Energy Wire
UTICA SHALE: Ohio's expanding ultra-light oil stands to overwhelm domestic market

Friday, January 03, 2014

The first quarterly production update from Ohio's Utica Shale reports a continuing upsurge in gas and oil output from hydraulic fracturing operations and presents a continuing mystery about exactly what is coming out of the wells.

Shale gas production in Ohio totaled 33.6 billion cubic feet in the third quarter last year, more than double gas volumes for all of 2012 but still constrained by a shortage of pipeline and processing infrastructure, according to a report released Dec. 31, 2013, by the Ohio Department of Natural Resources (DNR).

Oil production from Ohio shale formations was 1.3 million barrels in the third quarter, also more than twice the 2012 figure, seeming to contradict expectations of poor oil output from the Utica play. However, industry analysts believe that a high percentage of "oil" production from the Utica/Point Pleasant formation is not crude oil but instead consists of condensate grades, an ultra-light hydrocarbon that requires its own processing and delivery infrastructure.

An even larger flow of condensates is coming from the Eagle Ford Shale play in Texas, with major market implications for the entire industry chain from production to pipelines and markets, analysts say.

"The domestic market is not really equipped to handle this much ultra-light oil supply. Consequently, light oil prices will face downward price pressure in the coming years," reports Bentek Energy. Bentek estimates that condensate will represent 17 percent of U.S. oil production by 2023, compared to 5 percent in 2010.

Read the full article here.