A new report from PricewaterhouseCoopers analyzing American energy mergers and transactions in 2011 worth more than $50 million found a dramatic increase in deals in the Utica Shale, and a dramatic decrease in deals in the Marcellus Shale.
Ohio Gov. John Kasich, a Republican in his first term in office, delivered the annual State of the State address yesterday. He chose to do it from the auditorium of a high-performing elementary school in Steubenville. During the 90-minute speech he was briefly interrupted by several hecklers until state troopers removed them from the room. Who were the bad actors? You guessed it—anti-drillers.
Coshocton County in eastern Ohio requested Utica Shale lease offers for 436 acres of county-owned land no longer being used for any other purpose. There was only one offer put on the table, by Anadarko. Under the five-year lease offer, the county would receive a $1.3 million signing bonus ($3,000 per acre) and 17.5 percent in royalties.
According to press reports, XTO Energy—a subsidiary of Exxon Mobil—will drill its first Ohio Utica Shale well in Belmont County.
MarkWest Energy Partners, a major midstream player in the Marcellus and Utica Shales, just announced major expansion plans that will add an additional 600 million cubic feet per day (mmcf/d) of natural gas processing capacity which includes natural gas liquids (NGLs). Most of the new capacity will come from expansion of its Majorsville, WV plant. The expansion is made possible by new long-term agreements MarkWest signed with CONSOL Energy, Noble Energy and Range Resources to process NGLs.
MarkWest also announced they will build two new processing plants in Ohio’s Utica Shale—in Harrison and Monroe counties.
Increasingly, you will read on MDN and in press accounts about natural gas liquids (NGLs), and how major energy companies are now focused on drilling in the “liquids-rich” portion of the Marcellus and Utica Shales. The geography of where NGLs are found is typically western Pennsylvania, the West Virginia panhandle and eastern Ohio. But, just what are NGLs anyway? A helpful article on The Motley Fool website provides an excellent summary:
Last year’s mergers and acquisitions activity in the oil and natural gas sector set new records, both in the total value of deals and the total number of deals. Although the Marcellus Shale was responsible for a great deal of M&A activity in 2010, for 2011, the Utica Shale, considered an emerging shale play, ranked higher than the Marcellus in M&A activity. For 2011, the Utica saw 12 deals worth a combined $5.3 billion.
Exxon Mobil, through it’s subsidiary XTO Energy, recently acquired just over 13,200 acres of Utica Shale leases from Beck Energy Corp. in Monroe County, Ohio. A copy of the Bill of Sale, dated Dec. 20, 2011, is embedded below, containing a list of all the parcels in the transaction. Terms of the purchase are not disclosed in the document. Neither Exxon Mobil nor Beck Energy have disclosed the price and terms of the deal.
The Chinese government, through state-controlled Sinopec, yesterday signed a deal with Devon Energy to buy into five prospective new exploration areas in the U.S. One of those areas is the Ohio Utica Shale, where Devon has increased it’s position to 235,000 net acres. With a $2.2 billion cash infusion coming from Sinopec, Devon will have the money to develop all five plays, including the Utica.
From the Devon press release:
In October 2011, Enterprise Products Partners announced they were considering building a 1,230 mile pipeline to transport ethane from the Marcellus and Utica Shale regions in Pennsylvania, West Virginia and Ohio to the U.S. Gulf Coast (see this MDN story). Shortly after the announcement, Chesapeake Energy signed on to be the first customer for the new pipeline, if it’s built (see this MDN story).
In early November, Chesapeake Energy announced a major cash infusion into their Utica Shale exploration and production would come from a new joint venture with a mystery/unnamed “international major energy company” to the tune of $2.14 billion (see this MDN story). The amount turned out to be even higher: $2.32 billion, and we now know who the mystery company is: Total E&P USA, Inc., a subsidiary of Total S.A.
Chesapeake Energy, American Electric Power and Spectra Energy are joining forces to build 70 miles of new pipeline in Ohio that will connect Utica and Marcellus gas wells in eastern Ohio to Spectra’s Texas Eastern pipeline system, which runs from Texas to New York. The new joint project is called the Ohio Pipeline Energy Network (OPEN). The estimated cost for the project is $500 million according to Spectra Energy.
The good economic news keeps coming in for the Marcellus and Utica Shales. If approvals come (as expected) from the city of Youngstown, Ohio, Exterran Energy Solutions will build a new $13 million manufacturing facility in the city in 2012. Exterran manufactures parts used in compressors and compressor stations used in the production and transportation of natural gas from shale drilling. The new plant could provide as many as 200 new jobs in the next several years.
Chesapeake Energy has just paid $630,000 for two pieces of real estate in Belmont County, Ohio—ground zero for Utica Shale drilling in eastern Ohio. Chesapeake will not officially comment on the purchases, but there’s little doubt they will build a new satellite office at one location for their Ohio drilling operations, and perhaps use the other parcel (land and warehouse) for storage and operations. It shows the serious commitment Chesapeake is making in Ohio and signals their further expansion in the area.
The number of shale gas drilling permits in Ohio has rocketed from virtually none in 2009 and 2010, to 141 in 2011—the vast majority of that in the Utica Shale.
The Smith-Goshen Landowners Group in Belmont County, OH currently has 600 members and 45,000 acres of Utica Shale land available for lease. But they’re taking it slow and looking for a lease that will guarantee the safety of their farms and water supplies, according to Larry Cain, chairman of the group. They’re also looking for an even better deal than other landowners in Belmont County recently got from XTO Energy (a subsidiary of Exxon Mobil).