Initial drilling in the Utica Shale is still centered around eastern Ohio, in the wet gas window of the play, but activity could push westward as the oily window is better defined, noted Christopher Perry, the Energy Group Supervisor of the Ohio Department of Natural Resources’ Division of Geological Survey in a conference call hosted by Stifel Nicolaus last week.

Perry discussed the emerging unconventional resources play, focusing on its geology and current activity.

East

He  noted that while the play is thickest in southeastern Pennsylvania, the depth, maturity, organic content, porosity and permeability form the best combination for wet gas production in eastern Ohio.

A December 13 note to investors summarizing Perry’s discussion points out that 22 wells were permitted in Ohio in November, but only five horizontal well results have been publicly released. Production data will continue to lag because, while permitting activity is reported weekly, updates on production are only required in March for the previous year’s production at the state level.

While hard data may not yet be readily available, companies like Chesapeake, CONSOL, Gulfport Energy, and others hold acreage in the Ohio portion of the Utica, and as in the case of certain Chesapeake test wells, results have been encouraging.

“The economics of the wet gas window should improve as completion approaches are optimized and NGL infrastructure is developed,” noted Stifel Nicolaus analysts summarizing part of Perry’s discussion. “The wet gas economics should be similar to the Eagle Ford, potentially making this one of the lowest cost shale plays over time and accelerating the need for regional fractionation,” the analysts continued.

Providing another boost to economics in the Ohio portion of the play are the 176 active injection wells for water disposal. “This provides operators with the ability to dispose of frac flowback more effectively,” noted the analysts. In addition, “development of the Utica will be aided by the play’s close proximity to the Marcellus, which will allow for easier extension of takeaway capacity,” they said.

West

And while the majority of permitting is taking place in Carroll, Jefferson, and Columbiana counties, the play updips in the northwest direction and some operators are beginning to test the oily window (although the boundaries are not yet well defined).  Depending on these results, the productive portion of the play could push westward as the boundaries become more clear.

Devon Energy is one such operator. The Oklahoma-based company is currently seeking the play’s oil window with two wells drilling in the western portion of the play. According to the investor note, “Devon was encouraged by the positive permeability indications seen in its cores.”