Utica offers challenges, opportunities

There are at least two potential gas shale plays in the northeastern US states, with one of them extending into Canada. Most people are familiar with the Devonian Marcellus Shale play, but the lesser-known play is the Ordovician Utica, which takes its name from the city of Utica, in upstate New York, where it outcrops.

The Utica Shale occurs in outcrops in New York and in the subsurface in the provinces of Quebec and Ontario in Canada. It is also found in the states of Pennsylvania, West Virginia, and Ohio. The shale reaches a thickness of up to 1,000 feet and is as thin as 70 feet on the margins.

Estimates are that the Utica Shale may contain more than 20 trillion cubic feet of natural gas — not as much as the Marcellus Shale, but still an impressive amount. Since most of Canada's natural gas traditionally comes from the province of Alberta and other western provinces, the Utica has the potential of redrawing that country's energy map.

One Canadian oil and gas executive said this about the Utica Shale: "The Utica best compares to the highly successful Barnett Shale in Texas. Initial estimates show the total recoverable potential of the Utica Shale in Quebec could be as high as 25 tcf, with an estimated 93 bcf of original gas in place per square mile. A recovery factor of 15% would yield 14 bcf recoverable gas per square mile."

There have been numerous vertical wells drilled into the Utica Shale over the years, stretching as far back as the 1800s, although none were very productive. Several energy companies hope to change that as they deploy new technology utilizing multi-stage hydraulic fracturing and horizontal drilling techniques.

Challenges in the Utica Shale

The Utica Shale has a much higher carbonate content than the Marcellus Shale and a lower clay mineral content. This difference in mineralogy produces a very different response to hydraulic fracturing treatments. The methods used in the Marcellus do not produce as much fracturing in the Utica. However, fracturing rates might be improved with new techniques as more information is gathered.

Two major challenges for developing the Utica Shale are its significant depth and a lack of information. In areas where the Marcellus Shale is present, the Utica Shale is probably going to be a resource for the distant future. The Marcellus is less expensive to develop, and companies will focus on it before setting their sights on a deeper target with an uncertain payout. However, in areas where the Marcellus has been developed, the Utica will have an infrastructure advantage. Drilling pads, roadways, pipelines, gathering systems, surveying work, permit preparation data, and landowner relationships may still be useful for developing the Utica.

New activity

Questerre Energy, a Calgary-based company, reports that it has produced 12 MMcfd from one well less than 50 miles southwest of Quebec City. Other players currently operating in the Utica Shale include Gastem, Canbriam Energy, Forest Oil, Talisman Energy, and Quantum. Of these, Gastem has announced plans to drill into the Utica across the border in New York. Talisman and Questerre have begun horizontal drilling in the St. Lawrence Lowlands in Quebec. Forest Oil has been doing extensive drilling and testing, mostly in the St. Lawrence Lowlands and the Gaspe Peninsula in Quebec. Oklahoma City-based Chesapeake Energy is rumored to be acquiring acreage in the Utica Shale, according to Jefferies & Co.

Another company operating in the Utica Shale is Consol Energy, which recently drilled into the Utica Shale near St. Clairsville. Consol, better known as a coal mining company, has more than 70,000 acres planned for natural gas development in and around Belmont County.

Last year, Consol acquired the assets of Dominion Resources Inc., including their positions in the Marcellus and Utica Shale plays, for $3.5 billion.

"While most of our delineation efforts are focused on the Marcellus Shale, our vast acreage holdings include other zones that warrant testing, including the Utica Shale," said Consol Energy chairman and CEO J. Brett Harvey. "As a result of this discovery, we will shift some of our exploration capital to this shale in 2011."

With all the attention being given to the Marcellus Shale, the Utica Shale play has been hovering under the radar. This subsurface formation generally lies under the Marcellus and overlapping it at some points.

More recently, Consol announced it would reduce its shale gas drilling in 2011 due to sustained low prices. The company said it would reduce its planned build-up of its horizontal rig fleet in the Marcellus from an average of five rigs to an average of "just under four rigs."

A Consol spokesman said, "Our major objective in 2011 continues to be the delineation of our Marcellus acreage in central Pennsylvania and northern West Virginia. We also plan to drill a modest number of exploration wells in the Utica Shale."

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