* Oil output from Ohio's Utica shale to be dwarfed by gas
* But gas production is "significant"
* First true glimpse into Utica's size and scope
By Edward McAllister and Sabina Zawadzki
NEW YORK, May 16 Oil output from the Utica shale
in Ohio was less than expected last year, the Ohio Department of
Natural Resources said on Thursday, denting the Utica's image as
America's next oil-producing frontier.
Despite initially being touted as a $500-billion bounty when
drilling began in 2011, early evidence shows that the Utica may
disappoint, holding mostly natural gas, a far less lucrative
product already in abundance in the United States.
"Oil production will be incidental to gas production in much
of the Utica/Point Pleasant play," the DNR said, confirming some
analysts' concerns that it may not live up to the early hype.
Oil output averaged 1,742 barrels per day in 2012, according
to production data issued by the DNR. Gas output totaled 18.837
billion cubic feet (bcf), or 35 million cubic feet (mmcf) per
The eagerly anticipated data from 87 wells that produced in
2012 showed the stuttered beginnings of a drilling boom in Ohio
as producers searched for the sweetest acreage and output was
hampered by a lack of pipeline infrastructure.
Still, analysts were disappointed by the well numbers,
particularly given the early hype.
"This is less impressive than was initially touted," said
Mark Hanson, energy analyst at Morningstar in Chicago. "It
doesn't look like it's going to be the next Eagle Ford," he
said, referring to the shale play that has proved a major
success in Texas.
Chesapeake Energy was by far the largest producer
with total 2012 output of 10 bcf of gas. Hess Corp
produced 923 mmcf and Gulfport Energy Corp 767 mmcf.
Devon Energy did not produce any gas from its five
wells, the data showed.
Aubrey McClendon, head of Chesapeake until earlier this
year, once described the Utica as a potential $500 billion
gusher, and "the biggest thing to hit Ohio since the plow."
But enthusiasm has waned, with major drillers including
Chesapeake and Devon Energy selling acreage in what was
originally expected to be an oil-rich part of the play.
While companies have given details on progress of some
wells, until now there has been no comprehensive database
showing all the producing wells in the Utica.
As it stands, much remains unclear about the Utica's
potential. Drillers are awaiting new pipeline infrastructure
that would allow wells to bring product to markets nationwide.
And counties in Ohio show varying potential. Harrison County
has shown some evidence of strong oil production, while Carroll
County seems more gassy, Hanson said.
Regardless, a major drilling expansion in Ohio is imminent,
despite the lesser oil flows than some had hoped, as the state
issues more permits and drilling activity quickens.
"The production from these initial Utica wells makes a
compelling statement about the staggering amount of oil and gas
resources Ohio's shale may contain," said James Zehringer,
director of the DNR.
The department expects more than 360 wells to be producing
in the Utica by 2013, moving up to 1,000 in 2015.
In Ohio, where shale drilling began in 2011, production data
is made public only once a year, leaving many in the dark as to
its true worth. In most other producing states, data is made
public every quarter.
Last year, data was offered from just five producing wells
drilled by Chesapeake.
"As oil and gas production grows, we need to see these
production numbers more frequently. This will allow us to adjust
to the growing needs and not fall behind from a regulatory
standpoint," DNR's Zehringer said.