American Oil and Gas Reporter - February 2021 - 32

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IssuesUpdate: Ohio Oil & Gas Association

Ohio Industry Hopes To
Pick Up The Pace
By Del Torkelson
COLUMBUS, OH.-Whether it's an
engineer readying a prototype, a team
emerging from the locker room or students
sitting down to begin an exam, there
comes a time in which preparation meets
implementation. As Ohio Oil & Gas Association Chairman Bruce Levengood
considers Ohio's oil and gas industry in
early 2021, he says companies have spent
much of the previous year planning while
waiting for a figurative storm to pass.
Now, he suspects, many are itching to
turn their blueprints into reality.
" We have not been doing nothing, "
reports Levengood, who is president of
Sound Energy Company Inc. in Dover,
Oh. " We have taken the time to drill
deeper into our day-to-day operations
and look into how we can use the efficiencies of manpower, contractors and
tools to come out of this thing leaner and
meaner. "
And now, he says, " People in the business, especially the shale operators, are
getting active and have plans for a robust
2021. Most of us believe commodity
prices will recover this year better than
they have during the past couple years.
That will give many conventional operators
a fever to stick the bit back into the
ground. "
Even those not yet ready to start exploration have no intention of sitting on
their hands, he assures. " Some repairs
and maintenance have been neglected, "
Levengood observes. " My company is
not in drilling mode yet, but we have
taken the time to analyze our holdings
and determine the best ways to deploy
capital if prices rise enough to give us a
decent return on investment. That may
mean reworking wells or consolidating
with other producers. "
OOGA President Matthew Hammond
says he too is encountering indications
that many Ohio energy companies are
leaving their bunkers. " I hear Ohio can
expect to see some new drilling activity, "
he reports. " A number of shale producers
tell me they expect to be more active
than in 2020. Of course, for companies
32 THE AMERICAN OIL & GAS REPORTER

" Most of us believe commodity prices will
recover this year better than they have during
the past couple years. "
-Bruce Levengood
OOGA Chairman
with assets in multiple states, the question
is where Ohio lands in their rankings of
where to allocate capital. "
Even so, the previous calendar year
has demonstrated the extent to which
plans are subject to change, notes OOGA
Director of Public Relations Mike Chadsey.
Most plans to intensify field activity hinge
on commodity price behavior, he relates.
" Once they are comfortable with the
price points, some say they see opportunities to move quickly to invest capital in
Ohio, " Chadsey describes. " Other people
are being more conservative. Budgets
were cut significantly last year-not only
capital expenditures but everything-to
help companies survive its many challenges. Expectations for 2021 appear to
be a mixed bag. "
Smarter Spending
Even if natural gas is at or near its
floor price and the growing number of
market experts who forecast a new period
of natural gas scarcity prove correct, Levengood cautions that regional price differentials appear likely to remain a drag
on Appalachian Basin producers.
" We have learned to live with the negative basis, which has moved around radically, " he considers. " Companies with
large production volumes have found
ways to shut them off and then bring
them back to market quickly. There are
hedging market opportunities such that,
if the numbers are good six months from
now, producers will bring that gas back. "

According to Levengood, companies'
spending strategies have evolved from
the feeding frenzy characterizing the shale
play heyday. " People have wised up to
the importance of strong returns, " he reflects. " Now it is more of a smart numbers
game about managing existing production
and determining the best potential undeveloped locations to drill.
" Companies have learned to drill and
complete lower-cost wells and bring production on much quicker, " Levengood
continues. " As everyone looks to the
future, I think they are going to manage
their opportunities better. Some experts
are noting that the supply and demand
pictures look pretty good already, and
within about a year, Shell's cracker is
going to come on line, which will put rejected ethane to use and create another
natural gas supply void. "
Pipelines, Please
Unfortunately, Levengood muses, even
the extensive build-out of regional infrastructure cannot alleviate interstate
throughput limitations. Unless that situation is addressed, he says, it will hinder
Utica and Marcellus producers' ability
to ride to the rescue in the event of a gas
shortage.
" We need to finish some pipelines, "
he insists. " Even though the Keystone
Pipeline does not affect us directly, the
fact President Biden's administration already has cancelled its permits says a
lot. Projects to move more gas out of the

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