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Ohio Utica Shale

New infrastructure will boost Utica shale, Chesapeake reports

By Bob Downing Published: March 30, 2013

Here is what Chesapeake Energy Corp. has to report about drilling in Ohio's Utica shale in the Winter 2013 issue of The Play, the company's publication.

The second ariicle is about new Chesapeake drilling rigs being used in Ohio:

I. The Play: Utica Shale

Poised for Success
By Cheryl Hudak

Chesapeake is looking forward to a happy new year in Ohio, as infrastructure is completed to process and transport the bountiful wet gas the company is finding in the Utica Shale.

“Come February, our wells will be coming on line, as we complete compression and pipeline facilities to take liquids to processing plants,” said Tim Dugan, District Manager – Utica District, Eastern Division. “Throughout 2013, we will continue to ramp up.”

The discovery and launch of the Utica Shale has been a whirlwind, even for a company like Chesapeake, renowned for its innovative petroscience capabilities and rapid-fire development.

Floorhands Scott Niermeyer and Roger Harper,
crew members on Nomac Rig #70, drilling the
Lucas 35-11-4 6H in Carroll County, Ohio.

“I am hoping that the Utica will achieve profitability faster than any other Chesapeake play,” Dugan said. The company’s initial drilling results, announced in September 2011, were exciting. Its energetic Land Department had already begun amassing leasehold of more than 1.6 million gross acres, which the company believes will support drilling more than 13,000 wells.

Today Chesapeake has defined the Utica’s core wet gas window, in which it will target development in Carroll, Columbiana, Harrison and Jefferson counties in eastern Ohio. The company has 14 rigs operating in those counties and expects to raise that number to 17 in 2013. Of the 179 wells Chesapeake has drilled thus far in the Utica, 45 are producing while 45 await pipeline connections. Another 76 are in various stages of completion. As midstream constraints are reduced, Chesapeake expects the Utica to make a much larger contribution to its production growth.

The Utica is a complex play to develop, with other E&P operators in the region wondering how Chesapeake coordinates drilling locations and schedules for 14 rigs. Geologically, the Utica is challenging as we try to understand the varying rock properties across the different windows (dry gas, wet gas and oil windows). From a land standpoint, putting units together, working around mining operations and clearing titles has not been an easy task. Operationally, the terrain and weather in the Eastern Division also create unique challenges. However, we have assembled a Utica team that has been able to work through these obstacles and stay ahead of the drilling rigs to keep us well ahead of our competitors.

“We do a great deal of work before we even build a drilling location or a drillbit hits the ground,” Dugan noted. “We’re out there clearing title, working with leaseholders and coal companies on surface issues, and making sure our operations will have as little impact as possible on the environment and the public. These preliminary operations cost us up to $300,000 before we even begin to build a drillsite. The land and preparatory work is almost harder than drilling and production.”

A pristine Christmas tree marks a Carroll County
production site.

To further refine the process, Nomac Drilling, a wholly owned affiliate of Chesapeake Oilfield Services (itself a wholly owned subsidiary of Chesapeake), delivered the first new PeakeRig™ to the Utica Shale in December. Designed and built especially for the company, the PeakeRig incorporates new advancements in efficiency and hydraulics that enable it to “walk” on a multiwell padsite. That capability will be put to good use in the Utica, where 60% of all drilling sites are on multiwell pads. It will also keep costs down — a big challenge in today’s energy industry.

“We’ve worked our costs down relatively fast in this new play,” Dugan said. “We’re increasing efficiencies and finding ways to reduce costs in every aspect of development: using the PeakeRig, rotary steerable drilling capacity, innovations in our well completions, and more efficient production facility installations. And while we are using new techniques and equipment, we are not cutting corners. We want to impact costs, but not impact the quality of what we’re doing.”

A $2.32 billion joint venture partnership the company entered into with Total E&P USA in December 2011 is helping defray some of those costs. Approximately $1.25 billion of the original $1.42 billion in drilling carries remained available at the end of the third quarter of 2012. Chesapeake anticipates using all the remaining carry by year-end 2014, which will pay for 60% of our drilling costs during that time.

Safety continues to be a top priority in the new play — not just among Chesapeake employees, but vendors as well. Dugan pointed out that although the Utica ramp up has been rapid, its safety record has been outstanding.

Teamwork makes that possible. So does experience. Dugan himself has worked with Chesapeake development teams in the Barnett, Haynesville and Marcellus South regions before taking on leadership in Ohio. “Everyone shares their knowledge and experience from other plays,” Dugan said. “For instance, a big challenge in Utica is that the liquid-rich nature of this play adds complexity to the development process. So we’re getting great input from our counterparts in the liquids-rich Eagle Ford Shale play of South Texas.


Chesapeake’s Utica Shale operations bring native sons back to Ohio

Joe Starkey

Joe Starkey, Production Superintendent in Chesapeake’s Utica Shale operations, grew up in Waterford, Ohio. But it took almost a decade after graduating from college for Starkey to find his true career — and come back home to the Buckeye State.

