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Hess racks up well permits in Ohio but has no plans to start drilling soon

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Hess racks up well permits in Ohio but has no plans to start drilling soon

After a year of little activity in Ohio's Utica Shale, independent driller Hess Corp. was granted 10 well permits in July, all in Harrison County, the most permits of any operator in the state, according to data from the Ohio Department of Natural Resources. But the company has no plans to bring a rig back to Ohio in 2017, a spokeswoman said.

Hess permitted five Utica wells for all of 2016 and 13 wells in 2015, according to the department, but for the past year, executives have consistently said the company was waiting for gas and liquids prices to improve before it moves drilling beyond the need to hold leases by production.

Hess has 90 Utica permits, according to Department of Natural Resources data. "Those were permits we renewed to maintain the flexibility to resume drilling when market conditions improve," Hess spokeswoman Lorrie Hecker said Aug. 8. "We released the Hess-operated rig in the Utica in March 2016 and have no plans to resume drilling in 2017."

"Obviously, we are watching the margins change and the gas prices go higher. There are no plans for us right now to bring any rigs back into the Utica in 2017," President of Worldwide Exploration and Production Gregory Hill said on Hess' April 26 first-quarter earnings call. "Obviously, as those trends improve, we'll begin to evaluate: Do we bring our rig back in the Utica?"

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Hess did not mention any Utica Shale activity when it announced estimated second-quarter results July 26.

The company may be missing a parade of other drillers in returning to the Utica just ahead of the planned opening dates for new pipelines out of Appalachia, in particular, Energy Transfer Partners LP's 3.25-Bcf/d Rover Pipeline LLC.

All of Hess' new July permits are in the central-eastern county of Harrison, long an area of effort for Chesapeake Energy Corp., which added two permits in July in Harrison County. Tiny Rex Energy Corp. was another big mover in the shale in July, permitting seven wells in Carroll County, the county where Utica production first took off under pioneer driller Chesapeake. Chesapeake holds the most Utica permits, 849.

Carroll and Harrison counties are both in the wet gas window of the shale, but interest in the dry gas window as represented by Belmont and Monroe counties remained. Ohio issued 17 permits between those two counties in July.

Gulfport Energy Corp., a frequent leader in new permits, added nine permits to bring it to 377 permits in the shale.