Category: Gold News
Ohio oil producers hit gusher as production surges
When the energy boom took off in eastern Ohio, the general thought was that the Utica shale was an area primarily rich in natural gas.
Now oil production is also starting to surge.
Oil production in Ohio hit a record 27.8 million barrels in 2023, up 41% from 2022, according to researchers at the Levin College of Public Affairs and Education at Cleveland State University who have tracked production since 2011. In December alone, eastern Ohio oil wells pumped 93,000 barrels of crude, up one third from December 2022, according to federal data.
Ohio has become one of the top 10 oil producers in the country. It already was one of the biggest producers of natural gas.
“We always thought it was a gas play,” said Mike Chadsey, spokesman for the Ohio Oil & Gas Association. “Now it may very well become an oil play.’’
Utica shale investment tops $100 billion
It’s been more than a decade since drilling took off in eastern Ohio, driven by a controversial technique known as hydraulic fracturing, or “fracking” that environmentalists have criticized.
The number of producing oil and gas wells in Ohio now tops 3,100, according to the Cleveland State researchers. Investment has been estimated at least at $105 billion.
Most of the money has been spent on drilling while the rest has been spent on such things as pipelines, transportation, storage, processing and natural gas-fired power plants.
Production has been concentrated in 18 eastern counties, but it has been the strongest in a handful of counties near the Ohio River − Belmont, Harrison, Jefferson, Monroe, Carroll, Guernsey, Columbiana and Noble, according to Cleveland State’s reporting.
Even with the surge of oil production, the Utica continues to be a region dominated by natural gas, where 2.2 trillion cubic feet of gas was produced last year.
Crude made up about 7% of the state’s energy production last year, the researchers said.
What is driving oil growth?
Price and technology are key factors why more oil is being produced in Ohio.
Higher oil prices are making investments in the region profitable with oil prices climbing above $80 a barrel recently. Meanwhile, the warm winter hurt demand for natural gas and has been a drag on prices.
Natural gas produced in the Utica also trades at a discount because it’s hard to transport it from the region to market.
“Oil is more appealing,” said Mark Henning, research supervisor at the Energy Policy Center at the Levin School. “There’s a greater return on capital.”
Meanwhile, improved technology is allowing companies to access areas that in the past may have not been seen as productive as they are today, said Andrew Thomas, executive in residence at the Levin College.
“They can produce in places where they couldn’t produce 15 years ago with the technology they’ve developed,” he said.
The biggest jumps in oil productions are in Carroll and Guernsey counties. Jefferson, Belmont and Columbiana counties have also seen strong gains.
Carroll County had the most oil production last year in Ohio with 9.7 million barrels, Henning said. Guernsey County was second with 9.3 million barrels and Harrison County was third at 6.5 million barrels.
“There’s a lot more oil in Carroll than originally thought,” Thomas said.
Oil company EOG Resources, a newer company in the region, has told investors that it has accumulated leases on about 430,000 acres in the region.
“Now, just a reminder to the group, we’re investing at a $40 oil price,” EOG President Billy Helms said at a conference in January. “So we’re very comfortable with our investments and being able to generate the returns we’re wanting. And in today’s prices (about $81 a barrel Wednesday), those are monstrous returns. And that’s gone to help improve the financial performance of the company. So overall, that’s kind of how we think about it.”
EOG produced 1.3 million barrels of oil in 2023 in Ohio, with the highest producing wells in Harrison and Carroll counties, Henning said.
Encino Energy, Ascent Resources, Gulfport Energy, Rice Drilling, Southwestern Energy and Antero Resources account for 91% of the oil and gas production in the Utica in 2023, according to Cleveland State.
How long will it last?
Production of oil and gas in the Utica is still in the early stages and could go on for decades, Thomas said.
Even areas where oil and gas companies have fracked can in theory be fracked again to reach additional supplies of oil and gas, he said.
“We really haven’t developed the oil part yet,” he said.
EOG’s Helms said the company continues to be excited about the results the wells are getting.
“As a company, we’ve collected a lot of technology and a lot of data, the ability to analyze wells in the past and the future, apply EOG’s technology to those productive metrics … and to understand what’s the uplift we could get from applying those new technologies and these new plays,” he said at the conference.
“And the Utica is a textbook example where we took a look at some of the older wells in that play, analyzed it with our approach, and determined what the uplift could be.”
mawilliams@dispatch.com
@BizMarkWilliams
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