Crain’s Cleveland Business
By DAN SHINGLER
Houston-based M3 Midstream is in the midst of spending $1 billion across eastern Ohio in a rush to bring pipelines and equipment online to process natural gas from the Utica shale region, which the company known as Momentum expects to be the star of the nation’s shale gas and oil industry.
Drillers pursue the most profitable endeavors they can find, and that means coming to the Utica shale, said Momentum president and CEO Frank Tsuru, who spoke last Tuesday, Feb. 5, to nearly 600 attendees of Shale Summit 2013, an event organized by Crain’s Cleveland Business and public broadcasting organization ideastream.
Based on their well results to date, Utica drillers are on track to achieve an internal rate of return of 91% over the life of their wells, Mr. Tsuru said. That’s well above the next-best shale play, the Eagle Ford in south Texas, where rates of return are about 60% as drillers extract oil and “wet gas” — which consists of components such as natural gas, ethane, butane and other chemicals that are helping drive drillers’ revenues and profits.
The rate of return in the Utica shale also is leagues beyond the returns offered by pure “dry” natural gas plays such as Arkansas’ Haynesville region, where a paltry rate of return of about 4% essentially has brought drilling to a halt, Mr. Tsuru said.
It’s all because the Utica region is yielding not only dry methane gas, but also oil and an abundant mix of “wet gas” components. While the price of natural gas has plummeted in recent years, the price of oil and natural gas liquids has held up, Mr. Tsuru said.