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Ohio Utica drilling permits rise in September

13 Oct 2017, 5.18 pm GMT

Ohio Utica drilling permits rise in September

Houston, 13 October (Argus) — Permits to drill wells in the Utica shale in Ohio rose in September to 48 after a slight drop in the month prior, according to data from the Ohio Department of Natural Resources.

Permits in September rose by 50pc on the month, reaching 78pc higher than their year-earlier level amid a recovery this year in natural gas prices. In August permits were issued for 32 wells, down by nearly 16pc from July and down by nearly 47pc from the 17-month high set in March.

The number of applications processed each month varies, ranging from 10 to 41 in 2016. But application numbers have remained higher than 25/month after Nymex prices reached a 22-month high near $3.34/mmBtu in October 2016.

Spot prices near the Utica have maintained levels higher than the year earlier for most of this year amid rising exports to Mexico and higher summertime cooling demand. Spot natural gas prices at Dominion Transmission South averaged at $1.26/mmBtu in September, up by 21pc from $1.04/mmBtu in September 2016. August prices at Dominion South averaged about $1.70/mmBtu, up by 31pc from the year earlier level.

Argus natural gas forward prices for Dominion South in November are averaging $2.06/mmBtu, compared with the November 2016 spot price average of $1.92/mmBtu, suggesting that market tightness is likely lessening amid higher output levels, but could still continue into the coming months.

Gas production from the Utica shale in August topped 4.74 Bcf/d (134mn m³/d), up by 14pc from the levels produced a year earlier, and should rise to 4.88 Bcf/d in September, according to an estimate from the US Energy Information Administration (EIA). Utica output is expected to increase again next month to 5.03 Bcf/d, the EIA said.

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