Although some of the initial frenzy of activity has subsided, drilling in Ohio’s Utica Shale continues, and along with it comes a growth in business, jobs and economic impact.
Here are a few stories of Ohio businesses that have seen a major impact from plugging in to the Marcellus and Utica Shale “supply chain”:
Read More “Plugging in to the Marcellus & Utica Shale Supply Chain”
It seems the entire country watched with morbid fascination as Hurricane-now-Super Storm Sandy slammed into the northeast yesterday. The exceptionally large and powerful storm—some 1,000 miles across—lingers over what is essentially the Marcellus and Utica Shale region of the U.S. As of early Tuesday more than 5 million people are without power due to storm damage. New York was heavily hit with the highest storm surge to hit Manhattan in over 200 years, flooding subway tunnels and covering some city streets. The New York Stock Exchange is closed for two consecutive days for the first time since 1888. Truly history in the making.
How will Sandy affect drilling, production and refining in the Marcellus? Reports came in yesterday that refineries were shutting down in advance of the storm. Production coming from the field likely will not be affected all that much, but drilling is another matter. Some drilling operators reported they would lay down rig masts until the storm passes.
Read More “Sandy’s Effect on Marcellus/Utica Shale Drilling & Production”
Dominion Resources (a subsidiary of Dominion) has penned an agreement with M3 Ohio Gathering to hook up to wells in Ohio’s Utica Shale and move up to 180 million cubic feet per day of natural gas from those wells to the Kensington Processing Plant in Columbiana County, Ohio. The new plant is currently being built by Chesapeake Midstream, M3 and EV Energy Partners (see this MDN story for background).
Here’s the details on Dominion’s deal with M3 to pipe natural gas and gas liquids to the new processing plant:
Read More “Dominion Signs Deal with M3 to Pipe NatGas/NGLs to New Plant”
Magnum Hunter announced this morning they’ve purchased 100% of privately-held Viking International Resources, Inc. (“Virco”) for $106.7 million using a stock swap and cash. The deal means Magnum Hunter will get an additional 51,500 net acres in the Marcellus and Utica Shale in West Virginia and Ohio, pushing their total acreage to something just over 166,000 acres throughout the Appalachian region. Management already has it’s eye on the new acreage and has identified 74 new drilling locations in the Marcellus and 31 new locations in the Utica Shale.
Details on the transaction and what it means:
Read More “Magnum Hunter Buys Virco for $106.7M with 51,500 Net Acres”
The mighty Reuters news agency, no friend of shale gas drilling, is taking aim at the Utica Shale in Ohio. A new article by Reuters attempts to sow the seeds of doubt about the size and potential of the Utica Shale. Their article opens by quoting drilling “bad boy” Aubrey McClendon, CEO of Chesapeake who famously said last year the Utica contains $500 billion worth of hydrocarbons. Reuters’ contention? Don’t believe it.
A key point of the article is that Ohio is only reporting oil and gas production numbers annually, not monthly as other states typically do. That irks Reuters, so they’re spinning it as an industry cover-up to conceal the “real truth” that the Utica is not as productive as McClendon and “the industry” is leading people to believe. It’s the old “it really ain’t all that big, it’s just a Ponzi scheme” meme started by The New York Times last year (see this MDN story).
Read More “Reuters Says Utica Shale Boom is Really a Secret Bust”
A tale of caution for landowners in Ohio and in other areas where landowners have recently signed leases to allow drilling for shale gas. One landowner in Ohio reports being called by a Texas company looking to buy his royalty rights. The landowner already signed a lease and got his signing bonus. The company in question wants to now purchase the man’s future royalty payments—at a discount of course.
This is similar to companies buying other structured settlements—like someone who successfully sues for damages from an accident, but the payments are made over the course of several years. Or someone who wins a state lottery that has a payout over 25 years. Companies will offer to pay you less than what you would make over the course of time, but you get a lump sum payment now, up front.
Read More “Caution: Royalty Buyers Coming Out of the Woodwork in Ohio”
Yesterday MDN reported that Carrizo Oil & Gas had sold off it’s interest in lease acreage in Ohio’s northern Utica Shale region for $43 million (see this MDN story). Carrizo did not identify the buyer, but the enterprising Youngstown Business Journal did.
Here’s who it is:
Read More “Mystery Buyer of Carrizo’s Northern Utica Acreage Revealed”
According to a professor of geology at Youngstown State University, the Mahoning Valley, the area around Youngstown in northeastern Ohio, is one of the “sweet spots” for natural gas drilling in Ohio. Is that statement accurate? MDN wondered, so we decided to analyze the latest numbers from the Ohio Dept. of Natural Resources (ODNR). Our analysis, along with a a couple of maps, is embedded below.
