The exploration and production industry moved forward on the development of the Utica Shale during the first quarter of 2011 with some operators aggressively leasing acreage and others waiting for others to prove up the resources in this emerging play.
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The Utica Shale is a formation that underlies many of the same areas as the Marcellus Shale, and is present in Pennsylvania and Ohio, as well as eastern Canada. The Utica Shale is also deeper and thicker than the Marcellus Shale and the potential of the formation is unknown.
A recent study by the Ohio Department of Natural Resources tried to come up with an approximation of the recoverable resources from the Utica Shale and estimated that the formation might hold from 1.96 to 8.2 billion barrels of oil equivalent just from the Ohio area.
CONSOL Energy (NYSE:CNX) is working on the Utica Shale and plans to drill six vertical wells at a cost of $35 million in 2011 on leasehold in Ohio. The company reported its first Utica Shale well in October 2010 in Belmont County.
Chesapeake Energy (NYSE:CHK) is also involved in this emerging play, and the company has assembled a 1.2 million acre position across Pennsylvania and Ohio.
Chesapeake Energy has drilled nine wells into the Utica Shale and plans to have six operated rigs working here by the end of the third quarter of 2011. The company is also looking for a joint venture partner to help share the cost and risk of the development of the Utica Shale.
Chesapeake Energy is counting on wells in the Utica Shale to produce liquids along with natural gas, but since the play is at such an early stage of development, the company would not give an estimate of the liquids potential of the shale.
Rex Energy (Nasdaq:REXX) is developing the Marcellus Shale on its acreage in the Appalachian Basin in Pennsylvania and plans to drill its first Utica Shale test well in July 2011.
Range Resources (NYSE:RRC) also has exposure to the Utica Shale and drilled a successful horizontal well to test the shale. The well produced 4.4 million cubic feet of natural gas equivalents per day during the first seven days of production.
Range Resources said that the Utica Shale becomes shallower and less productive as it moves west and the company expects the play to have a well defined dry gas, oil, and wet gas area to exploit.
Range Resources is moving slowly in the Utica Shale as its acreage is held by production through drilling into the Marcellus Shale. The company plans a second well in late 2011 and a third well in early 2012.
Other companies are waiting to develop the Utica Shale. EQT Corporation (NYSE:EQT) drilled an exploratory well into the Utica Shale in 2008 and took an impairment charge related to this well after converting it into a Marcellus Shale well.
The Utica Shale has an unknown potential but has attracted the attention of many exploration and production companies. Some are aggressively moving into this area while others are watching and hoping that others will prove up these resources. (For more related reading, also take a look at Exploring The Utica Shale.)
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