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Utica shale yields higher output with fewer wells for drillers

| Wednesday, June 22, 2016, 11:00 p.m.
A worker tends to a drill pad near  Majorsville in West Virginia.
Andrew Russell | Tribune-Review
A worker tends to a drill pad near Majorsville in West Virginia.

One deep Utica shale well has the potential to produce as much natural gas as three wells drilled into the Marcellus layer above it.

It's why many producers pinched by sustained low gas prices are spending their precious money on fracking the high-pressure, high-producing Utica in eastern Ohio and Southwestern Pennsylvania.

Getting more gas from fewer, bigger wells was a theme of many comments during Hart Energy's annual Developing Unconventionals conference in Downtown Pittsburgh on Wednesday. Cecil-based Rice Energy, operator of the top three Utica wells in Ohio, is producing more gas from fewer wells than any of its competitors, said President and Chief Operating Officer Toby Rice.

“The Utica will be a significant contributor to growth in this space,” said Tim Dugan, chief operating officer at Cecil-based Consol Energy, which stopped drilling wells last year because of the price collapse but continues to bring online previously drilled Utica wells.

The push into the Utica is not without challenges, though. Over a decade, companies have greatly reduced the time it takes to drill into the Marcellus and the related cost while fine-tuning technology and techniques to get the most out of those wells.

“We're able to drill Marcellus wells in 15 days,” said Tony Angelle, a vice president at drilling contractor Halliburton. Three or four years ago, it took more than twice that long.

Drillers have less time and money to perfect their approach to the deep Utica — especially in Pennsylvania, Dugan said. The depressed prices have cut deeply into drilling budgets the past two years, and companies face pressure to maintain or even increase production until prices improve in a year or two.

“We'll all be challenged to reach the point of optimization much quicker in the Utica than we did in the Marcellus,” Dugan said. “We can no longer afford to wait for 12 to 24 months of production data to understand if the landing zone is optimal or the completion technique is effective.”

Consol is relying more on computer modeling to help officials decide on materials and techniques they will use when drilling and fracking. Oklahoma City-based Gulfport Energy, one of the busiest drillers in Ohio, also is using “big data” to help guide its Utica well development.

“We're still trying to determine what we can recover” in the Utica, said Mark Malone, vice president of operations at Gulfport, which has 180 wells. “I don't think we're there yet.”

The ability to quickly ramp up production from a few big wells could become even more important over the next year. The price drop was driven in part by an oversupply of gas that some analysts predict will ease as soon as this winter.

Bernadette Johnson, managing partner of Ponderosa Advisors, told the conference crowd she expects gas prices to rise to $4.50 per million British thermal units next year — up from about $2.60 this month — as demand increases and production from oil wells falls.

“A lot of people think we're crazy,” she said, acknowledging other predictions of gas barely reaching $3 next year as an oversupply continues.

She said companies will run out of previously drilled wells to complete, leaving a deficit as the number of drilling rigs has hit decade-long lows.

“We're going to have to get some drilling going,” Johnson said.

David Conti is the assistant business editor at the Tribune-Review. Reach him at 412-388-5802 or dconti@tribweb.com.

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