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Utica Shale gas drillers primed to dig in Mahoning Valley
By Karl Henkel
First came the leasing, then the permits.
Drilling and production will soon follow.
The Utica Shale exploration is ramping up, especially here in the Mahoning Valley, where new drilling permits have been approved, and 20,000 acres of freshly minted lease deals are nearly ready to be signed.
Chesapeake Energy Corp., the Oklahoma City-based energy company, which is the No. 2 driller in America, and an affiliate, Ohio Buckeye Energy, have gobbled up all of the drilling permits through the week of Oct. 9, according to the Ohio Department of Natural Resources Division of Mineral Resources Management.
Thirteen permits have been issued in Columbiana County. Middleton Township leads with four permits; Hanover Township has three and Franklin, West and Knox townships each have two.
Five of those permits are for horizontal drilling, which is executed using the hydraulic fracturing process, where a mix of water, chemicals and sand are blasted into rocks thousands of feet below the ground to unlock natural gas and oil.
Eight permits have been issued in Mahoning County. Goshen Township has six, and Milton Township has two. Ohio Buckeye Energy wells already have been drilled in Milton.
Trumbull County hasn’t been issued a deep drilling permit yet, but the 635-square-mile county may be close.
Bob Rea, president of the Associated Landowners of the Ohio Valley, which helped obtain lease deals for 100,000 acres of land in Columbiana County, is narrowing the focus on about 80,000 acres in Trumbull County.
“There are a number of interested prospective lessees looking at those acres,” Rea said. “This is the package that has the bow on it for bid.”
But Tom Stewart, executive vice president of the Oil and Gas Association, said there’s plenty of acreage to test, and oil and gas companies will have to spread out limited resources, such as rigs, to the areas they know have the greatest potential.
Chesapeake, which holds nearly all of the 43 horizontal-well permits in Utica Shale projects through mid-October, has five rigs, though it expects to have 40 by the end of 2014.
“This play is just getting under way; it’s just in its infancy,” Stewart said. “So the oil and gas companies will begin where they think they have the biggest probability for success.”
So far those three wells are producing west of the Valley. Two are in Carroll County, the epicenter of the Utica Shale boom, and one is in Harrison County.
The producing well sites were issued permits in late 2010 and early 2011 and started production in June (Harrison) and July and August (Carroll), said Keith Fuller, director of corporate development for Chesapeake.
The already-drilled Milton Township wells received permits in May, and based on Chesapeake trends, could begin producing by the end of the year.
The remaining Mahoning Valley locations all received permits after June 20, meaning production likely won’t start until 2012. Carroll, Geauga, Guernsey, Jefferson, Mahoning and Portage counties all have wells that are being drilled or have been drilled, but are not yet producing.
Chesapeake, or any of the oil and gas drilling companies, aren’t required to report oil, gas or brine production as it happens, according to Ohio Revised Code Section 1509.11.
Drilling figures, however, must be reported to ODNR’s Division of Mineral Resources Management by March 31.
Chesapeake, however, recently released drilling figures for its Carroll and Harrison county sites, which detail positive but limited information regarding the potential natural resources deep under the Ohio ground.
“It’s hard to keep secrets in the oil patch,” Stewart said. “But it’s hard to keep that information quiet, so competitors and other people in the industry are following it intently.
“I don’t think they’ll have to wait until March to see where the good spots and the bad spots are at.”