natural Resources has weighed in on the positive side.

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The oil was thin; wet gas wasn’t counted; there were constraints in the “mid-stream. All are reasons why ODNR says Ohio doesn't need to worry about a fizzle in Ohio’s Utica shale boom, even if 2012 production results were less than once expected.

Ohio Department of Natural Resources Director Jim Zehringer led a live webcast Thursday of what his agency billed as "A State of the Utica Play event."
“We believe the Utica Shale play is the real deal and will produce staggering amounts of oil and gas,” Zehringer began.

Increasing \ development
ODNR’s Oil and Gas Division chief Rich Simmers talked about growing from two producing Utica wells in Ohio in 2011 to 87 in 2012, 97 in first quarter of 2013; and a predicted thousand wells in 2015.

Then he addressed something less positive that has been in trade publications.

“You may be wondering about development tends being slower than in other formations," Simmers acknowledged. He said there are a several reasons for that -- and maintained many are passing.
Market value of the energy produced -- the driving force in bringing wells on line -- is one. With natural gas prices low, oil production is king right now; and much of the Utica oil thus far isn’t high grade. “It’s thin, kind of water like.” 

Questions about earlier analysis
There also has been publicity about early wells failing to produce the volumes of oil hoped for. But, Simmers said many of those were drilled in the western and southern fringes of the Utica where there was never an expectation of much oil. 

David Mustine of JobsOhio, who also took part in the presentation, said drillers in the heart of the play, in Carroll and Columbiana counties, for example, had strong results. Chesapeake returned 40 percent and some EnerVest wells returned 100 percent." 

Simmers said the value of well production was also not fully stated in the annual energy company data filed with the ODNR — the data that was the basis for the "State of the Play’ presentation.  “Wet products," such as propane and butane, did not have to be, and were notincluded in the reports. 

Simmers and Mustine -- and Zehringer in his opening remarks -- also noted the effect of pipeline and related infrastructure -- or lack of it -- on well production. But, Mustine pointed to more than $4 billion worth of what are called “mid-stream” projects currently under way.
"Infrastructure issues were constraining development, but that problem should eliminated by the end of the year."

Why sell?
Mustine addressed one more major question about the future of the boom. Some big players in acquiring drilling leases are now selling holdings. Mustine said that’s for reasons other than the viability of the Utica play. Chesapeake Energy, for example, is selling some parts of its holdings to reduce debt and pursue other corporate strategies -- and not just in Ohio. 

Overall 
The Department of Natural Resources appeared to be trying to deliver message: that the Utica Shale Play is sound, and likely to be a long-term boost to Ohio’s economy for decades to come.


Related WKSU Stories

Ohio says shale drilling is starting to pay big returns
Thursday, May 16, 2013

A sort of bookmobile for safety gear hits the gas fields
Tuesday, January 15, 2013

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