Ohio Gas Production Doubles in Year's Time

YOUNGSTOWN, Ohio – State officials said Wednesday that oil and gas production in Ohio nearly doubled between 2012 and 2013, driven mainly by exploration in the Utica shale. 

"The Utica play is the real deal," declared James Zehringer, director of the Ohio Department of Natural Resources.

ODNR oil and gas division chief Richard Simmers, Ohio Environmental Protection Agency Director Craig Butler, JobsOhio Senior Managing Director David Mustine, and State Fire Marshal Larry Flowers joined Zerhinger Wednesday to provide an update on oil and gas exploration in the Utica during an event at Stark State College in North Canton.

The event was streamed live on ODNR's website.

Zehringer said Ohio's oil production in 2013 increased by 62% versus 2012, while natural gas production skyrocketed 97%, the biggest production numbers in the state's history.

ODNR's Simmers reported that in 2013, the Utica alone produced 3.7 million barrels of oil, or 45% of total oil production in Ohio. In 2012, the Utica produced just 12%.

Production of natural gas in the play also grew significantly, Simmers reported. In 2013, the Utica produced 100 billion cubic feet of natural gas, or about 60% of the state's total output. In 2012, Utica production was equivalent to 16% of the state's collective natural gas production.

In just the Utica, oil production rose 470% during that period, while natural gas production increased 680%, he said. Also, in 2012 there were just 85 wells deemed producing. Last year, 352 were producing.

"Production per well is going up as well," Simmers noted. "As this play begins to mature, and we're in the very early stages of this play, companies are learning how to drill the wells, but their also learning how to fine-tune the completion."

As technologies improve, production out of Ohio's wells in the Utica should increase, Simmers continued.

Production leveled off during the fourth quarter 2013, Simmers said, mainly because of processing and pipeline limitations in the play. "The Utica is more of a gas play," and the wet gas -- butane, ethane, and propane, for example -- that is tapped from wells require additional processing and fractionation before it can be shipped to markets.

However, production during the first quarter of 2014 increased significantly, Simmers said, an indication that processing plants and pipeline networks are finally catching up with the number of producing wells in the state.

A total of 418 wells produced 1.9 million barrels of oil and 67 billion cubic feet of natural gas, during the quarter, according to data presented.

"I think that trend is going to continue," Simmers said.

Since 2012, private energy companies have invested billions of dollars in Ohio to shore up the state's oil and gas infrastructure, added JobsOhio's Mustine. This infrastructure includes hundreds of miles of gathering and transportation pipelines across Ohio, as well as large processing plants that are able to process natural gas and ship it to market.

"Conservatively, I use a figure of $6 billion of midstream and pipeline commitments made. Much of that has already been invested," he said.

Large energy players such as M3 Midstream, NiSource Midstream, Williams, Caiman Energy, and MarkWest Energy have all pumped massive investments into large-scale processing plants and pipeline networks in the state, Mustine said. "We have some of the largest companies in the United States, perhaps the world, investing billions of dollars in Ohio to develop the Utica shale."

Further development of the Utica is also to likely stimulate the state's petrochemical industry, especially if work proceeds on a multi-billion dollar cracker plant just across the state line in Monaca, Pa.

The state is also making strides to ensure that the industry is monitored safely.

Simmers said the number of on-site inspections stood at 23,000 in 2013, while the state has doubled in size the number of inspectors it employs.

The Ohio EPA's Craig reported that new regulations have helped expedite the permit process, reducing the time from when a company first applies with a general permit to it being issued to a matter of weeks than months.

However, the general permits also come with some of the toughest leak detection and repair requirements in the country, Craig noted.

There are also regulations involving seismic testing at certain well sites, newly introduced since ODNR linked a hydraulic fracturing operation in Poland Township to a series of earthquakes in eastern Mahoning County.

Once ODNR ascertained a link between the quakes and the well, the hydraulic fracturing operation was shut down.

"ODNR has and will continue to make decisions that are necessary to protect Ohioans, no matter how unpopular they may be," Zehringer said. "If an operation must be stopped or a company suspended in order to protect Ohioans and our environment, we have and we will take the right steps necessary to do so."

Copyright 2014 The Business Journal, Youngstown, Ohio.
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