When the Ohio Department of Natural Resources released the average production numbers for the last quarter of the year on Wednesday, the data did not reflect the expected slowdown in exploration. However, analysts say that the report does not paint an accurate picture of the state of the industry because it includes months of output that occurred before the most drastic cuts began to take place.
According to the report, there has been a 200 per cent increase in oil production and a 350 per cent increase in gas production in the state. Oil production from 779 horizontal Utica wells increased by more than 545,000 barrels, up 18.1 per cent, and natural gas jumped by more than 33 billion cubic feet, or 25.6 per cent, compared to the third quarter of 2014.
The new report lists 828 wells, 779 of which reported production, with the average oil production 4,568 barrels and the average gas production of 211 million cubic feet.
The top producers in oil were, in order: Chesapeake Energy, Antero Resources and Gulfport. In gas, the order was Chesapeake, Gulfport and Antero, with Aubrey McClendon’s American Energy Partners closely following in both categories.
This abundant production from the state’s shale plays has already affected natural gas prices in the state. Despite some record cold temperatures in Ohio, Columbia Gas’ Standard Choice Offer for March will be 43 cents per 100 cubic feet, or 18 cents less than a year ago. That is nearly 30 percent lower.
The natural gas supply is 42 percent more than a year ago and it is outpacing demand, said Chris Kozak, communications and community relations manager for Columbia Gas.
Having said that, despite the impressive production numbers, many analysts believe that low oil and gas prices will soon be reflected in the fall in production levels.
“Those numbers don’t tell the full story about the effect of the drop in commodity prices,” Matt Warnock, an oil-and-gas attorney for Bricker & Eckler in Columbus told The Columbus Dispatch. “I’ve seen rig count dropping. I’ve seen some companies exiting Ohio for a little while and focusing elsewhere.”
Shawn Bennett, executive vice president of the Ohio Oil and Gas Association, agrees with Mr Warnock.
“When you start hearing the chatter of things (that are) really impacting the industry and capital budget cuts, that didn’t really happen until mid-December,” he said.
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