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Thursday, September 29, 2016

EIA Looks at Increasing Utica Shale Focus on Natural Gas Production

From the Energy Information Administration:

graph of monthly oil and natural gas production from the Utica play, as explained in the article text
Source: U.S. Energy Information Administration and DrillingInfo Inc., June 2016
Note: The two vertical axes are scaled to present oil and natural gas production in roughly energy-equivalent terms.

Production of oil and natural gas in the Appalachian Basin's Utica play—which includes both the Utica and Point Pleasant formations—has increased significantly since 2012. Monthly natural gas production from Utica wells increased from 0.1 billion cubic feet per day (Bcf/d) in December 2012 to more than 3.5 Bcf/d in June 2016. Oil production increased from 4,400 barrels per day (b/d) to nearly 76,000 b/d over the same period.

map of Utica and Point Pleasant Oil and Gas Production through December 2012, as described in the article text

Source: U.S. Energy Information Administration based on DrillingInfo Inc., Appalachian Oil and Natural Gas Research Consortium, and U.S. Geological Survey
Note: EIA calculates the daily production rate for each well using the initial six contiguous months of liquid and gas production expressed in barrels of oil equivalent per day. Click to enlarge

Only 104 wells in the Utica play produced oil or natural gas in 2012, with most wells coming into production in 2013 or later, as shown on the maps above. Although the Utica play produces a mixture of oil and natural gas, recent development in the Utica has focused on natural gas. The rapid growth in Utica/Point Pleasant natural gas production since 2012 is attributable to increases in drilling efficiency, proximity to markets, improvements in business processes, resource targeting in stacked plays, and the lengthening of horizontal laterals. Relatively low oil prices and expansions in natural gas infrastructure make the natural gas-rich portions of the reservoir more desirable for development, and therefore, increasingly the target for operators.

The relative portions of natural gas and oil in a particular formation can be represented by mapping initial gas-to-oil ratios (GORs). GORs characterize the ratio of natural gas to oil produced from a well, expressed in standard cubic feet per barrel—scf/b. The distribution of oil and natural gas in a formation is partially controlled by the thermal maturity of a rock, which is an indication of potential hydrocarbon generation.

Crude oil and natural gas are produced by the heating of organic materials (i.e., kerogen) found in some rocks over long periods of time. When organic-rich rocks, usually shales, are buried, they are exposed to increasing temperatures and pressures. Heating causes the organic matter to change into the waxy material known as kerogen, then into oil, and finally into natural gas as the temperature further increases.

map of Initial gas-to-oil ratios (GORs) of Utica and Point Pleasant wells (through June 2016) and thermal maturity, as described in the article text

Source: U.S. Energy Information Administration based on DrillingInfo Inc., Appalachian Oil and Natural Gas Research Consortium, U.S. Geological Survey, and various state agencies
Note: EIA calculates GOR for each well using the initial six contiguous months of liquid and gas production. Click to enlarge

The temperature ranges conducive to converting organic material to oil and natural gas are referred to as the oil window and the gas window, respectively. The oil window typically occurs at temperatures between 60 degrees and 120 degrees Celsius, while the natural gas window occurs between 100 degrees and 200 degrees Celsius. Although this temperature range is found at different depths below the surface throughout the world, a typical depth for the oil window in the Utica play is 4,000 feet to 8,000 feet, and the corresponding gas window is 7,000 feet to 12,000 feet.

In the map above, natural gas-rich wells in the Utica play are mostly located in the eastern portion of the play, and oil-rich wells are typically located in the western portion. The distribution of initial GORs generally corresponds to the depth of the reservoir. Deeper wells (up to 13,000 feet) in the eastern portion have higher initial GORs (greater than 10,000 scf/b) and produce mostly natural gas, while the shallower wells to the west have lower initial GORs (less than 10,000 scf/b) and produce mostly oil.

