Tuesday, July 17, 2012

Economic Optimism For Ohio And Utica Shale Oil And Gas

It sure looks to me like Ohio and the rest of the "Rust Belt" could use some positive economic news.  Let's hope the development of the Utica Shale (and the other shale formations) for oil and gas works out.  The area has attracted a lot of industry interest, and usually these companies do not invest the amounts of money they have been putting into leasing up acreage in Ohio without being pretty certain of success.  This is an emerging play to pay close attention to.

BP CEO: In Early Stages Of Evaluating Ohio's Shale Potential
BP PLC is in the early stages of evaluating Ohio's energy potential but believes the state--which is home to the emerging Utica shale--could be a significant contributor to the energy industry, Chief Executive Bob Dudley said Friday.

In a speech in Cleveland, Mr. Dudley said BP technicians are already on the ground "advancing a plan to safely appraise the resources" the company is prospecting in leases acquired about four months ago in the Utica and Point Pleasant shales, according to a transcript of the speech.
The executive cited estimates by the Ohio Department of Natural Resources that put the state's recoverable shale potential at up to 5.5 billion barrels of oil and 15.7 trillion cubic feet of natural gas.
"In the coming months, we expect to acquire seismic surveys, prepare a development plan and survey land for initial wells to be drilled next year," Mr. Dudley said.

BP is one of several companies seeking to tap the unconventional oil resources that have revolutionized energy production in the U.S
Production of natural gas in the neighboring Marcellus shale, which underlies several northeastern states, has revitalized formerly depressed areas by providing cheap energy for steel manufacturing and low-cost feedstock for chemical products. The oil industry hopes that the shales underlying Ohio could have large deposits of profitable crude oil.
Copyright (c) 2012 Dow Jones & Company, Inc

EnCana Success In The Mancos Shale In New Mexico's San Juan Basin

The Mancos Shale and its stratigraphic equivalents can be found containing oil and gas from New Mexico, north throught the American Rocky Mountains, into Canada, and actually up into the North Slope of Alaska.  There's no reason a lot of it can not be productive.  I think we're just seeing the tip of the iceberg.

The Next Oil Rich Shale on the Block? Encana Corp. releases first Mancos Shale results
  Encana Corp. releases first Mancos Shale resultsdaily-times.com

The well, Lybrook H36, yielded a 30-day initial production rate of about 440 barrels of oil per day, Encana disclosed to investors.
An Encana spokesman said the initial production was enough to warrant further development. "That's an indication that we're pleased with the results we've seen to date," Encana's Doug Hock said.

The figure is the first publicly released data from a test well targeting Mancos Shale oil.

Geologists and industry officials have expressed hope that technological advances would enable wells to reach the oil-rich shale in the San Juan Basin, an area better known for producing natural gas.

Encana is partnering with local firms, including Aztec Well Servicing Co. and Dugan Production Corp., to exploit leases in the southern portion of the basin targeting oil-rich formations. Aztec is drilling the wells, and Dugan has taken advantage of its property interests in the area.

A sharp decline in natural gas prices has driven drillers to search for oil.

"Our strategy as a company right now is to increase the amount of natural gas liquids and oil in our portfolio," Hock said. "Given that, our exploration in the San Juan Basin is a key part of that, and that's why you've seen the commitment there to explore that."

Encana has a 174,000-net-acre position in the basin, the company said.

A major firm based in Calgary, Alberta, Encana has four Mancos Shale wells producing oil and a fifth being drilled, the company disclosed. Lybrook H36 was drilled into the Gallup formation, part of the Mancos Shale, to a lateral length of 4,100 feet and at a cost of $4.3 million.

The well is located about 50 miles south of Bloomfield in Sandoval County.

At current oil prices, the well is producing more than $35,000 a day.   (Beats a government subsidy all to heck.  Peter)
The production is about 10 times what one would expect from a traditional vertical well in the Gallup formation, said John Byrom, president and CEO of D.J. Simmons Inc., a Farmington independent producer.

"I'd take it," Byrom said.

Steve Dunn, drilling and production manager at Merrion Oil & Gas in Farmington, said the results are "very encouraging."

Merrion also is active in the Mancos Shale, partnering with a larger company to drill four wells. Dunn said he cannot disclose the partner. Merrion plans to drill its wells in September, he said.