Ohio gas and oil production stand out nationally, for now

The Columbus Dispatch  •  Friday February 19, 2016
Dan Gearino
Despite low prices, Ohio natural gas and oil production is projected to continue rising next month at the same time that it is falling almost everywhere else in the country.

The monthly report from the Energy Information Administration might look like an encouraging sign for Ohio, but industry leaders do not see it that way.

“The Utica was really the last shale play to be developed before the crash, so it’s the last one to slow down,” said Shawn Bennett, executive vice president of the Ohio Oil and Gas Association.

A key factor is the high productivity of energy production in the state, which can cancel out other factors that are reducing output, said Juan Pablo Fuentes, an economist for Moody’s Analytics.

“That’s a region where productivity is still growing at a relatively fast pace,” he said.

Oil prices collapsed in late 2014 and have remained low, the result of a robust supply and slow-growing demand. Natural gas prices also are unusually low.

The Utica and Marcellus shale plays are in the eastern parts of Ohio, and in neighboring states. The federal energy office counts the Ohio portions of two plays together as the “Utica region” in its monthly report.

The report is forecasting March production in the Utica of 78,454 barrels of oil per day, up from 78,230 in February, and 3.28 billion cubic feet of gas per day, up from 3.25 billion. Both of those figures would be record highs, although the rate of growth has slowed dramatically.

Of the seven shale regions in the report, the Utica is one of two showing an increase for oil, and it is the only one showing an increase for gas.

By another key measure, however, Ohio’s shale country has come almost to a standstill. The state has 13 active drilling rigs, which is down from a high of 48 in January of 2015, according to oilfield services company Baker Hughes. A lack of drilling means that there is very little new production about to come on line.

“With less wells drilled, there are fewer employees, and less spending in the state,” said Bennett.

The country’s rig count is 514, down from highs of more than 2,000 as recently as 2011.