The Ohio Department of Natural Resources (ODNR) has released its first quarter 2016 Ohio shale wells production totals. Over the first three months of this year, Ohio’s shale wells produced 5,485,854 barrels of oil and 329,537,838 McF (329 billion cubic feet) of natural gas. 

The ODNR released the results in a press release touting a “significant increase from quarterly productions from the first quarter of 2015.” However, looking at a comparison on a quarter-by-quarter basis, oil production has dropped for the first time ever since ODNR has started tracking these statistics. Oil production dipped -12.3% from the fourth quarter of 2015—slipping from 6.25 million barrels in Q4 of 2015 to 5.48 million barrels produced in Q1 of 2016.

The ODNR pointed out in its release that oil production was up 24% in the first quarter of 2016. Although this statistic is one representation, it is not a proper demonstration of what is happening in our industry. The 5.4 million barrels pales in comparison to the last three quarters, in an arena where consecutive increases were previously seen quarter-to-quarter.

Barrels of Oil Produced

2016   Q1       5,485,854      -12.3%

2015   Q4       6,249,116      +9%

2015   Q3       5,696,780      +2%

2015   Q2       5,578,255      +26%

2015   Q1       4,401,687      +25%

The numbers being reported are finally starting to reflect the continuing industry downturn and low commodity prices we have been facing starting in 2015. The oil and gas industry peaked in summer of 2014 when a barrel of oil was selling for more than $110. The fall of 2014 was when prices started to downturn and into early 2015 we saw them level out around $50 a barrel. Throughout the rest of the year prices continued to face an overall decline and in February of 2016 a barrel of oil was trading at $26 at one point—some of the lowest oil prices the industry has seen in years.

Another key element to consider looking at the ODNR quarterly production reports is that they are reflecting information from the quarter before the current quarter. The production report that was released on June 17, 2016 is covering production results that happened in January 2016 through March 2016. 

In addition, the agency reported that natural gas production grew by 80% from first quarter 2015 to first quarter 2016. Looking at a quarter-to-quarter comparison paints a different picture here as well, seeing only an 8.7% increase in natural gas production (303 BcF in Q4 2015 to 329.5 Bcf in Q1 2016). Although we did see an increase in natural gas production (as previously seen), the momentous increases are lessening (this is the first single digit percentage increase seen for Ohio’s natural gas production from shale).

Billion Cubic Feet of Natural Gas Produced

2016   Q1       329 Bcf           +9%

2015   Q4       303 Bcf           +23%

             2015   Q3       245 Bcf           +10%

             2015   Q2       222 Bcf           +21%

             2015   Q1       183 Bcf           +11%

When you analyze the current production numbers in comparison to previous quarters, it is apparent that  the oil and gas industry is in a downturn. While we are encouraged that oil and gas producers are able to find efficiencies and continue to drill new wells, it is important that the production results are represented accurately and so that the general public gets a realistic view of what is happening across the industry. As with many industries, the oil and gas industry is cyclical and the Association is optimistic that we will see a rebound.