BP Shifts into First Gear with Shale – Splits Offshore/Onshore
BP is one of the world’s largest integrated oil and gas companies, with operations that span from exploration and production in the upstream to midstream pipelines and even downstream (one of the world’s largest energy traders). A truly huge company. They also own 84,000 acres of leases in the Ohio Utica Shale–acreage they’ve done almost nothing with since leasing in early 2012. According to Volume 3 of the Marcellus and Utica Shale Databook (published in January), we count 5 drilling permits for BP in the OH Utica Shale for all of 2013. Barely a pulse.
Our course hindsight is 20/20, but one of the problems is BP leased all of that land in the northern part of the Utica play–in Trumbull County. As we’ve noted elsewhere today on MDN, Utica drilling has decidedly shifted southward (away from Trumbull and other northern counties). But perhaps geography hasn’t been the only thing holding BP back in their Utica drilling program. Could it be an inefficient management structure in the company? Perhaps! Two days ago BP announced they are splitting offshore and US onshore drilling into separate divisions within the company. Judging from the announcement, it appears the decision to split operations is an effort to take better advantage of shale drilling. While they don’t mention the Utica specifically, we believe part of the reason BP has not drilled in the Utica is due to their own internal structure, which they’re moving to remedy…
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A newly published peer reviewed study in the February Bulletin of the American Association of Petroleum Geologists (AAPG) offers new research that we believe comes close to, if not fully, exonerating Cabot Oil & Gas over the now infamous case of methane migration into water wells in a small area of Dimock, PA. The new study has no connection to Cabot. It is written by three experts and uses (gasp) actual science–you know, in the field data? The data comes from “more than 2,300 gas and water samples collected from 234 gas wells and 67 private groundwater-supply wells” in northeastern PA and is the largest such data set ever analyzed. What did the authors find? Shallow (near the surface) methane with the same identical chemical “fingerprint” as deeper Marcellus Shale gas is naturally occurring in large quantities in northeastern PA. That is, the shallow methane under the microscope looks exactly like the methane found more than a mile below the ground, but it isn’t gas from the Marcellus because the methane near the surface that looks just like Marcellus gas, with the same chemical “fingerprint,” was lurking in water wells long before there was any shale drilling in the area.