Permits to drill wells in Ohio's Utica shale rose in July to 38 after a steep fall in the month prior, according to data from the Ohio Department of Natural Resources.
Permits for 32 wells were issued in June, down by nearly a third from 46 permits in May and down by 46pc from the 17-month high set in March. Permits in July then rose slightly on the month, reaching 65pc higher than their year-earlier level amid higher prices for natural gas.
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 in recent months on low supply. Rising exports to Mexico and relatively higher cooling demand this summer have supported prices and prompted producers to ramp up drilling. A scarcity of skilled hydraulic fracturing crews added to market tightness in Appalachia earlier this summer.
Spot natural gas prices at Dominion Transmission South averaged $1.99/mmBtu in July, up by 42pc from $1.41/mmBtu in July 2016. June prices at the index averaged at $1.93/mmBtu, up by 13pc from a year earlier.
Argus natural gas forward prices for Dominion South in September are averaging at $1.89/mmBtu, compared with the September 2016 spot price average of $1.04/mmBtu, suggesting that market tightness could continue in coming months.
Gas production from the Utica shale in July topped 4.42 Bcf/d (125mn m³/d), up by nearly a fifth from the levels produced a year earlier, and should rise to 4.55 Bcf/d in August, according to an estimate from the US Energy Information Administration (EIA). July production was up by 2pc from June. Utica output is expected to increase again next month to nearly 4.69 Bcf/d, the EIA said.
