Pennsylvania’s Deep Utica Wells ‘Smoking’ Marcellus RORs
“The deep Utica, watch out folks. The deep Utica will probably be the next up-and-coming deep shale play here in Pennsylvania,” Huntley & Huntley’s Mike Hillebrand told DUG Appalachia attendees.
PITTSBURGH—Pennsylvania’s deep Utica wells are “smoking” the overlying Marcellus’ rates of returns, producing 25 MMcf/d and more without decline for more than a year so far, operators said at Hart Energy’s DUG Appalachia conference in Pittsburgh.
Deep Utica exploration might even qualify for an extra federal tax break under the One Big Beautiful Bill Act, which restored a deduction for oil and gas research and development spending.
“The deep Utica, watch out folks. The deep Utica will probably be the next up-and-coming deep shale play here in Pennsylvania,” Mike Hillebrand, CEO of Pennsylvania-based E&P Huntley & Huntley, told conference attendees.
Hillebrand recently sold Huntley’s Marcellus-focused Olympus Energy portfolio E&P in Pennsylvania to EQT Corp. for $1.8 billion after making five deep Utica wells within its leasehold.
A next Huntley start-up will focus on acreage for deep Utica and Tier II Marcellus potential, he said.
‘Every single investor call’
At Infinity Natural Resources, explorationists anticipate putting a rig on its deep Utica potential in Pennsylvania underlying its existing Marcellus-producing leasehold, CEO Zack Arnold told attendees.
Other deep Utica operators have now come within 7 miles of Infinity’s acreage.
“We’re anxiously awaiting the right time to put some dollars there,” Arnold said.
Word of the rock’s results has reached Wall Street and appeared in securities analysts’ reports.
When will Infinity spud a first test?
“I get that question on every single investor call every time I go in and meet with somebody who holds INR [stock],” Arnold said. “They want to know ‘When is that deeper Utica going to be developed?’”
Infinity operates in both western Pennsylvania’s Marcellus and eastern Ohio’s oily Utica window.
The formation’s deposition is shallower on the far western side of the Appalachian Basin in Ohio where the overlying Marcellus disappears. As the Utica is shallower when moving west, the depth, temperature and pressure are less than on the eastern side of the basin where the hydrocarbons have been “cooked,” resulting in gas rather than oil.
“The deep Utica in southwestern and central Pennsylvania is incredibly exciting,” Arnold said.
$1,850/ft
Olympus had watched its neighbors’ returns from deep Utica wildcats in Pennsylvania for years, finding inconsistent results for nearly as long, Hillebrand said.
When CNX Resources began producing consistent success, “we entered the game.”
A first Olympus test, Poseidon, cost $2,700 per lateral foot. “Our first, well, we threw science galore to it,” he said.
The fifth and last test before selling to EQT, though, cost $1,850 per foot.
“And we had line of sight to get to $1,600. And anything below $2,000 a foot on these type curves is just phenomenal.”
In the western Haynesville, Comstock reported earlier this year that its initial well in 2022 cost $3,930 per lateral foot but that had improved to $2,700 per foot on newer wells.
The Utica is at about 13,500 vertical feet in Olympus’ leasehold. Pressure is 0.9 psi/ft.
“So very, very high wellhead pressures.”
It’s similar to the western Haynesville’s pressure regime. The Utica rock quality is a little less where the Olympus property is than the far western Haynesville’s, he said.
“But coming from 13,000-pound wellhead pressures down to line pressures, we get the same Haynesville type curve of 20 to 25 MMcf/d—every day for over a year,” Hillebrand said.
Justin Loweth, president of National Fuel Gas’ Seneca Resources E&P unit, said in a recent earnings call that its deep Utica wildcats’ findings are showing strong output.
“We generally are going to restrict these wells at around 25 MMcf/d—at times 30 MMcf/d—and we’ll hold them flat,” Loweth said.
The reservoir pressure drawdown is low. “We’ve been able to successfully hold these wells at flat levels for now, at times, in excess of a year,” he said.
The question now is “how long that flat period can last.”
So far, production from the wells’ 90th day online is the same as first-day production.
“And frankly, the Day 180 production is about the same,” Loweth said. “It’s really a question of ‘What do we look like at Day 270 and 365 and 1.5 years in?’
“How long are these wells holding at flat rates and consistently doing so.”
The Utica is shallower on the Appalachian Basin’s western side and contains oil and NGL, while the deep Utica on the eastern side is more “cooked,” thus gas. (Source: USGS)
‘Smoking’ returns
Olympus’ acreage in southwestern Pennsylvania was among the last of Tier I Marcellus potential of 3 Bcf-plus per 1,000 ft, Hillebrand said at the conference.
“And for our long laterals’ economics compared to a 10,000-foot Utica, our Utica was smoking our internal rate of return over direct offsets in the Marcellus that were long laterals and still in Tier I turf.
“So, I would call it equivalent to probably East Texas, where Comstock is drilling the deep Bossier/Haynesville.”
There, the target is deeper at up to 19,000 vertical feet. The temperature is higher at more than 300 F and up to 425 F.
“We’re at 280 to 290 bottomhole temperatures,” Hillebrand said.
‘Thank you, CNX’
Arnold said its western Pennsylvania leasehold was picked for its Marcellus potential upon the E&P’s startup but also because the underlying Utica looked highly prospective there.
“We built that position based really just on one CNX well that had been drilled back in 2017,” he said.
Hillebrand’s interest was due to a CNX well, too, saying at the conference, “Thank you, CNX.”
The Gaut #4H in Westmoreland County near Olympus’ property was the basin’s first deep Utica test in that area in 2014, when others were testing it southwest in Washington and Greene counties.
“And unbelievably in watching that, it had a very successful result,” Hillebrand said.
But subsequent wells did not perform as well or started out badly in one area but subsequent wells improved. Results were inconsistent.
Arnold said neighbors testing the deep Utica are getting closer to Infinity’s leasehold.
“The nearest well to us is probably CNX’s Bell Point into Armstrong County. It’s about 7 miles from our position right on strike and in the same geological footprint.”
Olympus did “a tremendous job of bringing down the cost per foot and pushing out some lateral length,” he added.
“Watching those two compete and improve technology just to the southwest of us has given us a lot of confidence that the geology beneath us is representative from what they’ve developed in their position.”
The fairway
Hillebrand said the Utica wells in Pennsylvania that aren’t declining for a year or more are unlikely to be found where the Utica is shallower.
“You get into Butler County [westerly adjacent to Armstrong] and they’re back down to normal Ohio[-type] pressure gradients, 0.62 psi per foot,” Hillebrand said.
So, the fairway “probably won’t be as big as the Haynesville or, for sure, the Marcellus, but the corridor is yet to be determined.”
Moving northeast from Westmoreland and Armstrong counties, though, into where Seneca is drilling the Utica, “the play acts like more of a fractured-reservoir play up there.”
“You’re getting these three different kinds of signatures of structure to resource play to a fracture play.”
While Seneca’s Utica wells are not as deep, “they’re getting some nice deep Utica results,” he said.
Still, the Utica west of there in “this central window is kind of special for what we know so far.”
Tax favorability
The recent federal tax legislation restored immediate expensing of oilfield research and development, restored the full deduction of intangible drilling costs in the year incurred, permanently extending the 100% bonus depreciation for tangible drilling costs.
Arnold said the results might benefit Infinity as it tries out the deep Utica.
“We’re still digesting what this bill means to us and how much we can count on in the future,” he said.
The tax impacts should have interesting implications for deep Utica wildcatting.
“Does that qualify for some of the exploratory components of the bill?” he said. “We’ll watch that closely.”
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