Spanning more than 440,000 sq km (170,000 sq miles), the Utica shale has emerged as a major play among North American unconventional resources. With its sweet spot located in Ohio, the shale play extends into Pennsylvania, New York, Michigan, and West Virginia in the US as well as Quebec in Canada.

The Utica has three hydrocarbon windows, with light and black oil toward the west of Ohio, liquids-rich wet gas and condensate-rich source rock from northeastern Ohio to south-central Ohio, and dry gas through southeastern Ohio and into western Pennsylvania.

The US Geological Survey (USGS), in a recent report, estimates the Utica shale to contain 595 Bcm to 1.7 Tcm (21 Tcf to 61 Tcf) of undiscovered natural gas, 590 MMbbl to 1.39 Bbbl of undiscovered oil, and 4 MMbbl to 16 MMbbl of undiscovered NGL.

The Utica is stacked below much of the Marcellus shale in the Appalachian basin, which is the US’s “longest producing petroleum province,” according to the USGS. The shale play lies above and feeds the Point Pleasant formation, a carbonate made of interbedded limestone and calcareous shale that is more than 61 m (200 ft) thick. The play also feeds the Collingwood in Michigan and the Lorraine shale in Canada.

In the Utica’s core area, the play ranges in depth from 1,829 m to 2,438 m (6,000 ft to 8,000 ft) with a thickness of 24 m to 37 m (80 ft to 120 ft) and porosity between 6% and 12%. In outlying areas, the Utica’s depth varies from 152 m to 4,267 m (500 ft to 14,000 ft) with a thickness of 15 m to 152 m (50 ft to 500 ft) and porosity between 3% and 12%.

Early stages of development

The Ohio Department of Natural Resources (ODNR), in early estimates, approximated recoverable reserves to be 445 Bcm (15.7 Tcf) of natural gas and 5.5 Bbbl of oil. As of Oct. 12, the ODNR Division of Oil and Gas reported that 927 horizontal permits had been issued for the Utica and Point Pleasant plays, 577 horizontal wells had been drilled, and 164 horizontal wells were producing. “The presence, thickness, fracability, and source-rock richness of the Point Pleasant formation in Ohio are what make this state the center of this play,” the ODNR stated in a Utica/Point Pleasant presentation.

In Ohio, the play’s sweet spot comprises Noble, Monroe, Guernsey, Belmont, Jefferson, Harrison, Tuscarawas, Carroll, Stark, Columbiana, Mahoning, Portage, and Trumbull counties.

The Utica remains in the early stages of play development, with delineation of the northern and southern extents still taking place, according to the report, “Deep Dive into the Utica: Finally a Play Ohio Fans Can Cheer For,” by Baird Equity Research Energy. “The jury is still out on the economic potential of the broader Utica with lack of production data, infrastructure, and well results driving the uncertainty in our view,” the report stated.

Operators are focusing less on the western oil window of the play in favor of the core of the play’s wet gas window, which has proven less complex to derisk. “E&Ps have had the most success to date in the wet gas window, with wells coming on strong and with solid liquid cuts,” the report continued. “By our type curve, the wet gas window boasts a 27% internal rate of return and [US] $3.5 million per well at net present value. Key assumptions include $7.5 million well cost, 1,750 boe/d, 1 MMboe expected ultimate return, and 15%-35%- 50% oil-NGL-gas splits.”

Ramping up production

One of the state’s largest leaseholders, Chesapeake Energy Corp. reported in its October 2013 investor report that as Utica infrastructure expands, production in the play is accelerating. The company saw daily net production in the Utica of 2.4 MMcme/d (85 MMcfe/d) in 2Q 2013 and plans on targeting a year-end 2013 exit rate of 9.3 MMcme/d (330 MMcfe/d) in the play. The company’s average peak daily rate of 42 wells that commenced first production during 2Q 2013 was approximately 170Mcme/d (6.6 MMcfe/d).

