Chesapeake Energy Seeks OH Refiner for Oil from Utica Shale

A roundtable discussion at Lakeland Community College in Kirtland, OH brings us this update about Utica Shale drilling in Ohio:

A state official estimated Tuesday that as much as 5 billion barrels of oil and 15 trillion cubic feet of natural gas could be underground in eastern Ohio.

The oil and natural gas is in the Utica shale that is 100 to 300 feet thick under the eastern half of the state, said Lawrence Wickstrom, state geologist and head of the Ohio Department of Natural Resource’s Division of Geological Survey.

And this, he said, is “a very conservative estimate” of the Utica potential. No dollar figure was attached to the numbers, but others have said the Utica shale will produce tens of billions of dollars in Ohio.

Rick Simmers, of ODNR’s newly created Division of Oil & Gas Resources Management, called Ohio’s existing rules on drilling “very strict” and some of the “most stringent laws in the United States.”

Simmers said Ohio saw the shale’s potential and began working four years ago to get ready for the energy companies. This included toughening Ohio drilling rules through Senate Bill 165 and preparing a management plan.

Ohio also saw what worked and what didn’t work in Pennsylvania where the drilling took off first, he said.

He said the state’s rules are, according to an industry source, “thorough, fair and predictable.”*

And this tidbit about Chesapeake seeking a refiner in Ohio for oil it plans to get from its Utica shale wells:

Oklahoma-based Chesapeake Energy is negotiating with Findlay-based Marathon Petroleum Co. about the possibility of refining oil from its Utica shale wells in Canton, said Terry Fleming of the Ohio Petroleum Council.

Chesapeake Energy is a major player in Ohio shale drilling. It has invested nearly $2 billion and has leased 1.5 million acres in Ohio. The company has said it plans to drill 12,000 wells on its Ohio leases. Preliminary tests indicate that the wells will produce natural gas, oil and so-called natural gas liquids — ethane, butane and propane — that are lucrative.

Chesapeake is seeking a deal with Marathon Petroleum to refine the Ohio-produced oil in Canton and Catlettsburg. Ky., Fleming said.

Scott Rotruck, Chesapeake’s vice president of corporate development, said the company is not prepared to discuss the refining arrangement.

Ohio now has four active refineries but none are currently processing oil from Ohio wells, Fleming said.*

*The Akron Beacon Journal (Nov 1, 2011) – Headline xxx