WHEELING, W.Va. –The Utica Shale formation may hold 782 trillion cubic feet of natural gas, but officials said that does not necessarily mean it will make economic sense to extract such an amount when the selling price is down by more than $1 per unit compared to this time last year.
In fact, shale driller Consol Energy is eliminating 290 jobs from its natural gas division, while citing the “depressed nature of commodity prices.” The firm long-known primarily as a coal producer also expects to report an operating loss for the second quarter of this year, which Consol spokesman Brian Aiello said the company also believes is due to lower prices.
“We are taking aggressive action so that Consol can continue to operate from a position of strength through the downturn and quickly capitalize on the up-cycle when it occurs,” he said.
Still, despite Consol’s struggles, West Virginia Oil and Natural Gas Association Executive Director Corky Demarco said the future remains bright.
“We get smarter every day about the opportunities that we have,” he said. “It is not necessarily about how much gas is there, as it is about the technology we have to get the gas.”
Demarco said drillers are now working in the Rogersville Shale. He said a test well drilled in Putnam County went about 14,000 feet deep, or about 2.6 miles, into the earth to reach the Rogersville.
However, this is not the final frontier for horizontal drilling and fracking in West Virginia, he said.
“We know there are formations as far deep as 30,000 feet that have gas in them,” he said of the distance equaling about 5.6 miles.
“Do we really know what the limit is now? Not yet,” Demarco added.
For some perspective, 1 Tcf is enough fuel to provide power to 243,150 homes for 100 years, according to estimates from Cabot Oil and Gas. While Demarco calls the 782 Tcf projection for the Utica “a legitimate number,” Shawn Bennett, senior vice president of the Ohio Oil and Gas Association, remains skeptical that such an amount is realistic.
“Those are not yet proven reserves. It is going to take a certain investment to produce those reserves,” he said of wells known to cost as much as $10 million each for drilling and fracking.
“Just because it is there does not mean it is economical to produce,” he added.
Natural gas prices remain low, especially in Ohio due to what Bennett describes as a lack of pipeline infrastructure needed to get the products to market.
According to the New York Mercantile Exchange, the selling price for a 1,000 cubic-foot-unit of natural gas now hovers around $2.90.
In July 2014, the price was about $4.
“Can you produce all that? Maybe, if prices go back up,” Bennett said.
Meanwhile, Denver-based Antero Resources, which fracks in both Ohio and West Virginia, plans to drill its first Mountain State Utica Shale well in Tyler County before October. The firm believes it controls about 1,900 undeveloped Utica locations that could ultimately yield as much as 16 Tcf.
“As we look ahead to the second half of 2015, we expect to see a slight decrease in production during the third quarter, but expect a ramp up in completions and production during the fourth quarter as we head into 2016,” Antero Chairman and CEO Paul Rady said.
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