
Shale oil and gas production from the Appalachian Basin's Utica play has hit 3.5 Bcf/d this June, jumping from very low levels of 0.1 Bcf/d in December 2012. The surge in output from the vast Utica play keeps a lid on US natural gas prices and incentivise more power station operators to shift from coal to gas. The capacity factor for CCGTs has risen to 56% and is expected to increase further.
Utica Shale, lying at greater depth than nearby Marcellus Shale, used to be largely untapped but rig counts increased gradually over the past four years helped by rising drilling efficiency, proximity to markets, improvements in business processes, resource targeting in stacked plays, and the lengthening of horizontal laterals.
“The expansions in natural gas infrastructure make the natural gas-rich portions of the reservoir more desirable for development, and therefore, increasingly the target for operators,” EIA analysts commented.
Mapping gas-to-oil ratios (GORs) shows that natural gas-rich wells in the Utica play are mostly located in the eastern portion of the play, and oil-rich wells are typically located in the western portion. The distribution tends to correspond to the depth of the reservoir. Deeper wells of up to 13,000 feet have higher initial GORs (greater than 10,000 scf/b) and produce mostly natural gas, while the shallower wells produce mostly oil.
CCGTs utilisation exceeds coal plant dispatch
High-efficiency combined-cycle gas power plants make up the majority of US gas generators, and their capacity factor has risen substantially from an average of 35% in 2005 to more than 56% last year, according to EIA figures.
Dispatch of CCGTs in 2015 started to surpass the use of coal steam power plant, whose capacity factors dropped to 53%. Retirements of coal power capacity is set to further reduce the overall utilisation rate.
According to EIA’s weekly natural gas update, Total U.S. consumption of natural gas was unchanged from last week, averaging 59.4 Bcf/d, according to data from PointLogic. Power burn declined by 3% week over week, and industrial sector consumption stayed constant, averaging 19.4 Bcf/d. Natural gas exports to Mexico decreased 5%.