“It was kind of a roundabout process,” he explained. “I originally got a marketing degree from Marietta College in southeast Ohio. Then in 2001, I ran into a childhood friend, Zach Arnold, who was doing an internship for an exploration and production company in West Texas. Running into Zach was a wakeup call, because those were tough times in the marketing business.”

So tough, in fact, that Starkey returned to Marietta College for a degree in petroleum engineering. The school has a strong petroleum engineering curriculum, because the area was once a hub of E&P development. But when that activity faded, the college only had three or four engineering students graduating each year. Today, amidst Ohio’s new energy boom, the program has more than 100 students.

After receiving his engineering degree in 2004, Starkey moved to West Virginia with an E&P company, and later found himself working as a production engineer in Midland, Texas.

“I was homesick for more than three and a half years while I lived in Midland,” Starkey recalled. “Then in the fall of 2010, I heard that Chesapeake had drilled a Utica Shale well in Ohio. That was very exciting to me. I was really eager to get back home. I sent my resume to an engineer I knew at Chesapeake and called him every month to ask about job opportunities.

“He told me to hang tight,” Starkey laughed. “I kept calling and finally got an interview. I went to work for Chesapeake on June 29, 2011, in the company’s Jane Lew, West Virginia, office. It wasn’t quite home, but it was a lot closer.”

Today, Joe Starkey is officially back home in Ohio, where he is working in Chesapeake’s Canton, Ohio, field office and making a very important contribution to Chesapeake’s success in the Utica Shale — and where his two young children live in happy proximity to their grandmothers.

“Joe and his group are outstanding,” said District Manager Tim Dugan. “For example, they worked with a local tank manufacturer, the Waterford Tank Company, to get certified with the American Petroleum Institute to meet Chesapeake’s specifications. They made it. And it’s been great for everyone involved: their business benefits because they’re selling us tanks, and by buying locally, we reduced our transportation costs, which has saved Chesapeake a lot of money.”

Just as important, a generation of excellent workers has found its way home.

“I really love my job and being near my family,” Starkey said. He also enjoys working with three of his childhood friends who are also Chesapeake employees today: Nick Pottmeyer, Completion Superintendent; Joe Baker, Associate Production Superintendent; and Zachary Arnold, Operations Manager in South/Marcellus Central.

To date, Chesapeake operations in the Utica Shale have been the catalyst for creating more than 500 direct jobs with thousands of jobs created indirectly with vendors, service companies and peripheral businesses.

State-of-the-art systems and controls on the
PeakeRig increase efficiency and safety for
crew members like Driller Jeremy Camburn
and Motorman Roger Van Ryn.

An Economic Boon

The Utica Shale is helping to enliven the Ohio economy, with unemployment dropping from 9.4% in 2011 to 6.8% in 2012. In Carroll County, at the heart of Chesapeake’s core area, unemployment moved from above 12% in early 2011 to 6.9% in November 2012. A recent Global Insight Study from IHS (Information Handling Services) stated that unconventional gas activity contributed value-added economic activity of $4.1 billion to Ohio in 2012, and forecast that the contribution will grow to $35.2 billion by 2035. Oil and gas activity creates jobs and income, creates leasehold payments, taxes and renewed economic activity, including the manufacturing sector as it makes supplies, equipment and machinery to support the industry. A study by the Ohio Shale Coalition predicts that $6 billion will be spent on drilling and completing wells in Ohio by the end of 2014.​​​​​​​​



The Logistics: The Peake Move Process

Moving On
By Cheryl Hudak

Anyone who has been daunted by the prospect of moving a refrigerator or a couch should consider the challenge of loading up, transporting and reassembling a 106-foot, 2-million-pound drilling rig — every few weeks!

Moving a typical drilling rig involves 85 tractor-trailer loads, each weighing between 25,000 and 50,000 pounds. Load sizes may vary depending on the specific equipment, but they average 50 feet in length, 9 feet wide and 11 feet tall.

As the most active driller in the nation, Chesapeake knows that time is money. Every day that passes between the time a rig is released from one site and it spuds a well on the next site is a day not drilling. Down time between drilling also affects the company’s production and efficiency, which reduces profitability.

Concentration shows on the face of
Greg Armstead and fellow Nomac
Rig #311 crew members.

Early in 2012, a multidisciplinary team took on the challenge of improving rig move efficiency, and it began by recording a video of the moving process on one rig.

“Our team watched that video several times,” said Dave Bert, Vice President – Drilling, Eastern Division. “We thought we’d probably see some ‘double handling’ of equipment. But watching the video, we saw that one piece of equipment was handled five times! It was time to do something.”

Senior Drilling Engineer Roi Lam was named to manage a project designed to break down performance barriers in the rig moving process, using new approaches to teamwork, communications and planning.

