Operators Continue to Increase Investment in the Utica Shale
Companies investing and developing the Utica Shale continue to expand operational allocations as production ramps up. While 2013 was known as the year of the midstream, companies are now focused on developing this promising resource as some of the midstream constraints are removed. Announcements by companies like Chesapeake, Hess, XTO and Antero all suggest that 2014 is going to be a big year for the Utica Shale.
Chesapeake Energy is the clear leader in the Utica with over 50 percent of the permitted sites in the Utica. Fifteen percent of its 2014 budget focused on the development of the Utica Shale, and they are excited to see production increases in the new year. In a recent earnings call, CEO Doug Lawler noted:
“We see a very strong ramp in the production in Utica in 2014 as infrastructure and compression processing comes available to us, and we’re very excited.”
This excitement is not confined to Chesapeake. As Hess looks to 2014, the company is ramping up its presence in Ohio. Hess has allocated $2.85 billion in 2014 toward developing its shale resources across the nation, with 10 percent, $ 550 million, of that budget dedicated to developing 35 wells in the liquids-rich portion of the Utica Shale.
Antero Resources continues to place a major focus on the Utica Shale as well. For 2014, Antero plans to run four rigs and develop 49 wells in both Noble and Monroe Counties. Also in Monroe County, XTO, a subsidiary of Exxon, is pleased with its first well developed in the Utica. XTO Energy President Randy Cleveland said:
“We just initiated development in the Utica and are encouraged by results from our initial well that is producing at a peak 30-day rate of about 15 million cubic feet of dry gas per day.”
These investments aren’t going unnoticed by the local communities, either. Monroe County is experiencing a growth in sales tax and fees collected by the recorder’s office, which is boosting general revenue funds for the county. Monroe County Auditor Pandora Neuhart is particularly excited about the increased development:
“The oil and gas is a real shot in the arm for us, right now, we are seeing an increase in sales tax because people are buying stuff. It will probably be about two years before we really see money coming in from the oil and gas because that is when they will have the pipelines ready.”
Michael Silva, president of the Cadiz Community Improvement Corp., is also seeing the tremendous benefits shale development is bringing to Harrison County. In a recent letter to the editor discussing the positive impact shale development is having on the county, Mr. Silva shared some very compelling facts:
“There is no doubt that shale development is providing good-paying jobs to local residents. This much is evident as total county tax receipts have reached almost $4.7 million in 2013, compared with not quite $1.4 million in 2010. In addition, income-tax collections in the village of Cadiz have increased from $788,000 in 2012 to nearly $1.2 million in 2013.”
These investments each year by companies like Chesapeake, Hess, XTO and Antero have a direct correlation with the growth of the economy in eastern Ohio. These companies developing wells in Ohio are providing jobs for our residents and creating more revenue for our local governments. As we continue to see more development as well as infrastructure constraints removed, these benefits will continue to accrue, making eastern Ohio’s economies remain strong for years to come.