The Utica is Going to be Big, Very Big

There is a lot of debate about how big the Utica is going to be.  Hard to determine as the E & P guys keep their cards tight to their chests. They say as little as possible most of the time. And the rumor mongers make it even more difficult to determine fact from fiction.

I ran across the earnings call from DTE, an electric utility that also has substantial pipeline activity. From what they stated, they are in discussions with several energy companies that are almost desperate to get more pipeline capacity to move Utica product. Apparently they believe that this will so huge that we don't have near the needed capacity.

From the call; 

In the Utica, yes, I think we do continue to see strong, bullish, whatever you want to call it, results and here producers are talking about the scale of what is going to happen there and the scale is large and it will be constrained by infrastructure to get the gas to market, so they are now transitioning from evaluating the resource to believing that and now they got to get it to market.

The other thing you hear them thinking about is, what market and they are clearly places that take it that are better than others. A lot of it's been taken south to this point, but the basis to Michigan and Ontario if you watched in the recent year was strong, and those are growing markets. Demand for gas in Ontario is growing same is true in Michigan, particularly as we transition our generation fleet. Then our Vector Pipeline reaches into Chicago, Wisconsin and so forth, I think there is a lot of interest in reaching those markets with Utica gas.

There is much more there  in the call.  But I thought this is a good peak at behind-the-scenes activity that shines a strong light on the Utica future.  Follow the link.

http://seekingalpha.com/article/2023141-dte-energys-ceo-discusses-q...

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Permalink Reply by Tim on February 16, 2014 at 1:15pm
How far east is the utica window?

Not as far as wet, but dry utica heading east? Seneca popped a big one in Mckean Ct, 8.5mmcf/day peak, but surprisingly, it didn't seem to spike activity or pricing?!? Is that due to lack of infrastructure? Or just too much leased land to drill first?
Permalink Reply by Mark McGrail on February 16, 2014 at 1:25pm

Jim,

I think most people are anxious to have their property become a part of development. But they don't understand that the activity in the Utica is primarily exploratory and developmental, especially with regard to infrastructure.

Each year will bring more drilling more infrastructure, more growth.

Patience is the word to live by with regard to Utica development.

Permalink Reply by Trapper on February 16, 2014 at 3:35pm

How much of Western PA is part of the Utica build out?

What is a good estimate of time until buildout is complete and production reaches it's peak?

Permalink Reply by Buddy on February 16, 2014 at 4:37pm

And what exactly is meant when people say 'Western PA'?  Is that only Allegheny, Beaver, Butler, Washington etc counties?  Or is it also the forgotten counties of Venango, Clarion, Jefferson, Clearfield? etc?  In the 'forgotten counties' landowners have been told they sit on the Utica but don't know what to expect or hope for.  Any ideas of where the Utica build out will begin and/or end in relationship to 'east' Western PA?

Permalink Reply by george m vietze on February 16, 2014 at 5:22pm

Erie County, Pa. Greenfield Township the first Utica test well was drilled last spring.

Adameck#1.  That well was tested by Weatherford Consulting.  The well is owned by Indepth Exploration out of Houston and drilled by Utica Resources a Pennsylvania licensed company.  The driller has leased over 2,000 more acres in the general area,

some in Greenfield, Venengo and Greene Twsp and has listed 10+ properties on their web site www.slcenergy.com  and more info on their facebook page www.facebook.com/slcenergy.  They are affiliated with Coastal Petroleum Corporation

who also has experience drilling in Pa.  They claim that Adameck#1 tested to be a very good well and they expect to have a permit on a well south of Adameck#1 in a few weeks.  We own a 270 property four miles south of Adameck#1 which has a National Fuel Gas distribution lines on the property, a low pressure line and a high pressure line that has a 900 lb capacity but runs 200-300 lbs. Nucomer Energy,LLC.

