Chesapeake Energy aims to more than quadruple its Ohio oil and gas production by the end of the year, the company's acting CEO said yesterday.
Chesapeake Energy aims to more than quadruple its Ohio oil and gas production by the end of the year, the company’s acting CEO said yesterday.
The main obstacle in meeting that goal is a lack of processing plants.
“As a result of infrastructure constraints, we currently have turned to sales (in) just 54 wells, but we anticipate a substantial ramp-up in completions as we progress through the year,” acting CEO Steven Dixon said in a conference call.
Dixon, who was chief operating officer before his promotion, took charge last week after the departure of Aubrey McClendon, the executive who built the company.
Chesapeake, based in Oklahoma City, is the largest leaseholder in Ohio’s Utica shale, with more than 1 million acres.
Right now, the company is producing 75 million cubic feet equivalent of natural gas per day in the Utica. If not for a lack of processing capacity, Chesapeake could double that, Dixon said.
How much more could Chesapeake produce in Ohio?
“We are targeting net production of more than 330 (million cubic feet of gas equivalent per day) by the end of the year,” he said. “Achieving this level will be dependent on the timely startup of critical processing infrastructure at multiple facilities in the months ahead.”
Several companies are building plants to process natural gas and natural-gas liquids.
Blue Racer Midstream, a partnership involving Dominion and Caiman Energy, is almost ready to open a processing plant in Natrium, W.Va., near the Ohio-West Virginia border. The plant will be able to process 200 million cubic feet of gas per day and 36,000 barrels of natural-gas liquids, with room to expand as needed.
“We think the production (in the Utica) is just starting, and we agree that production will expand with the ability to process it,” said Dan Donovan, a Dominion spokesman. The Natrium plant is on track to open within two months, he said.
Access Midstream Partners is working on a processing plant in Columbiana County, Ohio, that will have a capacity of 800 million cubic feet of gas per day and is on track to open in June. Access includes assets that Chesapeake sold in the past year to reduce the debt that had accumulated under McClendon’s leadership.
Dixon gave an update on that front, saying Chesapeake has agreements for $1.5 billion worth of asset sales toward a goal of $4 billion to $7 billion this year.
“(W)e are on track to execute agreements for additional sales in the next few months that we look forward to sharing with you once definitive agreements are reached,” he said.