The resulting Peake Move Process (PMP) was implemented in the Eastern Division in July 2012, and its results have been very impressive. Almost every one of the 21 rigs using the process has reduced its average move time from 7.78 days to 3.67 days — more than 50%. The time saved equates to money saved, and with the cost of a typical rig move between $300,000 and $500,000, PMP is improving Chesapeake’s bottom line.

Hodges Trucking, a Chesapeake affiliate,
takes on a heavy load during the complex
task of moving and reassembling a
2-million-pound drilling rig.

“Every day we save moving one rig saves the company more than $42,000,” said Bert. “Since implementing PMP, we have saved more than $110,000 per well — that’s an estimated $9.7 million over the past six months.”

The logistics of rig moving are complicated. Something as obvious as mis-scheduling equipment can impede the entire job. With PMP, no detail is left to chance, from the arrival of trailers to haul a 50,000-pound rig mast to making sure the outdoor grill works at the celebration following a Best-In-Class move. The bottlenecks are in the details, such as having enough pressure washers ready at a drillsite to wash down equipment without holding up trucking crews.

Manpower is equally challenging: coordinating rig crews, drilling supervisors, pressure washing companies, crane operators, heavy-hauling companies, specialized moving crews and safety representatives. Some of the participants are Chesapeake employees, while others work for subsidiaries and third-party vendors, all of whom are required to attend pre-move meetings that enhance teamwork and communication.

“The field personnel from Hodges Trucking, Nomac and Chesapeake should all be commended on their support,” said Lam. “Without them, the program would not be as successful.”

Every risk in an upcoming move is identified, assessed and managed. A PMP workbook describes every step of the move and assigns tasks to accomplish it. Planning sheets are developed for each phase of the move. Daily progress reports are filed, and a final review provides highlights of each move as well as lessons learned for future reference. An online PMP site holds support documents, layouts of all rigs, best practices, moving tips and warnings.

Rigging down! Nomac Rig #311
begins its move after reaching a total
depth of more than 15,000 feet
on the Creamer 25-5-2 3H well
in Jefferson County, Ohio.

“We have employees who form special moving crews,” Bert explained, “and we may have a PMP facilitator on hand to coach the rig move, improving teamwork and communications. Some of these facilitators are among Chesapeake’s military veteran hires. That makes sense, because PMP moves rigs with almost military precision. Their military training and logistical experience makes them ideal candidates for the job.”

One of the most important benefits of PMP is its emphasis on safety. An orderly process with careful planning and risk assessment reduces the risk of accidents.

“Our goal is to learn the difference between being quick, precise and efficient — versus hurrying and taking high-risk shortcuts,” Bert said. “Safety is a priority in the PMP. We use walkie-talkies, reflective vests, hard hat lamps, risk registers and debriefing to determine how each task can be done safely.”

The process was also designed to heighten sensitivity to how rig moves impact communities where we operate.

“The PMP helps minimize disruption to the public by focusing on making rig moves as efficient as possible through more effective planning and scheduling,” said Lam. “The fewer days it takes to move a rig, the lower our impact on the public.”

Since its successful introduction in the Eastern Division, PMP is being expanded into the Northern Division and then to other operations across the company.

Improved rig moving processes may be just the beginning. Given Chesapeake’s characteristic ability to transfer knowledge from one activity to another, PMP will likely be adapted to further refine other company operations.​​​​​






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Utica and Marcellus shale web sites

Ohio Department of Natural Resources' Division of Oil and Gas Resources Management State agency Web site.

ODNR Division of Oil and Gas Resources Management. State drilling permits. List is updated weekly.

ODNR Division of Geological Survey.

Ohio Environmental Protection Agency.

Ohio State University Extension.

Ohio Farm Bureau.

Ohio Oil and Gas Association, a Granville-based group that represents 1,500 Ohio energy-related companies.

Ohio Oil & Gas Energy Education Program.

Energy In Depth, a trade group.

Marcellus and Utica Shale Resource Center by Ohio law firm Bricker & Eckler.

Utica Shale, a compilation of Utica shale activities.

Landman Report Card, a site that looks at companies involved in gas and oil leases.FracFocus, a compilation of chemicals used in fracking individual wells as reported voluntarily by some drillers.

Chesapeake Energy Corp,the Oklahoma-based firm is the No. 1 driller in Ohio.

Rig Count Interactive Map by Baker Hughes, an energy services company.

Shale Sheet Fracking, a Youngstown Vindicator blog.

National Geographic's The Great Shale Rush.

The Ohio Environmental Council, a statewide eco-group based in Columbus.

Buckeye Forest Council.

Earthjustice, a national eco-group.

Stop Fracking Ohio.

People's Oil and Gas Collaborative-Ohio, a grass-roots group in Northeast Ohio.

Concerned Citizens of Medina County, a grass-roots group.

No Frack Ohio, a Columbus-based grass-roots group.

Fracking: Gas Drilling's Environmental Threat by ProPublica, an online journalism site.

Penn State Marcellus Center.

Pipeline, blog from Pittsburgh Post-Gazette on Marcellus shale drilling.

Allegheny Front, environmental public radio for Western Pennsylvania.