New Report Says Canadian Utica Shale Key to Lower Emissions Future

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Not everyone in Canada is a liberal loon just like not everyone in New York State is a liberal loon. Case in point: the Montreal Economic Institute (MEI), an independent public policy think tank, has just published a report pointing out the fallacy of Quebec believing it can electrify all of its energy supplies without using natural gas. In particular, the paper says Quebec’s Utica Shale layer can and should play a key role in Quebec’s so-called all-electric future.
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Drilling the Utica Shale in PA & WV – Leveraging Stacked Plays

Last week MDN friend and ace reporter Rick Stouffer from Kallanish Energy hosted a one-day event in Pittsburgh called “Kallanish New Horizons: Appalachin Basin.” One of the speakers was Tom Murphy, director of Penn State’s Marcellus Center for Outreach and Research (MCOR). MDN editor Jim Willis had the pleasure of presenting on the same panel with Tom at the National Association of Royalty Owners (NARO) Pennsylvania Chapter annual convention in State College, PA last March. Tom never disappoints! He certainly didn’t at last week’s Kallanish event. Tom spoke on the topic of Utica drilling–in PA and WV. Normally you think “Ohio” when you think Utica. And indeed, Ohio has the vast majority of Utica wells drilled (2,080 and counting). But there’s a fascinating trend of drilling Utica wells in both PA and WV. How many?
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Utica Shale Beginning to Get More Love in PA and WV

The Utica Shale is starting to get more love. No, not in Ohio where the play is already well-loved, but in Pennsylvania and West Virginia. Although it’s always been known that the Utica underlies the Marcellus and in fact covers a larger geography than the Marcellus, drillers have not targeted the Utica nearly as much outside of OH. Why? Because it’s nearly twice as deep as the Marcellus and costs more to tap it. The Marcellus is roughly a mile below the surface, and the Utica roughly two miles below. However, there is renewed interest in the Utica in PA and WV in 2018. Most of the Utica wells drilled in PA have, so far, been drilled by Hilcorp. JKLM is targeting the Utica in Potter County. SWEPI (Shell) has drilled a few Utica test wells, as has EQT, CNX and others. Most recently CNX and Seneca Resources mentioned targeting the Utica in their quarterly updates. Throw it all in the mix and what it spells is more Utica drilling on the way in what has, until now, been largely Marcellus country…
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Update on “Evolving Giant” Utica Shale – from Range Resources

In early April of this year the 2017 AAPG (American Association of Petroleum Geologists) Annual Convention & Exhibition was held in Houston, TX. During one of the sessions, William Zagorski and Taylor McClain delivered a talk called “Discovery of the Utica Shale: Update on an Evolving Giant.” The interesting thing is that Zagorski and McClain work for Range Resources–the first driller in the Marcellus, not the Utica. We don’t have a transcript of that talk, but we do have an abstract and the slide deck used during the talk (below). The slide deck is fascinating. It begins with a history of the Utica. Did you know that the earliest Utica discoveries were in Ontario, Canada? And that the earliest drilling done in the play here in the U.S. was done in Upstate New York–near the Watertown area? No, we didn’t realize that either. In fact, a large swath of the Utica Shale layer underlies New York State–what a pity we can’t explore it because of a corrupt dictator by the name of Andrew Cuomo. At any rate, below is the slide deck, with slides outlining where the “wet gas” and “dry gas” zones are in the Utica. And exploring how Ohio became synonymous with the term Utica Shale…
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Report: Utica Investment has Injected $50 Billion into Ohio!

A comprehensive study by Cleveland State University researchers shows just how mind-blowing the economic investment in Ohio has been from the Utica Shale. The just-published study, titled “Shale Investment Dashboard in Ohio” (full copy below), finds that between upstream ($39 billion), midstream ($8 billion) and downstream ($3 billion), all related to the Utica Shale, there has been an incredible $50 billion invested in Ohio since Utica drilling began in 2011. It’s really hard to overstate just how big a deal this is. Can you image a $50 billion economic stimulus from the government? No way! It would never happen. And if it did, the money would come out of YOUR pocket–from taxpayers. But this $50 billion ALL came from the private sector. Good ole capitalism. Free enterprise. Private ownership. Private property. Love it! It’s what our great country was built on. Let’s dig into the numbers and relish this fantastic news…
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1st NRG Pops Back Up 2 Years Later – Still in Love with the Utica