The company has drilled 321 wells in the Utica play, including 106 producing wells, 93 that are waiting on pipeline, and 122 wells in various stages of completion. Chesapeake is projecting estimated ultimate recoveries of 142 MMcme to 283 MMcme (5 Bcfe to 10 Bcfe) in the wet gas window and is currently operating nine rigs in the play.

Jeff Mobley, Chesapeake’s senior vice president of investor relations and research, discussed Ohio’s Utica shale during the Deutsche Bank Leveraged Finance Conference, according to a transcript of the event by Seeking Alpha. “Utica is an emerging play for us. We are extremely pleased with our opportunity set here as we start to ramp up production now that the infrastructure has been put in place. We’ve largely been responsible for about 70% of the drilling in the play to date. We’ve drilled more than 300 wells. I think it’s north; it’s approaching 350 wells to date, and just over 100 wells are in production, most of those at restricted rates.”

As the processing capacity gets put in place, Chesapeake plans on being able to ramp up production through the end of the year. Mobley noted a fire at Blue Racer’s project at Natrium, which could temporarily inhibit those plans for increased production. “But we are really pleased with the quality of the assets here and are looking forward to ramping up as the processing gets online and the well gets to really produce at its fully capable rates,” he said.

Targeting the liquids-rich window

Another major operator in the area, Gulfport Energy Corp., is targeting acreage within the wet gas/retrograde condensate and mature oil windows of the play and currently has approximately 136,000 gross acres under lease in the Utica, according to the company’s website. Gulf-port recently reported successful completion at three wells in Harrison County, Ohio. In the Canton Consolidated field, the #3-4H Clay well averaged 71 Mcm (2.5 MMcf) of gas, 392 bbl of condensate, and 323 bbl of NGL per day. The #3-27H Lyon well, also in Canton Consolidated, had an average seven-day sales rate of 57 Mcm (2 MMcf) of gas, 477 bbl of condensate, and 274 bbl of NGL. In the Fork South field, the #3-28H Wagner had an average seven-day sales rate of 275 Mcm (9.7 MMcf) of gas, 214 bbl of condensate, and 1,067 bbl of NGL.

The company also recently announced results from two horizontal Utica shale wells in Belmont County. The first, the #1-28H McCort, averaged 272 Mcm/d (9.6 MMcf/d) of gas, and the second well, the #2-28H McCort, had a sales rate of 328 Mcm (11.6 MMcf) of gas and 21 bbl of condensate per day.

Magnum Hunter Resources holds 80,000 net acres prospective in the Utica shale. According to the company’s September investor presentation, acreage owned by Magnum Hunter exhibits good thickness and is highly prospective, with a large portion of the acreage in the wet gas and condensate window. In April the company spudded its first Utica horizontal well on the Farley pad – designed to handle four horizontal wells – in Washington County. The company cased the well in September, and fracturing operations are ongoing. Alpha Hunter took possession of a new state-of-the-art robotic drilling rig in May and plans to drill 16 to 18 wells on the Stalder pad during the next 18 months, with the first well spudded in July.

Rex Energy recently announced the successful results of its Ohio Utica shale wells on the Warrior North prospect in Carroll County. The company’s G. Graham 1H well produced at a five-day sales rate of 1,710 boe/d (41% NGL, 30% gas, and 29% condensate) and averaged a 30-day sales rate of 1,256 boe/d, as reported by Rex Energy in a June press release.

“We are pleased with the results of the G. Graham 1H, our second announced well in our Warrior North prospect,” Tom Stabley, Rex Energy’s CEO, said in the release. “It is our belief that the initial sales from the G. Graham 1H are among the best results in Carroll County to date. With more than 110 additional locations on our approximately 16,000 net acres in Carroll County, we believe this result further demonstrates the potential value of our acreage position in our Warrior North prospect.” The company also placed three wells into sales in the Warrior South prospect and is currently drilling the fourth well of the five-well J. Anderson pad.