Will the Utica Shale Surpass the Barnett and Marcellus?

Feb. 28, 2011 8:18 PM ETCNX, CVX, CHK, RRC7 Comments
Vinod Dar profile picture
Vinod Dar

The Barnett and Marcellus shale plays are justifiably regarded as world class resources for natural gas and are becoming recognized for their great gas liquids potential. Thus, when industry conversation starts mentioning a North American gassy shale play that could be in the same league or eventually even more impressive than these two proven plays, both industry participants and investors become curious.

The Utica lies beneath a very large geography.

In physical extent, the Utica shale covers a geography about twice as extensive as the Marcellus (and far more extensive than the Barnett). In terms of hydrocarbon resources, no one knows the potential of the play. It is too early in its E&P lifecycle (recall that the first modern well was drilled in the Marcellus by Range Resources only in 2004). Only a few commercial wells have drilled by less than half a dozen companies but even so expectations have risen dramatically.

The Utica lies between 3,000 and 7,000 thousand feet beneath the Marcellus but extends further northwest and much further southwest. It underlies parts of New York, Pennsylvania, Maryland, Virginia, West Virginia, Ohio, Tennessee, Kentucky, Lake Erie, Lake Ontario, Ontario and Quebec. Its depth ranges from about 2 miles deep in parts of Pennsylvania to under 2,000 feet below sea level in parts of Ohio, the Great Lakes and Ontario. It is reportedly even shallower in Quebec.

It is this very large footprint that is persuading E&P companies, especially Canadian companies, to postulate that the Utica shale may be a very large resource play even if recovery with current technology is only in the 2 to 3 % range. Each generation of technology increases recovery rates and the industry is confident that recovery rates will keep rising over the next few decades.

The Utica has a much higher carbonate

This article was written by

Vinod Dar profile picture
I am the managing director of Dar&Company in Bethesda, MD. We provide business advice and corporate governance coaching to presidents, CEOs, and chairmen of energy and utility companies. Our clients have ranged from the largest utility holding, energy finance and energy technology companies in the world to energy funds, operating start ups, spinoffs and near IPOs. We offer no advice on securities of any kind and recommend no companies (other than as transactional, merger, acquisition or investment partners for clients). I have been in the energy industry since my college days at MIT, where I got my start in energy at the MIT Energy Lab as a graduate student in the mid-late 1970s. I hold degrees in engineering, corporate finance/international business (MBA) and applied economics (doctoral). I have served on the boards of 5 publicly traded energy operations and energy consulting firms. I have been CEO of 2 natural gas and electricity operations, marketing and trading companies. I have also founded strategy and risk management practices at 2 major energy consulting companies. I regret not providing company specific investment ideas or indications in my articles. This is owing to my wife’s federal government responsibilities and the nature of my professional activities.

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