As Chesapeake delves into drilling, experts take wait-and-see attitude

By Karl Henkel | October 1, 2011 at 12:00a.m.

Chesapeake Energy Corp.’s foray into Utica Shale drilling has produced early positive results, according to figures released by the company.

But the limited statistical data and secrecy have some experts holding off on a celebration.

Chesapeake announced this week it is drawing natural gas from four wells in three eastern Ohio and western Pennsylvania counties, including one in nearby Beaver County, Pa.

The most productive well to date is located in Harrison County, about 80 miles southwest of Youngstown, which at its peak has produced 9.5 million cubic feet of natural gas and 1,425 barrels of natural-gas and oil liquids.

The Beaver County, Pa., well, 45 miles southeast of Youngstown, has produced a peak daily rate of 6.4 million cubic feet of natural gas; two wells in Carroll County, 65 miles southwest of Youngstown, have produced peak daily rates of 3.8 and 3.1 million cubic feet of natural gas.

Aubrey McClendon, Chesapeake’s CEO, called the preliminary results “very strong” in a statement released Wednesday.

“It’s creating a lot of optimism and a lot of positive projections,” said Tom Tugend, Ohio Department of Natural Resources deputy chief.

“But four wells don’t necessarily paint the entire picture for what the future might be.”

Jeffrey Dick, Youngstown State University geology department chair, said the Harrison County number was “quite impressive” but remains cautious about what the numbers mean in the long term because Chesapeake released only peak rates.

“That’s just one data point,” he said. “What really I want to know, and Chesapeake will eventually have to release this, is there a sustained production rate and the rate of decline.”

Dick said the rate of decline in Marcellus Shale wells declined “very quickly” but that Utica Shale drilling could be different, because of the rock’s mineral composition and thickness. It’s also deeper below the ground’s surface.

Chesapeake will make known complete drilling information in March.

Its stock fell nearly 12 percent this week after the statistic release and closed Friday at $25.55 per share.

Peak rate or not, natural gas numbers compare favorably to production wells in Ohio’s Appalachian basin, which can produce between 100,000 and 500,000 cubic feet of gas daily.

Wells in the Utica Shale could produce between 2 million and 10 million cubic feet daily, according to a report from ODNR.

Chesapeake, which has leased 1.25 million acres in Utica Shale territory — about 40 percent of the drillable area — has eight other horizontal wells being completed or waiting on completion. This includes a well in Milton Township that has already been partially fractured and another in Knox Township in Columbiana County, which is currently under construction.

A Chesapeake spokesperson declined to comment on anything to do with drilling plans in the Mahoning Valley.

The gas isolation is done through a process called hydraulic fracturing, or fracking, a process where water and chemicals are blasted into rocks thousands of feet below the ground to unlock the natural substances.

It’s a hot-button issue that many point to as a possible source of pollution.

But Dick said fracking is a process that’s been around since the 1970s and does not directly lead to environmental hazards.

“Claims that fractures that extend from 800 feet below the surface of the ground and contaminate water are baseless,” Dick told The Vindicator. “It’s pretty much physically impossible.”

The Oklahoma City-based company, which employs 12,000, also said it has five operating rigs in Utica Shale territory and hopes to up that total to 10 by year’s end, 20 by the end of 2012 and 40 by the end of 2014.

“That’s not a substantial number,” Tugend said. “It’s more than we have right now, but we’re ahead of the game and focusing on increasing our staff.”