Ohio 2019 Oil and Natural Gas Production
Following each quarter, the state of Ohio releases updated horizontal shale production. Unlike most states, the data is not separated by monthly volumes. The analyses included in this article are based on quarterly intervals unlike the previously published Pennsylvania 2019 natural gas review. Ohio ended the year producing 7.4 bcfd and 74 mbbld, an increase of over 0.6 bcfd and 17 mbbld from the 1st quarter 2019.
The majority of the horizontal development is focused in eastern Ohio and produces from the Utica/Point Pleasant shale. This is highlighted when looking at the production by county. Belmont Co., Jefferson Co., and Monroe Co. contributed 79% of the natural gas production while Guernsey Co. and Harrison Co. produced 76% of the oil over the 4th quarter 2019. All of the annual oil growth and most of the natural gas growth also comes from these counties.
Five operators dominate the production of the state. Ascent Resources, Encino Energy, EQT, Gulfport Energy, and Montage Resources combine to make up 86% of the natural gas and 94% of the oil produced in the 4th quarter of 2019. Similar to the 2019 Pennsylvania production, EQT is the only operator in the top five that ended the year with a lower production rate.
Continued growth in production helped maintain the downward pressure on natural gas prices. Over 2019, the Henry Hub price had fallen to a low of $1.75 and ended down 36% from January 2nd, 2019.
Horizontal drilling rigs in Ohio have shown a descending trend from 2018 through 2019. The highest point was in January 2018 with 27 rigs and reached a period low of 10 rigs in the 3rd quarter of 2019. Based on the Baker Hughes Weekly Rig Report, the horizontal rig count decreased approximately 60%. This is consistent with the reduction in rigs observed in Pennsylvania over the same time.
The Ohio 2019 exit rate from horizontal shale production is unlikely to be sustained into 2020. Demand concerns from the coronavirus and supply concerns from OPEC+ have increased volatility in the commodity markets. Though Appalachian operators have seen a small boost in stock prices, they remain depressed. At this time, it appears uncertainty throughout the world will help keep production growth in Ohio limited in the upcoming year.
Comments and citations
Operator production analysis includes the following transaction information: Encino Energy purchase of Chesapeake Ohio assets; Gulfport purchase of Equinor Ohio assets; Montage merger of Eclipse Resources and Blue Ridge Mountain Resources
Baker Hughes. (2020). North America Rig Count. Retrieved from https://rigcount.bakerhughes.com/na-rig-count
ODNR Division of Oil & Gas Resources. (2019/2020). Quarterly Horizontal Shale Production. Retrieved from http://oilandgas.ohiodnr.gov/production
U.S. Energy Information Administration. Natural Gas Spot and Futures Prices (NYMEX). Retrieved from https://www.eia.gov/dnav/ng/ng_pri_fut_s1_d.htm
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