U.S. Chamber Tooting Shale's Horn in Ohio's Marcellus, Utica

July 26, 2012
NGI's Shale Daily
A series of recent reports highlights the economic benefits of the burgeoning gas industry in eastern Ohio's Utica and Marcellus shales and, according to the U.S. Chamber of Commerce, shale energy "has the potential to be an economic game-changer" for the state and the nation.
"Ohioans are already beginning to see the benefits of shale development, but much more shale energy sits below the surface," said Karen Harbert, CEO of the Chamber's Institute for 21st Century Energy, which recently launched a campaign to educate the public and business community on shale's potential economic impact on the state. The "Shale Works for US" campaign will include extensive grassroots recruitment, advertising and educational outreach to businesses and community groups, according to the Chamber, which said similar efforts are under way in Pennsylvania and West Virginia and are planned in other areas. The Chamber is set to launch a nationwide campaign highlighting the vast potential of shale energy this week.
"Oil and natural gas production in Ohio is not new, but recent advances in technology will allow for vast quantities of recently discovered shale energy to be produced in a safe, environmentally responsible way," said Linda Woggon, executive vice president of the Ohio Chamber of Commerce. "This production will not only create jobs for Ohioans, but generate new revenues for localities throughout our state, meaning more money for education and public safety and lower residential property taxes."
Natural gas and oil drilling in Ohio could create 65,000 jobs and add nearly $5 billion to state coffers by 2014, according to an academic study issued earlier this year (see Shale Daily, Feb. 29). Energy, economics and geology experts from Cleveland State University, Ohio State University and Marietta College's Department of Petroleum took up the study at the request of the Ohio Shale Coalition, led by the Ohio Chamber of Commerce. The study team said for the first time in more than a century, "Ohio finds itself on the threshold of not only being self-sufficient in the production of oil and gas, but it may even become an exporter." Another study, conducted by an economics professor at Ohio State University, said it would be more realistic to project that shale development in the Utica would create only 20,000 jobs over the next four years in Ohio (see Shale Daily, Dec. 20, 2011).
The head of the American Petroleum Institute (API) has said Ohio is experiencing an energy "rebirth" as a result of the surge in shale gas development (see Shale Daily, May 15).
Evidence of that rebirth can be seen in a series of recent reports from eastern Ohio. Shale-related companies accounted for 30% of all business expansions and attraction projects in the Mahoning Valley, according to a recent report from the Youngstown/Warren Regional Chamber. And those companies are encouraging their suppliers to locate in the area, according to the Chamber.
The Columbiana County Recorder's Office has been packed with oil and gas company representatives searching out property deeds and mineral rights for months, and the county has issued 55 drilling permits, according to Youngstown's WFMJ-TV.
The Columbiana County Port Authority (CCPA) recently approved a memorandum of understanding to sell a portion of an industrial park in Wellsville, OH, to Marathon Petroleum Corp., which plans to use the property as a staging area for trucks transporting oil and gas collected from area shale wells, according to East Liverpool, OH's Review. The acreage is adjacent to a Marathon storage facility. The CCPA also agreed to lease acreage at the industrial park to Arrowhead Utica Pipelines, which plans to build a transfer facility on the site, the Review reported.
Last month the county's Board of Commissioners approved a three-year gas and oil lease agreement with DPS Penn for 548 acres at $5,850/acre (see Shale Daily, June 25). The $3.2 million deal came less than a year after the commissioners voted to a approve a letter of intent to sign a lease proposed by DPS that would have fetched $2,700/acre; however, that lease was never signed.
In September Rex Energy Corp. said it had acquired the rights to lease about 11,000 net acres in neighboring Carroll County for about $3,600 per acre, plus 20% royalties with no deductions (see Shale Daily, Sept. 12, 2011). The village council of Carrollton, the county seat of Carroll County, this week voted in favor of a nondevelopmental oil and natural gas lease agreement with Rex that was valued at $938,000 (see related story). Chesapeake last year paid a reported $2,250 per acre plus 17.5% in royalties for about 75,000 acres in eight Ohio counties (see Shale Daily, May 11, 2011).
Chesapeake Energy Corp., M3 Midstream LLC and EV Energy Partners LP are developing what they claim will be the largest integrated midstream service complex in eastern Ohio to serve Utica Shale production in Columbiana County (see Shale Daily, March 16). Engineering and procurement has begun for the project, with the first cryogenic processing and fractionation plants scheduled to be in service by the second quarter of 2013, according to Chesapeake.
Hess Corp. was scheduled to open a field office in Steubenville, in Jefferson County, this week. Hess Operations Manager Joaquin Martinez told Steubenville's Herald Star that the company plans hopes to drill and complete 10 horizontal wells in the Utica this year and have three rigs running by the end of the year.
Last September Hess acquired almost 185,000 net acres in Ohio's Utica Shale and more than 18,000 undeveloped net acres in Louisiana's Haynesville Shale after agreeing to buy Marquette Exploration LLC for $750 million (see Shale Daily, Sept. 9, 2011). The company also agreed to pay Consol Energy Inc. $593 million to acquire a half interest in nearly 200,000 net acres in eastern Ohio.
The permitting of horizontal natural gas wells in Ohio has grown more than eight-fold in one year, according to data from the Ohio Department of Natural Resources' (ODNR) Division of Oil and Gas Resources Management (see Shale Daily, July 9). The ODNR issued 285 horizontal Utica permits through July 15; 92 of those wells have been drilled and 14 are producing, according to ODNR data.
There were 15 horizontal rigs operating in Ohio's Utica Shale as of July 20, according to an NGI's Shale Daily estimate based on Smith Bits data. Nine of those rigs were operated by Chesapeake in Carroll, Columbiana, Harrison and Jefferson counties.