Hit the Lights - Utica Shale Condensate Production Is Up. Where's It Going and How's It Getting There?

Wells operated by a half-dozen E&Ps in eastern Ohio’s Utica Shale are now churning out more than 100 Mb/d of superlight crude oil — aka condensate — more than twice as much as they were just three years ago, and there’s talk that condensate production in the play’s “volatile oil window” could increase significantly over the next few years. This surge in condensate output raises three relevant questions: (1) how is the condensate being transported to market, (2) where is it headed and (3) what is it being used for? In today’s RBN blog, we continue our series on Utica condensate with a look at the approaches used to transport the commodity to refineries and others in the Midwest and points beyond. 

As we said in Part 1, five counties in eastern Ohio have been generating fast-increasing volumes of crude oil, almost all of it “light condensate” with an API gravity of 55 to 59 degrees (and sometimes as high as 65 or even 70 degrees), but with a rising share of “heavy condensate” (API of 50 to 52) that is more like a super-light crude and therefore more desirable to some refiners. In November 2024 (the latest data from EIA), Ohio produced a record 120 Mb/d — 140% more than in November 2021 — with another 46 Mb/d produced in Pennsylvania and West Virginia. And the buzz among E&Ps and market watchers in the play is that Ohio production alone may well rocket past 150 Mb/d and even 175 Mb/d or 200 Mb/d over time.

That optimism is reflected in the results of the January 30 initial public offering (IPO) by Infinity Natural Resources (NYSE symbol: INR), which valued the seven-year-old company at a heady $1.3 billion. Infinity, which has both condensate- and natural-gas-focused assets in the broader Marcellus/Utica production area, ranked fourth among the six leading Utica condensate producers we discussed in Part 2, with Q3 2024 production averaging a modest 10 Mb/d.

After Infinity’s IPO, Reuters reported that the Canada Pension Plan Investment Board (CPPIB), which holds a 98% ownership interest in Encino Acquisition Partners (EAP), the largest condensate producer in Ohio (Q3 2024 production of 45 Mb/d), is studying the possibility of either selling its stake or initiating an EAP IPO that would value the E&P at more than $7 billion. (CPPIB and Encino Energy, which owns the other 2% of EAP and oversees its operation, have declined comment.) Also, EOG Resources, the third-largest condensate producer in Ohio (and by far the largest Utica condensate player by market capitalization), has been talking up the potential of its Utica position, which the company has said is “almost reminiscent of what we saw nearly a decade ago happening in the (Permian’s) Delaware Basin.”