American Oil and Gas Reporter - February 2015 - 132

YOU DON'T GET A
SECOND CHANCE
TO FRAC IT RIGHT
THE FIRST TIME

Given the difﬁculty, expense
and mechanical risk of
performing refracturing
treatments in horizontal
wellbores, it is imperative to
stimulate properly the ﬁrst
time. Flotek's citrus-based,
environmentally friendly CnF®
fracturing additives allow oil
and gas wells to produce to
their maximum capability.

FL RIDA

CHEMICAL

For more information contact
cesimkt@ﬂotekind.com
or call
832-308-CESI (2374)

Possible Positives
Bennett and Hill mention three industry
upsides that tend to accompany "belttightening" times: mergers and acquisitions, a service pricing reset, and technological innovation.
"For companies that are not heavily
leveraged, we probably will see lots of
acquisitions," Hill reasons. "It may not
be positive or negative for the overall industry, but depending on the circumstances,
it could be advantageous for the companies
involved."
Before the market turn, Hill says, service companies preferred to work on the
larger, horizontal shale wells, which left
smaller, conventional operators scrambling
to find reasonably priced services. "This
price drop likely will cause service prices
to come back down, and there will be a
reset on industry pricing in Ohio," he details.
Bennett and Hill also note several of
Ohio's conventional operators have started
looking for opportunities to implement
newer technologies and techniques in old
reservoirs. Bennett says the move will
help carry many such companies through
a downturn.
Hill remarks that operations may be
fewer, but also larger and more efficient,
which should benefit companies and
struggling communities in conventional
drilling areas.
"Shale development has brought companies to Ohio looking to get their start
in the play," Bennett explains. "Our conventional operators, who have been drilling
for a long time, have to find new opportunities, especially with increasing land
prices and drilling costs. Some are looking
into drilling horizontal wells in Clinton
reservoirs.
"This is an industry based on innovation, ingenuity, and technology," he continues. "And conventional operating members have taken that to heart."
Hill mentions that Ohio still offers
many opportunities for enhanced or secondary oil recovery, as many of OOGA's
conventional well operators have demonstrated. "That is how our conventional
operators will live to fight another day,"
he suggests. "There still is a lot of oil in
the ground in Ohio."
Hitting A Wall
Exacerbating Ohio producers' market
problems is what Bennett refers to as the
"wall" of the Marcellus. "OOGA supports
developing pipeline infrastructure to transport gas to markets such as Boston, Washington, Chicago, Canada, and west to the
Denver Basin," he comments. "In Ohio,
we are experiencing the same bottleneck

132 THE AMERICAN OIL & GAS REPORTER

constraints as Pennsylvania and West Virginia."
Nevertheless, Bennett reaffirms, several
opportunities await companies savvy
enough to choose the right timing and
marketing. "It's not only about establishing
new pipelines, but also locating new markets, so that our gas is utilized in the
most efficient manner," he says.
Because of the Marcellus' figurative
wall, Bennett confirms Ohio producers
are enduring a negative price differential.
"Some people are getting $3.75 an Mcf.
We are getting about $1.75 or $2.00 an
Mcf," he reports. "It is a reality that
everyone in the Appalachian Basin faces,
especially if the companies have to deal
with transportation costs. There is such a
glut of natural gas coming out of this
area."
Furthermore, Bennett reflected in midJanuary, the winter heating season in the
populous Northeast had not helped much.
"Last year, I didn't see the ground from
January until March because it was covered
in snow," he describes. "I was hoping for
that winter again this year, but it has
been very mild. It is going to keep prices
down and limit the sectors that can consume our gas-be it power generation or
some of these areas with colder weather.
We cannot always hope for a cold winter.
There has to be another answer, and we
need to be willing to find it."
Polymer Corridor
Turning the subject back to how consumers' feel about low prices, Bennett
notes that the United States' wealth of
gas is likely to spur demand. "With the
surge in shale gas, at least two polyethylene
or cracker plant companies have been
looking to build facilities in the Appalachian Basin," he relates. "If we land
even one, we are looking at a renaissance
of manufacturing-especially plastics-in
what historically has been called the
'polymer corridor.'"
Bennett expresses confidence that at
least one plant will be approved and built
in Appalachia, particularly the proposed
ODEBRECHT plant, slated for construction in West Virginia, near the Ohio border.
"It would greatly benefit the communities in southern Ohio and northwestern
West Virginia," he remarks. "And it would
be down the road from Akron University's
Polymer Institute. Polymers constitute a
very important industry to Ohio, and if
we are able to land that cracker plant, I
think a lot of investment will come back
to Ohio industries after a few years."
Hill also predicts the large supply of
raw feed stock will draw the petrochemical
industry back to the area, which also

American Oil and Gas Reporter - February 2015

Table of Contents for the Digital Edition of American Oil and Gas Reporter - February 2015