Decision Point: Will BP Drill Their Utica Acreage? Or Pass?
In March 2012, BP leased 84,000 Utica Shale acres in Trumbull County, OH for $3,900 per acre and 17.5% royalties (see BP’s Big Utica Shale Deal, Leases 84K Acres in Ohio). They now have a total of 104,000 acres under least in northeast Ohio. But it’s been hurry up and wait. For an entire year we heard nothing from BP about drilling. A year later, in March 2013, BP obtained their first permit to drill in the OH Utica (see Better Late than Never: BP Gets First Permit for OH Utica). The original plan was to drill 10 test wells. So far they’ve drilled four, one of which is actually producing and online. Which seems like an awfully slow start for one of the world’s largest oil & gas companies. Landowners are frustrated at BP’s lack of drilling.
BP’s problem is, of course, that the more profitable “wet gas” zone for Utica drilling is well south of the acreage they’ve leased. So the question becomes, how much wet gas is there in the BP acreage? And if there’s not much, how productive (and cost effective) is the methane or “dry gas” they’re able to extract from the acreage? The jury is still out. NGI’s Shale Daily reports BP will make a decision “early next year” about whether or not they’ll commit to drilling on their OH Utica acreage…
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