Going all the way back to 2012, MDN has chronicled, from time to time, the myriad press releases issued by a small driller headquartered in Denver called 1st NRG Corp. They’ve been saying since that time that they really really really really want to drill in the Utica Shale–on a small 7,000 acre leasehold they own (see our stories about 1st NRG here). Ever hear of the boy who cried wolf? Eventually they did participate in drilling a Utica well, in 2014 (see 1st NRG Begins Pushing Dirt on First Utica Well Pad). That was the last time we wrote about 1st NRG–until today. Turns out the well they drilled, which was supposed to be a horizontal Utica “test” well, turned into a vertical Beekmantown Dolomite well. But 1st NRG hasn’t given up. In a “corporate update 2016” press release issued yesterday, the company said “these are exciting times” for the company, and that they are on a “growth trajectory for 2017.” What has the company so jazzed? They expect that Dolomite well to get hooked up to production in January. Although they still love the Utica, the company will focus on the reviving activity in the Clabaugh Ranch field in Wyoming in 1Q17 (coal bed methane, not shale drilling). Finally, the company is working on the purchase of a 364-mile natural gas gathering pipeline system, which they “hope” to close in 1Q17. The company cagily does not identify where the gathering system is located. Here’s the recent update from 1st NRG, along with a slightly older announcement about the pipeline gathering system they “hope” to buy…
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Analyzing Gulfport’s Decision to Diversify Away from the Utica

Last week MDN told you about Gulfport Energy’s deal to buy 85,000 acres of leases with 48 horizontal wells in Oklahoma’s SCOOP shale play in a $1.85 billion deal (see Gulfport Energy Expands into SCOOP, New Stock & IOUs to Pay $1.85B). At the time we said, “we jealously wish they were investing that money here [in the Utica] and not there.” Looks like we’re not the only ones questioning Gulfport’s strategy of “diversifying away from the Utica.” None other than energy analyst Richard Zeits, our favorite Seeking Alpha author, did a deep dive into the deal. He found that Gulfport paid $27,000 per acre and although they paid for it with a fair amount of equity, they also increased their debt load “significantly.” Zeits said, “The move into a new core area raises questions with regard to the company’s macro outlook for the Utica/Marcellus region.” Hmmm. Here’s what else the oracle of energy had to say about Gulfport’s SCOOP deal…
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EQT 2017 Forecast: Drilling 119 Marcellus, 81 UD, 7 Utica Wells

EQT is feeling bullish about natural gas drilling in the northeast for 2017. The company has just released its 2017 operational forecast. What do we notice? First off, they plan to spend $1.5 billion next year, most of which ($1.3 billion) will be used to drill and complete new wells. That’s a whopping 50% increase from spending $1 billion this year. The next thing we notice is what type of wells they intend to drill: 119 Marcellus wells (76 in PA and 43 in WV); 81 Upper Devonian wells, which will be drilled on the same pads as deeper Marcellus wells, but only in PA; and 7 “deep Utica” exploratory wells. EQT also reworked a midstream deal with Williams in the Ohio Valley. Below are the exciting details of what’s ahead for EQT in 2017, including a second announcement from EQT Midstream about what’s ahead for the pipeline subsidiary, including details on how much they plan to spend on the Mountain Valley pipeline project in the coming year…
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Fracking in Canadian Utica Shale Takes Big Step Closer to Reality

Little known fact: There is a Utica Shale layer in Canada–along the St. Lawrence River Valley–in the Province of Quebec. On and off over the years we’ve mentioned it, largely in connection with an ongoing moratorium on shale drilling in Quebec (see our stories here). Quebec’s moratorium is similar to the mortorium on shale drilling in New York State–that is, a total block, but not a permanent block. Here’s some really good news: the Quebec moratorium on shale drilling is about to come to an end! After debating an environmental bill all night Friday into Saturday, the Quebec National Assembly voted to pass Bill 106, ostensibly to support Quebec’s “clean power plan.” The bill includes a section that “lays out a framework for oil and gas development” in Quebec. Fracking will not begin immediately. The bill does, however, mean that new regulations will come along in early 2017 and after that, it’s an almost certainty that fracking will begin, in 2017, in the Canadian Utica. Cool! Here’s the news…
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Utica Drillers Using Managed Pressure Drilling (MPD)