Recent updates to EIA's maps and geologic information for the Utica play help to describe the formations' production, gas-to-oil ratios, and other geologic characteristics. This information provides a better understanding of recent production within the context of key geologic parameters.

Principal contributors: Olga Popova, Gary Long, Chris Peterson
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Wednesday, September 28, 2016

Permitting Resumes in Utica Shale; Rig Count Climbs; 1,800 Wells Now Drilled

The latest weekly Utica shale permitting report from the Ohio Department of Natural Resources reveals that activity picked back up a bit last week after no permits were issued the previous week.  Five new permits were issued last week, while the rig count jumped back up to 18.  2,246 permits are now issued, 1,800 wells drilled, and 1,398 wells are producing in Ohio's Utica shale.

View the report below or by clicking here.

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OPEC Reaches Deal to Limit Output, Sending Oil Prices Up

From Reuters:
Oil prices settled up nearly 6 percent on Wednesday after OPEC struck a deal to limit crude output at its policy meeting in November, its first agreement to cut production since 2008 and after the market crashed on oversupply. 
The Organization of the Petroleum Exporting Countries reached agreement to limit its production to a range of 32.5-33.0 million barrels per day (bpd) in talks held on the sidelines of the Sept. 26-28 International Energy Forum in Algiers, group officials told Reuters.

OPEC estimates its current output at 33.24 million bpd. 
"We have decided to decrease the production around 700,000 bpd," Iranian Oil Minister Bijan Zanganeh said.

OPEC will agree to production levels for each member country at its Nov. 30 meeting in Vienna, group officials said. After reaching its group target, it will seek support from non-member oil producers to further ease the global glut.
Click here to read more.

This news, which many no doubt feel is long overdue, pushed oil prices up to the highest levels seen in recent weeks.  Brent Crude reached as high as $48.96 before settling at $48.69, while West Texas Intermediate (WTI) rose to $47.45 before finishing the day at $47.05.

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Tuesday, September 27, 2016

Gas-Fired Power Plant Announced for Harrison County; Columbiana County Plant Receives State Approval

It has been a big week for new natural gas-fired power plants in Ohio.  First, a previously announced $1.1 billion project in Columbiana County got approval from the Ohio Power Siting Board, and construction is scheduled to begin in January 2017.

Then a $900 million investment for another plant in Harrison County was announced.

First, from Dayton Business Journal:
Ohio regulators have approved a $1.1 billion natural-gas-fired power plant in eastern Ohio, a project that locals say will significantly boost the area. 
The Ohio Power Siting Board gave the go-ahead to Boston-based Advanced Power Services on a 1,105-megawatt power plant in Columbiana County. It's enough to power about a million homes, the company said. 
The county, one of the prime spots for oil and gas development related to Ohio’s Utica shale play, has $4.4 billion of tangible assets, County Commissioner Tim Weigle said in recent regulatory testimony on the plant, operated by subsidiary South Field Energy. 
“So they’re willing to invest one quarter of our entire worth in Columbiana County. That is extreme,” he said in support of the plan.
Then there is this report from WTOV 9 on the new plant being planned in Harrison County:

The Harrison County Community Improvement Corporation announced Thursday that a 1,000 megawatt natural gas-fired electrical power generation facility will be constructed in the Harrison County Industrial Park.

The facility will provide enough electricity to power a million homes and bring capital investment of more than $900 million to Harrison County, according to Raj Suri, CEO of EmberClear, the company that will build the facility.

