I read a Nov. 2012 Hart Energy study on the Utica Shale which I found to be the most informative article I have read. I found it on the "Go Marcellus" website, Mercer County, posted by Berk in January. It is proprietary and locked for copying.
The points that I got out of it: The wet gas/liquids window band travels from southern Ohio north into Trumbell then on into Mercer County PA and NE into western Warren County to the NY State line. The band is not super wide but in terms of acreage it is huge. It is also rather complex and changes in geology from South to Northeast. The South endzone has not been defined as yet and results of wells have been surpassing what was expected. As you enter into PA the Point Pleasant thins out but the Utica thickens, the toc increases and the permeability of the Utica increases which increases its frackability. What one has to appreciate is that in Ohio they are using a surrogate the point pleasant to get to the Utica. The Industry realizes that they are not coming close to getting out of the Utica portion of their strata what it has to offer. Therefore the study says that in the future companies will continue to explore other ways to get more out of the Utica. Some companies are going to start to target the Trenton/Black River. Going into PA companies are targeting the Utica. Most of the drilling is being done by majors or private companies so there is not a whole lot of public information. Like Ohio now there is little infrastructure in place to rely on any well reporting to judge the results.
To the West along side the wet gas/liquids window lies a band of volatile oil. The band is about the size of the gas/liquids window. It travels north then east all the way to the NY line. This is the band the companies are targeting for oil. It is far from derisked, but there have been some very good wells. The oil is relatively light and the pressure is good. The numbers potential for oil from this band are huge. Further west and north of this band as it travels NE, the oil is thick and the rock pressure trails off. This is where the dry holes are coming from.
I got a number of things out of this study. Number one the field is huge but it is a long way from being optomized. The optomization will come through better engineering applications. Geologists are optimistic for the whole play. On this one play I am most interested in what is happening in NW PA. Shell has built around 8 huge locations and have permitted 6 to 10 wells a location. They are drilling with a triple now. Besides the Utica they are permitting the Rhinestreet and Geneseo. The second thing is the change in leasing interest. I have seen companies suddenly loose interest in area like NE Ohio and walk away from leases. The whole leasing thing has me puzzled. Last fall a number of companies quit being so aggressive to lease properties. Is it because they already have a full plate or have learned more about the geology?
Since you and chx are the most hands on in the field, how do you feel MWE is situated. Is it overbuilt or still underbuilt as far as areas that are presently positive. Thanks for your work. I am extremely market oriented but know potential is always what keeps prices going north.
The lack of mid stream is slowing the Utica down bigtime. My concern is a price drop in liquids such as what happened with dry gas. I just hope MWE is doing a number of spreadsheet analysis checking out their cashflow based on various pricing levels.
The only way out of this is to continue to push market expansion. Up till a couple of years ago I used to get a summer discount on my propane. It stopped and I inquired why. It appears the Texas terminal that ships huge amount of NGL's worldwide found a huge unfilled market for propane in South America.
I have confidence in MWE's management. I am still buying at times. From what I can figure out they have some good contracts but this won't help them if the producers cannot sell the goods.