[Subjectivist]

Speaking of cornucopianism, Opportunity Ohio is releasing new video's every week or so promoting the Utica Shale and opposing the proposed severence tax that is working its way through the state legislature.

http://vimeo.com/63064869 part one

http://vimeo.com/63506510 part two

http://vimeo.com/64028439 part three

Each of them is under 3 minutes to watch, I find them somewhat effective because they push the right buttons to strum your heart strings if you live in this state.

[Tanada]

n the wake of a policy consortium's report critical of the boost in jobs from the shale boom in the tristate area, Ohio has come out with numbers telling a different story.

There were 8,192 jobs in drilling and pipeline construction in Ohio in the first quarter of 2013, according to state data reported on by Columbus Business First. It's an increase from the first quarter of 2011's 6,263 and up 12 percent from the 7,329 in the first quarter of 2012.

These are just the core shale-related jobs in Ohio, not the jobs that are directly impacted.

http://www.bizjournals.com/pittsburgh/b ... -ohio.html

That one dates from 03DEC2013. A 12% growth in oil field employment is nothing to sneeze at, but Ohio is still in the early phases. North Dakota didn't have explosive growth in 2008, it came along a couple years later.

[copious.abundance]

Hey, it's still early.

Was reading lots of stuff earlier in the year that the oil window in this shale was a looking bit disappointing, though the jury is still out. But there's no doubts about the wet and dry gas windows.

And it's not very exciting as of yet, but Ohio c&c production has finally started ticking up the past few months:
http://www.eia.doe.gov/dnav/pet/hist/Le ... RFPOH2&f=M

[Tanada]

Hey, it's still early.

Was reading lots of stuff earlier in the year that the oil window in this shale was a looking bit disappointing, though the jury is still out. But there's no doubts about the wet and dry gas windows.

And it's not very exciting as of yet, but Ohio c&c production has finally started ticking up the past few months:
http://www.eia.doe.gov/dnav/pet/hist/Le ... RFPOH2&f=M

Having seen so many posts from you in the following vein I am surprised you didn't post this table with the Headline (Ohio's Oil Production Reaches Its Highest Level Since March 2000!!!!!!)

[copious.abundance]

I was actually thinking of doing that, but of course at 21K bpd it would have been a joke.

[Tanada]

I was actually thinking of doing that, but of course at 21K bpd it would have been a joke.

Good to see you have maintained your sense of humor

I looked up the EIA data this morning, Ohio has 530,000/bbl/d refining capacity and consumes about 600,000/bbl/d of petroleum. Peak production year for Ohio so far was 1984 with 41,838/bbl/d. In September 2013 based on your link from the EIA Ohio reached the 21,000/bbl/d mark and is projected to keep growing for some time. Even though Ohio passed 1000 fracked well permits a few weeks ago it is going to take a while before the state produces enough oil to supply its own refineries, let alone export large volumes to other states in the surrounding area.

Ohio reached a key milestone regarding Utica Shale development this week. Per the Ohio Department of Natural Resources (ODNR) Utica Shale permit page, the state has approved over 1,000 Utica Shale permits since 2010. The activity in Ohio is only growing as we continue to see new counties being explored and new companies seeking permits to develop the Utica.

Since 2010, companies have come to Ohio and invested an unprecedented amount of capital into eastern Ohio’s struggling economy. New natural gas processing facilities are being built and companies supplying Utica Shale operators are now making Ohio their home. In fact, a recent report from Columbus-based law firm Bricker and Eckler found over $12.2 billion has been invested in Ohio thanks to Utica Shale development.

This investment and rapid pace of permitting is making the Utica Shale in Ohio one of the fastest growing shale plays in America. During Hart Energy’s recent DUG East conference in Pittsburgh, Chris Simon, managing director of asset acquisitions and divestitures at Raymond James Financial Inc, remarked the Utica’s pace of development meets or surpasses the rate of exploration and production in some of the major shale plays across the country.

During these first three years of Utica Shale activity, companies have been able to determine the sweet spots for development. Currently, companies are focusing their efforts primarily in seven counties.

CarrollCounty- 352 Permits
HarrisonCounty- 154 Permits
ColumbianaCounty- 94 Permits
NobleCounty- 74 Permits
GuernseyCounty- 65 Permits
BelmontCounty- 59 Permits
MonroeCounty- 55 Permits

While the core of activity remains in these seven counties, new counties continue to be explored and tested. In the northern portion of the Utica, Mahoning and Trumbull Counties are both seeing encouraging results. In the southern portion of the Utica, Washington County has also seen some impressive results from test wells by PDC Energy. PDC was so encouraged by its Washington County wells that in November the company permitted a well in the adjacent Morgan County, the first Utica Shale permit for that county.

