Ohio Utica well permits slow pace from March

Permits to drill wells in the Utica shale in Ohio fell in April to 23, dropping by nearly half from the 43 permits issued the month prior, according to data from the Ohio Department of Natural Resources.

The number of permits issued in May rose by one from April, which had the lowest monthly count since only 16 permits were issued in February. Permits in May were 43pc lower than the year-earlier level of 42.

The number of applications processed each month can vary widely on multiple factors including demand, gas prices and weather. Permits issued per month in 2017 ranged from 25 to as many as 58.

Spot natural gas prices at Dominion Transmission South in April averaged $2.40/mmBtu, down by 11pc from April 2017, amid higher production rates this year. The index fell further in May, averaging at about $2.20/mmBtu, 19pc lower than a year earlier.

But Argus natural gas forward prices for Dominion South in July 2018 are averaging at $2.37/mmBtu, compared with the July 2017 spot price average of $1.99/mmBtu, suggesting expectations of higher summertime demand this year and market concerns on the potential for supply tightness amid lower-than-average storage inventories.

Output in the Appalachian region rose in April to about 27.4 Bcf/d (776mn m³/d), 19pc higher than a year earlier, according to the US Energy Information Administration (EIA). The state of Ohio in March produced 6.2 Bcf/d, up by about 1pc from the prior month and up by 45pc from March 2017, according to EIA data.