* Oil output from Ohio’s Utica shale to be dwarfed by gas
* But gas production is “significant”
* First true glimpse into Utica’s size and scope
By Edward McAllister and Sabina Zawadzki
NEW YORK, May 16 (Reuters) - Oil output from the Utica shale in Ohio was less than expected last year, the Ohio Department of Natural Resources said on Thursday, denting the Utica’s image as America’s next oil-producing frontier.
Despite initially being touted as a $500-billion bounty when drilling began in 2011, early evidence shows that the Utica may disappoint, holding mostly natural gas, a far less lucrative product already in abundance in the United States.
“Oil production will be incidental to gas production in much of the Utica/Point Pleasant play,” the DNR said, confirming some analysts’ concerns that it may not live up to the early hype.
Oil output averaged 1,742 barrels per day in 2012, according to production data issued by the DNR. Gas output totaled 18.837 billion cubic feet (bcf), or 35 million cubic feet (mmcf) per day.
The eagerly anticipated data from 87 wells that produced in 2012 showed the stuttered beginnings of a drilling boom in Ohio as producers searched for the sweetest acreage and output was hampered by a lack of pipeline infrastructure.
Still, analysts were disappointed by the well numbers, particularly given the early hype.
“This is less impressive than was initially touted,” said Mark Hanson, energy analyst at Morningstar in Chicago. “It doesn’t look like it’s going to be the next Eagle Ford,” he said, referring to the shale play that has proved a major success in Texas.
Chesapeake Energy was by far the largest producer with total 2012 output of 10 bcf of gas. Hess Corp produced 923 mmcf and Gulfport Energy Corp 767 mmcf. Devon Energy did not produce any gas from its five wells, the data showed.
Aubrey McClendon, head of Chesapeake until earlier this year, once described the Utica as a potential $500 billion gusher, and “the biggest thing to hit Ohio since the plow.”
But enthusiasm has waned, with major drillers including Chesapeake and Devon Energy selling acreage in what was originally expected to be an oil-rich part of the play.
While companies have given details on progress of some wells, until now there has been no comprehensive database showing all the producing wells in the Utica.
As it stands, much remains unclear about the Utica’s potential. Drillers are awaiting new pipeline infrastructure that would allow wells to bring product to markets nationwide.
And counties in Ohio show varying potential. Harrison County has shown some evidence of strong oil production, while Carroll County seems more gassy, Hanson said.
Regardless, a major drilling expansion in Ohio is imminent, despite the lesser oil flows than some had hoped, as the state issues more permits and drilling activity quickens.
“The production from these initial Utica wells makes a compelling statement about the staggering amount of oil and gas resources Ohio’s shale may contain,” said James Zehringer, director of the DNR.
The department expects more than 360 wells to be producing in the Utica by 2013, moving up to 1,000 in 2015.
In Ohio, where shale drilling began in 2011, production data is made public only once a year, leaving many in the dark as to its true worth. In most other producing states, data is made public every quarter.
Last year, data was offered from just five producing wells drilled by Chesapeake.
“As oil and gas production grows, we need to see these production numbers more frequently. This will allow us to adjust to the growing needs and not fall behind from a regulatory standpoint,” DNR’s Zehringer said.