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Ohio Utica Shale

New players staking claims to Ohio’s Utica shale land

By admin Published: March 26, 2012

Chesapeake Energy Corp. swept into eastern Ohio nearly two years ago and started aggressively signing thousands of landowners to leases for natural gas drilling.

The Oklahoma-based company quickly became the biggest stakeholder in Ohio’s Utica shale, the gas-abundant rock formation thousands of feet underground. In 2011, Chesapeake started drilling its first wells.

To date, Chesapeake — with 1.35 million acres of land leases — has drilled (or is drilling) 56 wells, mostly in Carroll County, as its exploration continues.

But Chesapeake is seeing increased competition as other companies — some with familiar names — are attracted to Ohio’s potential.

Among the companies signing leases or other deals to become players in an area stretching from Youngstown to Marietta are EnerVest Ltd., Anadarko Petroleum Corp., Devon Energy Production Co, Hess Energy, XTO Energy Ltd. (an ExxonMobil Corp. subsidiary), Chevron Corp., HG Energy, CNX Gas Co. Ltd., Range Resources Corp., Anschutz Exploration Corp., Carrizo Oil & Gas and Antero Resources.

To date, 3.8 million acres in Ohio have been leased or acquired, according to a recent study by Ohio State and Cleveland State universities and Marietta College.

The price paid to acquire Utica rights topped $8,800 an acre in at least one case, but a more typical leasing bonus is $2,500 an acre.

The busiest counties for recent leasing and acquisition have been Belmont, Jefferson, Noble, Guernsey, Monroe and Washington.

Projections are that 160 wells will be drilled in 2012 in Ohio, with another 650 wells in 2013 and 1,075 wells in 2014.

Leasing is expected to spread slowly to the west as drillers get more serious about tapping into the oil found in the Utica shale.

Few companies will reveal their lease holdings or plans. But a clearer picture of who’s got what Ohio acreage is starting to emerge from company statements, state permits, leasing records, trade publications, media and Web reports and other sources.

Chevron Corp. controls about 600,000 acres, obtained through a 2011 acquisition of Atlas Energy for $3.2 billion.

EnerVest, with about 780,000 acres leased in Ohio (about 300,000 acres in the Utica shale area), holds state permits to drill horizontal wells in Stark, Carroll and Jefferson counties.

Anadarko controls an estimated 300,000 acres in eastern Ohio — about half coming from a deal with Columbus-based American Electric Power, which used to mine coal for its power plants in eastern Ohio. The company has filed for state permits to drill wells in Guernsey, Coshocton, Muskingum and Noble counties.

Devon Energy, with about 235,000 Ohio acres leased, said it hopes to have 125 wells by late 2012 in five shale areas. It holds state permits to drill in Medina, Knox and Ashland counties.

ExxonMobil Corp., through its XTO Energy Ltd. subsidiary, has about 75,000 acres, mostly in Belmont and Monroe counties. It got its first two state permits for wells in Belmont.

The Texas-based energy giant moved into eastern Ohio last fall. It acquired Pennsylvania-based Phillips Resources and a sister company last June for $1.7 billion. That purchase included about 45,000 acres in Ohio.

A new player in Ohio is Oklahoma-based Gulfport Energy, one of the smaller gas-oil companies. It has filed five permits with the state and is drilling its first horizontal well in Harrison County. It has drilled vertical test wells in Harrison, Belmont and Guernsey counties.

Benefits of “wet gases”

Rex Energy documents offer a rare glimpse into the financial rewards for drillers in Ohio.

In its paperwork, the State College, Pa., company, which holds leases covering 11,000 acres in Carroll County, says “wet gases” like propane, butane and ethane that it is getting from wells in western Pennsylvania add about 40 percent value to its natural gas production.

That bonus explains why drilling companies are so interested in Ohio’s Utica shale, which already is proving rich in butane, ethane and propane.

Chesapeake is shifting its drilling efforts away from gas-only sites like the Marcellus shale deposits in northeastern Pennsylvania to eastern Ohio.

The company has received 121 well permits from the Ohio Department of Natural Resources’ Division of Mineral Resources Management. Statewide, 159 permits have been approved for horizontal wells. That includes 52 Chesapeake permits in Carroll County alone.

Chesapeake has said it needs to drill about 100 wells before it will know the exact nature of the gas-oil play.

The company has eight rigs operating in the Utica shale: six in the wet area and one each in the dry (natural) gas and oil areas.

The company said it holds lease rights on about 400,000 acres in the natural gas-only area and another 400,000 acres in the oil area.

Aubrey K. McClendon, Chesapeake’s chief executive, said in a Feb. 22 earnings conference call that the company has held back development in the gas area and has not drilled enough wells in the oil area to determine how rich Ohio might be.

Both areas will be developed soon, he said.

Chesapeake has reported positive results from two wells in Carroll County. Company officials said those wells produced a peak average rate of 700 barrels of oil and 3 million cubic feet of natural gas per day.

A typical Ohio well produces less than one barrel of oil and about 50,000 cubic feet of natural gas a day.

To date, Chesapeake has released data for only five Ohio wells.

The company said it has added 200 miles of natural gas pipelines in Ohio and expects to add 200 more miles this year.

Bob Downing can be reached at 330-996-3745 or bdowning@thebeaconjournal.com.

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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.