14 Sep

Why Utica Shale’s Natural Gas Production Rose 28% in One Year

WRITTEN BY Alex Chamberlin FEATURED IN Macroeconomic Analysis

Utica Shale natural gas production

According to the EIA (US Energy Information Administration), the Utica Shale in eastern Ohio has become one of the fastest-growing natural gas-producing regions in the United States.

In its Drilling Productivity Report released on September 12, 2016, the EIA estimated that Utica Shale natural gas production reached ~3.6 Bcf (billion cubic feet) per day in August 2016. That’s nearly unchanged from production in July 2016, but it’s 28% higher than production in August 2015. In the past eight years, natural gas production at the Utica Shale has increased by more than 20 times.

Why Utica Shale’s Natural Gas Production Rose 28% in One Year

Rigs and monthly additions from the average rig

According to Baker Hughes (BHI), the Utica Shale had 14 active rigs in August—two more than in July 2016. By comparison, 19 rigs were in operation in the shale in August 2015.

From August 2008 to August 2016, additional natural gas production per rig at the Utica Shale rose from ~0.22 MMcf (million cubic feet) per day to ~7.7 MMcf per day, or by ~34x. In the 12 months leading up to August 2016, the natural gas production addition per rig rose 28%.

Utica Shale energy operators

Steady Utica Shale natural gas production can positively affect oilfield equipment and service providers such as RPC, Inc. (RES) and Precision Drilling (PDS) as well as contract drillers such as Patterson-UTI Energy (PTEN) and Nabors Industries (NBR). These companies continue to improve revenues and profits from operating in the Utica Shale if drilling activity rises. NBR accounts for 2.3% of the iShares US Oil Equipment & Services ETF (IEZ).

In the next part of this series, we’ll look at production at the Haynesville Shale.

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