Shell Finds Stretch Utica Shale Boundary Hundreds of Miles East

Sep 03, 2014 1:19 pm ET

Sept. 3 (Bloomberg) -- Royal Dutch Shell Plc’s natural gas discoveries near the Pennsylvania-New York border indicate that the Utica shale formation extends hundreds of miles farther east than originally thought.

Two gas finds in Tioga County, Pennsylvania, announced today by Europe’s largest oil company are more than 300 miles (483 kilometers) away from the epicenter of Utica shale drilling in Monroe County, Ohio. Shell, which has been selling gas assets in other parts of the U.S. to focus on its highest-profit prospects, said it owns drilling rights across about 430,000 acres in the discovery zone, an area five times the size of Philadelphia.

Since the discovery of the Utica four years ago, exploration has been dominated by a handful of domestic wildcatters such as Chesapeake Energy Corp. and Gulfport Energy Corp. Oil majors including Exxon Mobil Corp. were late to the race after initially assuming the formations wouldn’t yield hefty returns.

The Utica “could be much bigger” than previously mapped, Kayla Macke, a Shell spokeswoman, said in a telephone interview from London.

Shell’s discoveries, known as Gee and Neal, were found about two miles underground. The Gee well was producing 11.2 million cubic feet of gas a day when output began a year ago, Shell said. The Neal well saw a peak in daily production of 26.5 million cubic feet after drilling ended in February.

Shell, based in The Hague, held off on publicizing the well results for months to avoid alerting competitors to the potential bonanza in that part of Pennsylvania, Macke said.

‘Competitive Reasons’

Although the Gee well’s existence and performance was publicly disclosed after its first six months of production, as required under state regulations, Shell “didn’t advertise it broadly for competitive reasons,” Macke said.

Four more wells drilled by Shell in the same area are expected to begin pumping gas by the end of the year, the company said today.

Monroe County, in southeast Ohio along the border with West Virginia, was the most active permitting site for Utica drilling permits during the second quarter, according to data compiled by Bloomberg. Belmont County, which lies adjacent to Monroe County, was the next busiest Utica permitting site.