All of this activity has been a true blessing for Ohio’s economic outlook. In a recent report, the Ohio Department of Jobs and Family Services found that core-related shale jobs in the Utica Shale have grown by 30 percent from January 2011 to January 2013. These well-paying jobs are providing wages that are 68 percent higher than Ohio’s average wage of $44,367. This is a significant increase for those in eastern Ohio where our average wage is usually much lower than the state average.

Though the issuance of these 1,000+ permits, operators in Ohio have determined the sweet spots for development and placed significant amount of investment into our state. While there is still a good amount of research to done on the Utica, we are continuing to see very positive results. As we move into 2014, these investments and permits will only continue to grow, providing Ohioans with high paying jobs and economic activity that has long remained stagnant in eastern Ohio.

http://energyindepth.org/ohio/ohio-tops ... e-permits/

It all sounds like sunshine and lollypops, but I think 2014 will be very telling. Supposedly the basic infrastructure needed to fully exploit these seven counties shale beds is coming on line in 2014 and they will be able to frack and complete wells and put them into production at a growing rate over the course of the next 13 months.

I also stumbled over a graphic showing Utica shale is under about 80% of the state, if that turns out to be true Ohio might have a bright tight oil future. Again time will tell. We also do not know how long any of these wells produce or what their depletion curves look like because very few of them have been in full production more than a few months. As data accumulates we will get a much clearer picture of how high the production might eventually go and how long it might ultimately last.

[copious.abundance]

Here is a more recent map showing the (known) extent of the Utica shale in Ohio. Looks like it covers about 1/3 of the state (give or take), with the oil and wet gas windows covering maybe 1/4 of the state. So that's about 10,000 square miles.


link

Here's a map I showed last year showing the (known) extent of the Utica Shale beneath Ohio, color-coded for the different "windows." Apparently one problem with the oil window is it's too shallow, which isn't good for fracking, since you don't get good pressures. If they start tapping the oil window on a large scale they might have to install pumps on the wells from the get-go. Typically in a fracked shale well you can wait quite a while before the pressure gets low-enough that you have to install a pump.

[Subjectivist]

The Ohio DNR 2nd quarter report for the Utica Shale wells in this state is out now.

http://oilandgas.ohiodnr.gov/portals/oi ... 100114.xls

Based on the totals at the bottom the shale wells produced 2,469,000 bbl in the second quarter this year. By my math that is around 27,000bbl/day.

Not super huge, but not bad either.

[shallow sand]

What are the cost ranges for Utica wells? The production amounts reported for oil would be good for conventional wells, but don't seem to strong on average compared to the three big US horizontal areas. Agree it is still early, but lower oil price and low natural gas price won't help. Also assume big decline so if they are below 100 bbl per day quickly, may not work until oil price spikes.

[shallow sand]

From my reading Utica is primarily gas, like Marcellus. Looks like gas rates can be huge though.

[Subjectivist]

From my reading Utica is primarily gas, like Marcellus. Looks like gas rates can be huge though.

True in Pennsylvania but the further west you drill into Ohio the higher the wet gas/oil ratio gets. Not as high as North Dakota, but high enough to give Ohio a substantial bump in annual oil production.

[shallow sand]

Nat gas seems to be strengthening also. May get the reverse of Bakken, EFS & Permian, in that Utica gas drillers will increase production of "associated oil".

[Subjectivist]

I missed this when the announcement was made in August, the Utica Shale play in eastern Ohio has completed its 1,000th well according to the state agency that approves drilling.

http://youtu.be/xZy5KZcF37c

I wonder how WTI prices will effect the economy here? Some folks laughed when I said Utica is very important to the Ohio economy, but I for one do not find any humor in the current volatility in the oil market. Ohio needs these jobs.

[Subjectivist]

What are the cost ranges for Utica wells? The production amounts reported for oil would be good for conventional wells, but don't seem to strong on average compared to the three big US horizontal areas. Agree it is still early, but lower oil price and low natural gas price won't help. Also assume big decline so if they are below 100 bbl per day quickly, may not work until oil price spikes.

The numbers bandied about in the media range from 5 million to 10 million per well for the Utica play.

