Oil and Gas update – October 2013
We have been quite busy since our last update. Most -if not all- of the most valuable lands have already been leased, and energy companies have essentially staked out their positions. An incredible 169 wells are currently producing from the Utica shale in eastern Ohio. Chesapeake Energy is far and away the biggest producer in the region, as they operate 114 of these 169 wells. The lion’s share of these producing wells are in Carroll county. Carroll saw such a boom due to its underlying geology, but also because it had never seen significant oil and gas development. As a result, energy companies like Chesapeake did not need to navigate around already existing wells and older leases: it had a relatively blank canvas with which to operate.
Many more wells have been permitted and drilled. The Ohio Department of Natural Resources reports that more than 700 lateral wells have either been drilled or permitted within the last few years. Even so, there are limits to the development of the Utica shale play. Unfortunately, what comes out of the wellbore can’t immediately be put to use and first needs processed to remove impurities and fractionate natural gas liquids. Two plants have recently come online in Ohio to address this problem: one in Kensington (operated by Utica East Ohio), and another in Cadiz (operated by Mark West). Four other plants are expected to be built in Ohio to process Utica gas and gas liquids.
Of course, the gas first needs to get to these processing facilities. Pipeline projects by various companies are evolving every day. We have represented countless landowners who have been approached by entities such as Halcon, BP, and Sunoco, just to name a few. My niece, Atty. Molly Johnson Phillips, has been handling the vast majority of these pipeline agreements and she has quickly become an expert in the field. She will be instrumental in the installation of the Bluegrass pipeline which will take Utica natural gas liquids to Kentucky on their way down to the Gulf Coast.
We continue to be amazed at how quickly this has developed. The more information we obtain the more encouraged we are that this play has staying power.