Trend toward southern horizontal drilling continues to grow

SALEM – The Ohio Department of Natural resources issued 32 horizontal drilling permits in the Utica Shale region from Feb. 23 through March 1. But no permits were issued in Columbiana, Mahoning, Trumbull or Stark counties.

According to the weekly report, there are 1,123 horizontal permits issued in the play, 750 wells are drilled with 385 of those producing oil and gas.

Carroll County was issued nine permits, Harrison County six, Guernsey and Monroe counties had five each, Noble County had four and Belmont County had three. This reflects an increasingly southern trend.

Chesapeake Energy continues to dominate the number of permits, receiving 15. Antero Resources had eight, Gulfport Energy and PDC Energy Inc. had three each, American Energy Utica LLC two and CNX Gas company LLC one.

Of the 44 permitted wells, seven were in the process of being drilled. Five of those are in Monroe County and two in Noble County.

The American Energy Utica LLC is former Chesapeake Energy CEO Aubrey McClendon’s company. McClendon spearheaded the oil and gas drilling rights buying spree in the Utica play in eastern Ohio before being ousted by the Chesapeake board of directors. The company has raised well over $3 billion for his new American Energy Utica (AEU) LLC, an affiliate of American Energy Partners, LP.

Based in Oklahoma, McClendon kept his focus on the Utica shale play and brought his new company right back to Ohio where it now has more than a quarter of million acres in the Utica play. AEU expects to have upwards of 30 drilling rigs operating in the Utica shale play by 2018.

In other oil and gas news, BP announced Tuesday its intention to establish a separate business to manage its onshore oil and gas assets in the United States lower 48 states. BP has an office in North Jackson.

According to a press release, the US Lower 48 onshore oil and gas business environment has unique characteristics and the move is expected to improve competitiveness, helping US Lower 48 onshore business remain at the forefront of innovation and development of technologies for unconventional resources.

The new business will operate separately from the rest of BP and will be designed to adapt to the rapidly changing and hyper-competitive energy landscape in the region.

This move is expected to help unlock the significant value associated with BP’s extensive resource position in the US Lower 48 onshore, which it currently oversees through its Houston-based North America Gas group.

“Over the last few years, we have fundamentally reshaped our North America Gas portfolio,” said BP Upstream Chief Executive Lamar McKay.

BP has divested non-core assets and focusing development in leading unconventional plays like the Eagle Ford Shale in South Texas.

“Now it’s time to reshape the way we run the business and we are very excited about this bold step forward,” he said. Our overriding goal is to build a stronger, more competitive and sustainable business that we expect will be a key component of BP’s portfolio for years to come. Participating in the US Lower 48 onshore is key to our upstream strategy because we believe the region will remain at the forefront of innovation and drive global learning in unconventional resources.”

Also, the Ohio Oil and Gas Association is holding its 67th winter meeting starting today in Columbus.

The OOGA meeting features top industry leaders from Ohio and the nation to provide the most current state of the oil and gas industry in business sessions and the trade show.

The winter meeting is the principle business meeting of the association. The trade show has more than 79 exhibitors and Thursday’s events include talks by OOGA Executive Vice President Tom Stewart on past and present challenges; Alex Epstein, from the Center for Industrial Progress will speak on wow to be an oil champion; Melissa Agnes of Agnes and Day will speak crisis Management in the 21st Century.

Jody Jones of Chesapeake Energy will present a regulatory update, and Jonathan Airey of Vorys, Sater, Seymour and Pease, LLP will give an Ohio oil and gas legal report; and state Rep. Dave Hall of the 70th District will give a legislative update along with OOGA’s Stewart.

Friday features a third business session with exploration update with Larry Wickstrom of Wickstrom Geoscience, while George Francisco, CFO, M3 Midstream LLC will give a midstream update.

Dr. Ronald Ripple of the University of Tulsa will make a presentation on energy markets and Dr. Brad Mitchell, Battelle for Kids will give an introduction to rural education transformation.

Dr. Scott W. Tinker, Director, Bureau of Economic Geology (Texas) will make a keynote speech Friday on “Shale and the Global Energy Future.”

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