[copious.abundance]

I wonder how WTI prices will effect the economy here? Some folks laughed when I said Utica is very important to the Ohio economy, but I for one do not find any humor in the current volatility in the oil market. Ohio needs these jobs.

As shallow sand pointed out above, the Utica has turned out to be mostly a gas play. I don't think oil prices will have much effect here at all.

[Tanada]

Ohio misses on severance tax

The responsible use of Ohio’s natural resources is crucial to the well-being of its residents and to the long-term sustainability of its economic infrastructure. Currently, Ohio is 13th among states in terms of crude oil production and 6th in terms of natural gas.

The Marcellus and Utica shale formations, which lie, in part, under the hills of eastern Ohio, are two of the most important sources of natural gas in the United States. Since the rise of hydraulic fracturing (also known as “fracking”) in 2010, more than $40 billion worth of natural gas has been extracted from Ohio’s shale deposits.

However, the astounding wealth that has been created from state resources and using state infrastructure has overwhelmingly benefited a small number of rather large pockets. The expansion of oil and gas production locks in future greenhouse gas emissions in a time when the need to mitigate our contributions to climate change is more desperate than ever.

If Ohio policymakers refuse to embrace safer energy technologies, then they should at least ensure that oil and gas extraction increases the shared prosperity of the people of Ohio rather than fueling short-term private gains.

It is time for Ohio’s oil and gas drilling corporations to pay their fair share. Ohio still has significant untapped reserves of hydrocarbons and their extraction should be subject to a severance tax at the level of other major gas- and oil-producing states.

A fair state-level severance tax would help ensure that the exploitation of Ohio’s hydrocarbons funds critical state services responding to the pressing needs of all Ohioans and the prospects of their children. Furthermore, a severance tax permanent fund — sometimes called a legacy fund — like those of other gas-producing states and tribal nations, would go a long way toward a thriving Ohio beyond the ups and downs of the fracking boom.

A permanent fund produces a sustainable investment endowment that generates revenue from interest earnings that can be used to finance the needs of a region or state.

Over the years there have been several attempts to legislate a fair severance tax in Ohio. In 2015, Republican Gov. John Kasich proposed a 6.5% severance tax on gas and oil production and a 4.5% tax on natural gas liquids.

Years earlier, Policy Matters Ohio proposed a flat 5% severance tax on gas and oil and, after certain trigger points, a 2.5% fee toward a legacy fund that could provide long-term benefits despite the volatility of oil and gas markets. However, after an aggressive lobbying campaign from the Ohio Oil and Gas Association and the American Petroleum Institute, lawmakers refused to act.

Ohio drilling operators pay a dime per barrel of crude oil and half a nickel per thousand cubic feet of natural gas. This is one of the lowest severance taxes in the country and it means that years of gas and oil production have enriched corporations and drillers but not the communities that host them nor the state that supports them.

The promises made by oil and gas corporations never materialized and the Appalachian counties that were supposed to thrive have grown poorer. According to a recent Ohio River Valley Institute report, in the period between 2008 and 2019, gas-producing counties (Belmont, Carroll, Guernsey, Harrison, Jefferson, Monroe and Noble) had a net job loss of 8%, growth in personal incomes lagged state and national averages, and the local population decreased by over 5%.

These statistics only scratch the surface of the negative local impacts that have ravaged eastern Ohio in the past decade. All this while the same counties grew, in terms of GDP, five times faster than the state of Ohio and four times faster than the nation as whole. In other words, Ohio’s gas producing counties are being drained of both their natural resources and their economic vitality at the same time.

What would have happened if the General Assembly had instituted one of the several severance tax proposals since 2010 — say, the one proposed by Policy Matters? Based on Ohio Department of Natural Resources data, a flat 5% severance tax on crude oil and natural gas going back to 2016 would have produced more than $1.5 billion in revenue, $1.244 billion more than under current severance taxes.

Utica Shale

[ROCKMAN]

T: Long,long ago I pointed out how some states charged a rediculously low severance tax. But that's the choice of the state's oil/NG regulators. But remember it's a free market. When you sell your house you can ask for any price you want. And if you ask 3X the market value you're not going to sell it. Your choice. Raise severance tax too high and fewer wells may be drilled. Folks in Ohio should have taken a trip to Austin long ago to talk to the Texas regulators about setting severance tax rates. In addition to helping our annual budget out a good bit we were also able to put away a $10 BILLION "rainy day" fund.