43
Oil and gas drilling prospects dim here, expert says
YOUNGSTOWN
If oil and natural-gas prices increase substantially, new well drilling likely will get a boost in Columbiana County, but the prospects aren’t good in Mahoning and Trumbull counties, an industry expert said.
“Right now, you’re really just looking at Belmont, Harrison, Monroe, and maybe a little bit of Noble County” as the focus of drilling activity, said Mike Chadsey, public-relations director for the Ohio Oil and Gas Association, a 3,000-member industry group.
“As the price shrunk, the geographic play shrunk; and, as price expands, the play will expand,” Chadsey said.
Chadsey was among about 65 people who attended a luncheon last week sponsored by the Youngstown/Warren Regional Chamber at Mill Creek MetroParks’ Fellows Riverside Gardens, which featured Ohio Department of Natural Resources officials as speakers.
If oil and gas prices rise, “There’ll probably be a little activity in Columbiana County, but everything that we have seen in Trumbull and Mahoning [counties] doesn’t look like the rock is there,” Chadsey said.
“This is all about what the rock will do – the Utica and maybe the Marcellus [shale]. It just doesn’t seem workable up here,” he said, citing BP’s decision to withdraw from Trumbull County production activities in 2014.
The production numbers reported by ODNR for 2014 and 2015 support Chadsey’s assertion.
In Columbiana County, natural-gas production soared from 21.3 billion cubic feet in 2014 to 37 billion cubic feet in 2015.
That county’s oil production rose from 172,388 barrels in 2014 to 214,412 barrels last year.
In Mahoning County, natural-gas production was a mere 4 billion cubic feet each year, and oil production slumped from 26,929 barrels in 2014 to 22,378 barrels last year.
Trumbull County’s natural-gas production fell from 1 billion cubic feet in 2014 to 628 million cubic feet in 2015, and oil production there plummeted from 40,668 barrels in 2014 to 10,871 barrels last year.
No new oil and gas wells were drilled last year in Mahoning or Trumbull counties, the trade association reported.
The industry needs an oil price between $75 and $80 per barrel to make expansion of drilling activity attractive, Chadsey said.
“Three dollars or $4 an mcf [1,000 cubic feet of natural gas] would make the Utica just very exciting again,” he added.
Drilling is expensive, with each horizontal well now costing a couple of million dollars to drill, he noted. Later, he augmented his statement to say the actual cost was upwards of $7 million.
Oil now ranges from $40 to $43 a barrel, and Chadsey said natural gas is now as low as $1 or less per mcf due to Ohio’s gas surplus and lack of large users.
The new $890 million Lordstown Energy Center, which will be a natural-gas-fueled power plant in the Lordstown Industrial Park, for which site preparation is now underway, will be a large natural-gas user, Chadsey said.
Chadsey said he expects Ohio’s oil and gas production will continue to increase “marginally” this year “as old wells become hooked up to the pipeline network.”
Ohio’s oil and gas production this year will depend on the markets for those commodities, said Rick Simmers, ODNR’s oil and gas division chief, who was a luncheon speaker here.
“I think we’re going to still see an increase, at least for the first two quarters, but it’ll be at a lower rate than it has been,” Simmers predicted.
“If the commodity prices remain low, then into the third and fourth quarters, I would guess that the production’s going to begin to decline, compared to wherever it peaks, but not dramatically,” he predicted.
Ohio’s oil production doubled from 10.9 million barrels in 2014 to 21.9 million barrels last year.
Its natural-gas production rose 110.6 percent from 452 billion cubic feet in 2014 to 953 billion cubic feet last year.