First, the statement from the Youngstown professor:
Read More “Where are the ‘Sweet Spots’ in Ohio’s Utica Shale?”
Carrizo Oil & Gas announced today it has sold its interest in the northern portion of the Utica Shale play—in Mercer and Crawford counties in Pennsylvania and Trumbull County in Ohio—for $43 million in cash (see the map below). Carrizo’s press release does not identify who purchased the lease interest in the northern Utica. Carrizo also does not say how many net acres are represented in the sale, although an MDN story from Oct. 2011 says the initial deal Carrizo signed included 15,000 acres (see this MDN story).
Carrizo has not, however, completely exited the Utica Shale. Far from it. They retain an interest in an additional 26,000 acres in the southern part of the Utica Shale play—in Guernsey County, Ohio. Looks like Carrizo has decided which part of the Ohio Utica Shale is their “sweet spot.” From the Carrizo press release:
Read More “Carrizo Exits Northern Utica Shale, Retains Southern Acreage”
Seeking Alpha blogger Richard Zeits, whom we’ve highlighted before on MDN, is back with a new analysis of the latest Baker Hughes rig count. You need rigs to drill the holes—so the rig count is a good indicator of whether new drilling is going up, down or staying constant.
In Zeits’ extensive analysis (well worth your time to read and digest), he draws some conclusions about wet gas (natural gas liquids) versus dry gas (methane only) drilling as evidenced by the Baker Hughes numbers. His conclusions may surprise you, as it did us:
Read More “Surprising Data on Rig Counts for Dry vs Wet Gas Drilling”
Because the sale price of domestically produced oil and natural gas has gone down over the past year, royalties for landowners have gone down as well. However, the bonus payments landowners receive when signing a new lease agreement have gone up—way up in the Marcellus and Utica Shale.
A newly released survey (embedded below) from Farmers National Co., a real estate management company for property owners, shows a dramatic increase for bonus deals in West Virginia (up 1.75 times), in Pennsylvania (more than doubling, up 2.3 times), but most dramatically, in Ohio (up nearly 13 times from a year ago). The largest reported lease signing bonus in Ohio for 3Q12 was a whopping $8,200 per acre.
Read More “Lease Bonus Payments for Marcellus & Utica Reach New Highs”
The number of permits filed to drill new shale oil and gas wells in Ohio slowed a bit in September, according to recent records. The number of permits to drill new shale wells in Pennsylvania saw an uptick in September.
Read More “A Look at the Numbers: OH Drill Permits Dip, PA Permits Grow”
Marathon Petroleum Corp. (MPC) and Harvest Pipeline Company announced yesterday they’re working together to build a system to bring natural gas liquids (NGLs) from the Utica Shale in eastern Ohio and western Pennsylvania to Marathon’s refineries by truck and barge along the Ohio River. The joint project will be completed by the end of 2013.
From the Marathon press release:
Read More “Marathon to Move Utica NGLs to Refineries by Truck & Barge”
Ohio finds itself at the very front end of the shale energy revolution and all of the benefits that will mean for the state. Most stories on how the shale boom will affect the state economically concentrate on the exploration and production (E&P) aspects and talk about jobs and tax revenue—very important aspects.
Not mentioned so often is another beneficiary of the shale revolution: the petrochemical industry. Shale drilling, according to one trade group, will have a “revolutionary” (not just evolutionary) impact on chemical and plastics companies throughout Ohio. How?
Read More “Shale is "Revolutionary" for Ohio’s Petrochemical Industry”
The U.S. Geological Survey (USGS) has just released their first official assessment (i.e. estimate) of how much recoverable natural gas, oil and gas liquids is located in the Utica Shale throughout Ohio, West Virginia, Pennsylvania, New York, Maryland and Virginia (a full copy of the USGS assessment is embedded below).
The USGS estimates the Utica is #3 in size behind the Marcellus (#1) and Green River Basin (#2) for volume of recoverable natural gas in the U.S. Here are the numbers from the USGS, along with and a brief introduction to their first-ever assessment of the Utica:
Read More “USGS Releases Official Estimate of Oil & Gas in Utica Shale”
The story line for development of the Marcellus and Utica Shale going back to the beginning of this year was, “Drillers are leaving the dry gas areas and going after wet gas,” meaning natural gas liquids. Why? Because the price for liquids is more favorable. That meant drilling activity was lessening in places like northeast Pennsylvania and (supposedly) moving to southwest PA, northern WV and eastern OH. To some degree that has happened.
However, the price for natural gas liquids has fallen due an abundance created by Marcellus and Utica Shale drilling. So the more recent story has been a move toward drilling for crude oil, especially in Ohio. But drilling for crude in Ohio isn’t working out so well—at least for some drillers.
Read More “Ohio’s Less Than Stellar Results from Oil Drilling”