That was the unmistakable message from Ohio Governor John Kasich on September 21, 2011 as he spoke at a conference at The Ohio State University produced by Battelle about the future of Ohio’s energy policy and the opportunities for energy, economic development and job creation to leverage Ohio’s substantial opportunities from unconventional oil and gas development in the Utica Shale.
The panel of experts at the conference included Aubrey K. McClendon, CEO of Chesapeake Energy. Chesapeake is drilling 12 horizontal wells in the discovery phase of its Utica Shale play with good initial production success from the first four horizontal wells in the wet gas and dry gas phases of the play:
- Buell 10-11-5 8H in Harrison County, Ohio was drilled to a lateral length of 6,418 feet and achieved a peak rate of 9.5 million cubic feet (mmcf) per day of natural gas and 1,425 barrels (bbls) per day of natural gas liquids and oil (liquids), or 3,010 barrels of oil equivalent (boe) per day;
- Mangun 22-15-5 8H in Carroll County, Ohio was drilled to a lateral length of 6,231 feet and achieved a peak rate of 3.1 mmcf per day of natural gas and 1,015 bbls per day of liquids, or 1,530 boe per day;
- Neider 10-14-5 3H in Carroll County, Ohio was drilled to a lateral length of 4,152 feet and achieved a peak rate of 3.8 mmcf per day of natural gas and 980 bbls per day of liquids, or 1,615 boe per day; and
- Thompson 3H in Beaver County, Pennsylvania was drilled to a lateral length of 4,322 feet and achieved a peak rate of 6.4 mmcf per day of dry natural gas.
Chesapeake said in a later press statement that production rates listed above assume maximum ethane recovery and that it is processing wet natural gas stream from the three Ohio wells listed above at a nearby processing and expects to expand its production of NGLs including ethane. Horizontal drilling allows access to previously uneconomic deposits of oil and gas and uses hydraulic fracturing to improve the extraction efficiency. Because the oil and gas exists in ribbons the quantities are typically smaller and deplete faster than the deep conventional wells tapping large pools, but they are cost effective to access since newer drilling techniques allow multiple wells to be tapped.
The spectacular growth of unconventional oil and gas domestic production has been a good news story for the US energy industry. Chesapeake has been a big player in that unconventional energy growth. Overall across its unconventional business Chesapeake has recently set new all-time production records of 6.1 billion cubic feet of natural gas equivalent (bcfe) per day and its net production has exceeded 3.45 bcfe per day, including approximately 95,000 bbls per day of liquids. By the end of 2012 and 2015 Chesapeake said it would increase its net liquids production by 50% and 150% to more than 150,000 bbls per day and more than 250,000 bbls per day, respectively, while maintaining its net natural gas production at current levels. In 2009, by comparison Chesapeake’s full-year liquids production averaged just 32,000 bbls per day.
Chesapeake has 1.25 million net acres of leasehold acquired to date, with our current primary leasing efforts focused in the wet gas phase of the Utica play covering about 40% of the potentially drillable acres in the Utica play. Average drilling and completion costs are expected to be $5.0 – $6.0 million per well. Chesapeake currently has five drilling rigs operating in the Utica Shale play and expects the rig count to be 10 rigs by year-end 2011, up to 20 rigs for 2012 and up to 40 rigs by year-end 2014.
BusinessWire reported that early test drilling results indicate that the Utica shale could be one of the most productive shale plays in the United States rivaling the Bakken, Barnett, Eagle Ford and Marcellus and could be worth $500 billion in energy production output and attract perhaps $20 billion in investment over the next twenty years.
At the same Battelle conference the Ohio Department of Natural Resources released an economic analysis projecting 203,000 new jobs would be created in Ohio by from Utica shale gas development.
- Chesapeake shares rise on Utica Shale results (marketwatch.com)
- Placing Bets on the Utica Shale (fool.com)
- Energy Stocks: Chesapeake gains; energy extends rebound (marketwatch.com)
- Chesapeake boosts liquids production outlook (marketwatch.com)
- Ohio Shale Energizes Deal Frenzy (online.wsj.com)
- New Frontiers: the attention turns to some up-and-coming plays (mb50.wordpress.com)
- Natural Gas Gold Rush, Utica Shale Edition Courtesy of John Kasich (desmogblog.com)