an affiliate of EmKeyEnergy purchased our lease along with 20+ other properties (over 1,400 acres) and EmKey purchased $34million dollars of Norse's distribution lines.  This is the first activity that looks as if it might be significant in Erie County and they are trying to keep this quiet.  As property owners we are looking for a driller to drill our property and EmKey is mainly a mid-stream pipeline distribution company who would like to work with a qualified drilling company. Some of our information

is on www.facebook.com/georgevietze 

Permalink Reply by george m vietze on February 16, 2014 at 5:32pm

Coastal Petroleum Company is in the process of a permit in Albion, Erie County, Pa.  SLC Energy,LLC is going to drill their wells.

Coastal Petroleum Corporation has applied for an oil and gas permit, 049-25426 for Tercho #1 in Albion, Conneauto Twsp.,
Erie County, Pa.

Permalink Reply by Trapper on February 16, 2014 at 6:30pm

If you want to get technical , Buddy , divide the state into thirds and choose the western one third as being classified as "Western PA".

Since PA in general is usually left out of most Utica conversations , I would settle for a timeline for even just those western most counties which border Ohio. I happen to live in one of them and my primary focus is naturally on that one. We already know we are in pretty good shape with our Marcellus and Upper Devonian plays and the Utica wells are thus far good gas producers. In Ohio , the emphasis seems to be on Utica Oil production.

IMHO Oil will eventually meet the fate of coal as more and more gas is utilized to replace the myriad of energy producing means currently dominated by crude oil products such as gasoline , diesel , and heating oil.

Permalink Reply by Jim Litwinowicz on February 17, 2014 at 10:57am

Buddy, Tim, Trapper; Where the Utica is productive and where the wet/dry line is is a huge question.  Looking at current maps it would appear that western halves of Lawrence and Beaver are wet while almost all of Mercer and about half of Venango are wet. But these are based on old vertical wells from years ago.  That may change as more exploratory horizontals are drilled.

The counties of Clarion, Forest, Clarion, eastern Venango appear to have dry gas in the Utica but they have little pipeline capacity to move it to market. And there is some question if the current spike in prices will hold. Hard to predict when these counties will see high activity rates. Some companies looking for land will move quicker to tie up land.  Others that have all they can handle will stay away from them.

Some of these areas also have wet Marcellus but the Marcellus is thinner than the south western counties or the north eastern counties so it won't be quite as productive.  And the Upper D is worth testing in these areas.

Who knows, maybe the TBR will be productive in those counties. Or maybe other strata will prove out.

Permalink Reply by Buddy on February 17, 2014 at 2:52pm

Trapper and Jim,  I appreciate both of your opinions and explanations.  I am happy to finally hear some specifics for my counties.  Time will tell, but I wish it would hurry up!

Permalink Reply by Jim Litwinowicz on February 17, 2014 at 4:17pm

Buddy; Not sure where you are but things seem to work out from the center. Mercer is becoming very busy and the activity is working eastward. Because of that,  I think there will be some leasing activity soon in Clarion and Venango.  But Jefferson, eastern Clarion, and Clearfield, may be later this year or next year. A lot of that will depend on gas prices staying strong and new pipeline capacity developing.

I am concerned about prices.  There seems to be more and more areas and more and more strata that look productive. I just read there is another layer below the Eagle Ford that looks promising. There are fields everywhere being explored and all that drilling may cause another glut, driving down prices again. And they get better every year at getting more gas from each well.

But a sixth LNG export terminal was just approved, Boston and NY City are screaming for more pipes after this winter, the Midwest wants more gas, EPA rues will shut down more coal gen plants next year so demand may balance all the increased drilling.

Permalink Reply by Trapper on February 17, 2014 at 4:23pm

Amen to that Buddy!

None of us are getting any younger! LOL!

Keep hanging in there , it will come.

Permalink Reply by Harry E. Rose on February 16, 2014 at 1:38pm
JL, MM, Thanks for info.

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