Utica Shale Boom: Shell's Latest Gas Discoveries In Northeast Pennsylvania Could Spur Drilling Boom Along Utica Shale Formation

Northeastern Pennsylvania could soon see a shale drilling boom along the Utica formation. Royal Dutch Shell PLC (NYSE:RDS.A) this week announced prolific results at two of its discovery wells in Tioga County, an area as yet untapped by most oil companies.

The Utica Shale underlies major parts of Pennsylvania, Ohio, West Virginia and New York. So far, operators have mostly focused on Utica’s gas reserves in western Pennsylvania or southeast Ohio, the latter now one of the fastest-growing natural gas production areas in the United States, according to federal energy statistics.

In the northeastern part of the Keystone State, most of the gas drilling has targeted the Marcellus Shale, the formation that lies on top of the deeper Utica Shale. Shell is among the first companies to bet on the Utica play in this area, the Pittsburgh Post-Gazette noted.

Shell said its Gee well, in production for nearly a year now, had an initial flowback rate of 11.2 million cubic feet of natural gas per day. The Neal well, which went online in February, observed peak flowback rates of 26.5 million cubic feet daily. The discoveries “extend the sweet spot of the Utica formation” into an area where Shell holds about 430,000 acres, according to the Dutch oil giant.

Marvin Odum, Shell’s upstream Americas director, said the Gee and Neal wells are part of the company’s latest shale gas strategy, which concentrates on a smaller number of plays with a certain scale and economic profile. “The Appalachian basin is one of those areas, and these two high-pressure wells both exhibit exceptional reservoir quality,” he said in a statement Wednesday.

Shell’s discovery will likely open a new chapter in deep Utica exploration in Pennsylvania, research analyst Richard Zeits wrote on Seeking Alpha, an online investment platform. “The play may add many years of economically competitive inventory to the region's natural gas resource base.”

Utility companies are betting on a continued production surge in the region. Earlier this week, utilities Duke Energy Corp. (NYSE:DUK) and Dominion Resources Inc. (NYSE:D) announced plans for a $5 billion natural gas pipeline that will cut through the shale formations.