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Friday, September 23, 2016

U.S. Chamber of Commerce Imagines What Economy Would Look Like if Shale Boom Hadn't Happened

From NGI:
The U.S. economy would be "much weaker" if the energy renaissance had not occurred, the U.S. Chamber of Commerce said in a report outlining the jobs and financial gains resulting from unconventional drilling. Researchers also highlighted some of the biggest benefactors: Ohio, Pennsylvania, Texas and Wisconsin. 
The report, "What if America's Energy Renaissance Had Not Actually Happened?" is the second in a series by the Chamber's Institute for 21st Century Energy. Researchers compiled data from 2009 through 2015 to imagine the U.S. economy minus the plethora of oil and natural gas reserves uncovered in shale, sand and other formations now being tapped by hydraulic fracturing and horizontal drilling. 
"The 'Keep It in the Ground' movement completely ignores the vast benefits to our nation's economy that the energy renaissance has brought to us," Institute CEO Karen Harbert said. "For instance, lower electricity and fuel prices spurred a comeback in manufacturing that alone is responsible for nearly 400,000 jobs. It costs consumers less to drive a car and heat their homes today. And all the while, our nation has been decreasing its energy imports and lowering emissions." 
Because of the energy renaissance, U.S. natural gas import levels have declined by 73%, while oil imports have fallen by 62%, the researchers said.
The whole article is available by clicking here.

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Trump Voices Support for Fossil Fuels at Shale Event in Pittsburgh

From The Hill:
Republican presidential nominee Donald Trump on Thursday accused his Democratic opponent of seeking a “war on energy,” and promised to slash regulations that he says are holding back fossil fuels. 
Hillary Clinton’s energy policies would cost the United States $5 trillion, Trump said in a speech at a natural gas conference. He added that Clinton wants “to put the coal miners out of work, ban hydraulic fracking in almost all places and extensively restrict and ban energy production on public lands and in most offshore areas."

The billionaire businessman predicted "devastation for states like Pennsylvania, Ohio, West Virginia and so many others, where shale oil and shale energy and coal and coal production are critical parts of the economy.” 
Trump used the speech in Pittsburgh, the heart of the Marcellus Shale gas boom of recent years, to pitch his energy, economic and tax agendas to gas executives. He spoke highly of what the gas boom, spurred by hydraulic fracturing, has done to the country’s economy and security.
Click here to read more of this article.

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Sand Declared the "Unsung Hero" of Battle Between OPEC and U.S. Shale

The late-2014, Saudi-initiated oil-price war may have taken the ‘boom’ out of the US shale industry as it seriously threatened OPEC market share, but Saudi victory has been elusive: US shale has proven amazingly resilient. The industry has adapted quickly to the new playing field, and the unsung hero of a new uptick in drilling and investment isn’t just true grit—it’s sand. 
The Saudi victory is equally dulled by the fact that it was not a decline in US shale production that rebalanced supply and demand; rather, it was chaos in Libya, militant attacks in Nigeria, massive fires in Canada and the destabilization of OPEC’s own Venezuela. 
US shale made good use of the down-time to regroup and innovate. And now, with the drilling rig count consistently rising, drilling activity coming back on track and new investment surfacing in our favorite shale patches, it is perhaps ironic that the dessert Kingdom should find sand its new enemy in the next phase of this battle for market share.

Sand has been the most significant innovation on the US shale playing field. 
“North American producers are rapidly increasing efficiency and reducing production costs, and we’re just at the beginning of this innovation curve,” says Select Sands Corp.CEO Rasool Mohammad.
Read more by clicking here.

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Wednesday, September 21, 2016

Emails to Sierra Club Show EPA Policy Chief's Frustration with White House Approach to Fracking Regulation

From the Washington Free Beacon:
A senior Environmental Protection Agency official privately complained about “dickheads” in the White House who resisted efforts to regulate an innovative oil and gas extraction technique, newly released documents show. 
Michael Goo, then the EPA’s policy chief, complained to a Sierra Club lobbyist that the White House Office of Management and Budget was resisting efforts to regulate hydraulic fracturing, or “fracking.” 
“If you want any hope of regulation of fracking then give us more time to try and remove the gun from our head and talk sense into OMB dickheads,” Goo wrote to John Coequyt, the Sierra Club’s top climate policy official and one of its team of D.C. lobbyists
Goo and Coequyt worked extensively behind the scenes to craft major EPA policies under Obama, including, these text messages show, the agency’s first major fracking regulations.
The rest of the article can be read by clicking here.

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