Although Ohio's shale oil and gas production was up 15% year over year to 7.1 Bcfe/d in the first quarter, cost-conscious producers that are under pressure from skittish investors to control spending ratcheted down their activity significantly, new data from the state's Department of Natural Resources shows.
Compared to the fourth quarter of 2018, Ohio's shale oil and gas production slipped 1.4%, according to the quarterly report released May 31.
Ohio's top producer, privately held Ascent Resources, paused its output growth and held production at 2.15 Bcfe/d, essentially the same as it reported in the fourth quarter of 2018 but a 68% increase over the first quarter of 2018.
All of Ohio's top five producers, public and private, reported decreases in production volumes in the first quarter compared to the prior quarter, but that lull may not last as permits for new wells doubled in April when compared to 2018.
How much effect slumping spring prices will have on production is unclear, but at least one analyst would like to see shale gas producers idle more rigs and let commodity prices rise in the face of stagnant supply volumes.
"In our view, a cut by our coverage could help stave off further declines in the commodity; however, the pragmatic investor in us suggests that the market's invisible hand will likely need to guide gas prices toward $2.25/Mcf to send a flashing signal to slow down," analysts at energy investment bank Tudor Pickering Holt & Co. told their clients June 4. "If the Northeast and Haynesville went [without] growth, we see a pathway to a more stabilized commodity price."
Prices at the benchmark Henry Hub in Louisiana were $2.54/MMBtu at the close of June 3's gas trading day but were $2.195/MMBtu at Ohio's Lebanon hub, according to S&P Global Market Intelligence data.
The state's first-quarter data also showed producers' increasing focus on the more liquids-rich window of the Utica in counties farther west from the Ohio River. First-quarter oil and gas production in Guernsey County more than doubled year over year, and production from Guernsey County wells was nearly 46% crude oil. By comparison, Belmont County wells, in the dry gas window, reported less than 1% of production as crude oil. Ohio does not require separate reporting of NGL volumes. Those volumes are included in the natural gas figures.
Article graphic amended Sept. 11, 2019, to better reflect production volumes at Encino Energy LLC following its acquisition of Chesapeake Energy's Utica Shale assets in October 2018.