WHEELING, W.Va. — West Virginia’s oil and natural gas production dropped from March 2015 to March of this year at the same time production expanded in Ohio, U.S. Energy Information Administration numbers indicate.
West Virginia Oil and Natural Gas Association Executive Director Corky DeMarco does not seem too concerned, however.
He said Mountain State drillers pumped 1.3 trillion cubic feet of natural gas and 8.2 million barrels of oil in 2015. These numbers easily outpace the 257 billion cubic feet of natural gas and 1.5 million barrels of oil drawn from the state in 2009.
“We produced more than three times the amount of gas and oil in 2015 compared to 2009. I think the overall trends are upward when we grow that much in six years,” DeMarco said. “It may go up or down in short periods of time based on prices and activity. But, in the big picture, we have a great thing going here.”
Administration data show West Virginia produced 21,000 barrels of oil per day in March, which is down from 30,000 per day in March 2015. Natural gas production also dipped slightly from 3.65 Bcf per day last year to 3.63 Bcf each day this year.
“If there is a decline, it is because a lot of the conventional production is dropping off,” DeMarco said of wells drilled with traditional vertical methods and no fracking. “The wells drilled since 2011 should still be producing at a pretty strong clip.”
In Ohio, EIA data show drillers pumped an average of 72,000 barrels of oil and 3.89 Bcf of natural gas per day in March. These numbers exceed those levels from the previous March of 69,000 barrels of oil and 2.24 Bcf per day.
“I think you will see the production flatten out,” Ohio Oil and Gas Association Senior Vice President Shawn Bennett said. “On the other hand, this is still a very immature play. And there are some phenomenal wells out there.”
DeMarco, Bennett and Tim Greene, owner of Land and Mineral Management of Appalachia, believe production for the entire Marcellus and Utica region should increase significantly once some of the six interstate pipelines under Federal Energy Regulatory Commission review enter service. These include the Rover Pipeline, Nexus Pipeline, Leach XPress, Mountaineer XPress, Mountain Valley Pipeline and the Atlantic Coast Pipeline.
Greene said the lack of pipeline infrastructure continues to depress prices for Marcellus and Utica natural gas even below the already relatively low New York Mercantile Exchange prices, which were about $2.40 per Mcf, or 1,000 cubic-foot unit, Friday.
“The NYMEX price is a starting price. There is no reason to sell gas at 71 cents for an Mcf,” Greene said of the value he believes some companies are getting for natural gas due to the pipeline problems. “If I’m a mineral owner, I would probably rather the company keep the gas in the ground at that price. Come back when you can get more out of it.”
“Pipelines are a long process that involves a lot of red tape and a lot of community outreach,” Bennett said. “It’s something we just have to deal with until the prices come back.”
Also Friday, the active rig count from oilfield services giant Baker Hughes indicated there are now only 10 rigs working in West Virginia, along with 11 in Ohio. These numbers are down from 20 active rigs in each state at this time last year, as the level of drilling has fallen as commodity prices have tumbled.
Still, industry leaders believe the long-term future for the industry is bright.
“A year ago, people were crying. Six months ago, they were ready to jump off a building. Now, they know it’s not that bad,” Greene said. “And if oil goes back up around $120 (per barrel) or so, they’ll be drilling holes in the ground anywhere they can.”