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This post is far (far) more technical than the typical post on MDN. It is aimed at those in the drilling business. However, a general understanding will help everyone interested in what’s happening in the Utica Shale. We spotted a story that claims MPD–or managed pressure drilling–is emerging as the “preferred” drilling method in the Utica Shale. The article is written by engineers who work for Weatherford, the world’s fourth largest oilfield services company (and a company with major customers/operations in the Utica, i.e. a vested interest). The first, most obvious question is: What in the world is MPD? We went looking for a layman’s definition. The simplest definition we found was, “cheating Mother Nature.” MDP involves managing the pressure in the well, and drilling mud…
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EIA: Utica Shale Turned Out to be a NatGas (Instead of Oil) Play

EIAWhen Aubrey McClendon first trumpeted his find in the Ohio Utica Shale, he famously said the Utica Shale could be worth $500 billion, and the “biggest thing economically to hit Ohio, since maybe the plow.” Not quite as famous, but on the same day at the same event, McClendon also said the Utica “is likely most analogous, but economically superior to, the Eagle Ford Shale in South Texas.” That one turned heads and got tongues flapping. McClendon made those remarks five years ago this month at the Ohio Governor’s 21st Century Energy & Economic Summit in Columbus, OH. The reason Aubrey was so excited was because of the oil potential in the Utica. But fate is a funny thing. As it turns out, it is natural gas that’s turned out to be the big story in the Utica. Last Friday the U.S. Energy Information Administration (EIA) published an article that chronicles the development of the Utica and illustrates, with charts and graphs, how the Utica has turned out to be a gas rather than an oil play–at least so far…
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Frackenstein 2: Gassy Utica Critters May Increase Well Output!

Frankensteins_monster_Boris_KarloffLast week MDN reported researchers from Ohio State University had discovered a new form of microorganism in fracked Utica Shale wells–something they call “Frackibacter” (we call it Frackenstein). As researchers continue to pour over the research, they’ve hit upon a stunning new revelation. Those little critters may actually INCREASE natural gas output from the well. Now that is exciting news! OSU is on the case, promising to further examine Frackibacter’s origin and “more of its applications”…
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NatGas Production in Lower 48 Goes Up in August, Thx to Utica

ihs-markitAlthough there’s less new drilling for oil and gas (at least there’s less if you believe press reports), and although DUCs (drilled but uncompleted wells) are decreasing, overall production in the lower 48 states is actually increasing. IHS Markit says natgas production in August increased month over month for the second month in a row–something that hasn’t happened in a year. Markit says the main reason is an increase in production in the northeast–specifically an increase in production in the Utica Shale. However, there were also increases in other plays. Here’s the full update…
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Chesapeake Energy CFO Says Co. Will Mostly Ignore Utica in 2017

Domenic Dell’Osso

Chesapeake Energy’s Chief Financial Officer, Domenic Dell’Osso, filled in for his boss CEO Doug “the ax” Lawler by addressing analysts at the Barclays 2016 Global CEO Energy-Power Conference held earlier this week in New York City. Dom, you may recall, was one of Aubrey McClendon’s closest allies at Chesapeake, someone who had no problem standing by while McClendon was unceremoniously fired from the company he founded by corporate raiders in 2013 (see McClendon Exits Chesapeake, Well-Bonused “Friends” Replace Him). Dell’Osso remains in his post to this day. He drew the short straw to take a short vacation in NYC and talk about Chesapeake at the Barclays event. Although Dom’s talk focused on how rosy the picture is for Chesapeake now that they’ve fired thousands and sold nearly everything but the kitchen sink, it was his off-hand comment about the Utica Shale that caught our attention. Chesapeake is the #1 driller and producer in the Ohio Utica Shale, having drilled 588 wells in 2015 and producing an average of 847 million cubic feet per day equivalent of natural gas (see Which 5 Drillers Dominate in the Utica Shale?). What did Dom say about the Utica in 2017?…
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Shift in Utica Drilling – from Wet Gas to Dry Gas

shiftOne of NGI’s (Natural Gas Intelligence) ace reporters, Jamison Cocklin, wrote a top notch news/analysis article last Friday in NGI’s Shale Daily publication about the “crucial priority” of new gathering pipelines and pipeline infrastructure in general that’s needed in the Utica Shale. Jamison made the observation that while not every operator in Ohio’s Utica Shale has shifted from focusing on wet gas extraction (concentrating on wells that extract not only methane but also natural gas liquids) to dry gas (or methane only), some of the biggies have. A change in focus doesn’t mean a change in geography. The change in focus from wet to dry is happening in core wet gas counties, including Monroe, Belmont and Jefferson…
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