Oklahoma company estimating $20B worth in shale beneath its 1.25 million leased acres
Friday, July 29, 2011 03:04 AM
By Dan Gearino
An Oklahoma company has discovered oil and natural-gas resources in eastern Ohio that it thinks could be worth up to $20billion, an announcement that shows the economic potential of Utica shale.
Chesapeake Energy released the estimate yesterday, based on a two-year study of the company’s 1.25 million leased acres.
Gov. John Kasich hailed the discovery, which he said will lead to jobs and wide-ranging benefits.
“This is huge news for Ohioans, and I’m simply thrilled to hear it,” the governor said in a statement. “I’m especially glad that this can mean a shot in the arm for eastern Ohio.”
Utica shale is a layer of rock deep beneath central and eastern Ohio that geologists have said might contain vast amounts of oil and natural gas.
Using new drilling technologies, companies are finding ways to extract resources that once were too far down or too difficult to collect. Some of the techniques, such as “fracking,” have led to environmental concerns.
Chesapeake, based in Oklahoma City, is one of the country’s largest natural-gas producers. The company has five drilling rigs in Ohio and plans to increase that number to as many as 40 by the end of 2014. Chesapeake is considering different ways to manage the project, including a potential joint venture that would be announced sometime later this year.
The initial five rigs are all in Carroll and Columbiana counties.
Tom Stewart, executive vice president of the Ohio Oil and Gas Association, said Chesapeake’s numbers are in line with other estimates he has heard about the potential of the region, although he added that he has not yet seen the company’s announcement.
“The investment by this company and other well-capitalized companies indicates that the resource is there, the potential is there, and Ohio can become a much more significant producing state because of the technology unlocking the oil and gas potential of the Utica shale,” he said.
A recent report from state geologist Larry Wickstrom shows why people such as Stewart are so optimistic. While a typical natural-gas well can produce about $2million worth of resources over its life, a well in one of Ohio’s shale formations potentially can produce $16 million, the report said.
Numbers like that are why Kasich thinks shale resources can transform the state’s economy.
“I believe that we could be at the beginning of a new and extended positive chapter in Ohio’s economy, and it’s essential that we properly marshal our economic development, job training, environmental and regulatory assets to make this work right and work well for Ohio,” he said.
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