By Burton Speakman
As Trumbull and Columbiana counties experienced tremendous investment in 2011 with companies buying large numbers of oil and gas leases, Mahoning County lagged a bit behind the curve.
Starting in June, however, Houston-based Hilcorp Energy Co. aggressively pursued leases in eastern and southern Mahoning County.
Out of 444 leases signed by Hilcorp in Mahoning, all but 11 of them were filed in 2012.
The expansion of the oil and gas business into both Mahoning and Trumbull counties is just a natural expansion of the industry to the north of its current base in Ohio, said Dr. Joseph A. Stanislaw, founder of the advisory firm The JAStanislaw Group LLC, independent senior adviser to Deloitte’s energy and sustainability practice, and a member of several energy-related boards.
“Companies are moving north to grab land that doesn’t already have holds,” he said.
“The nature of the oil and gas business is highly competitive. When you are in the early stages of a play, companies are really trying to get a sense of what all is going on. However, it is no secret that the Utica Shale holds a lot of potential,” said Greg Lalicker, president of Hilcorp. “Whether this potential turns out to be more liquids or more gas will only be known once we have the results from drilling and production. That is why we are here — to figure that out.”
Hilcorp still is considering its options for opening an office in either Ohio or Pennsylvania, he said. “As we continue to grow our operations in Ohio and Pennsylvania, we would naturally look at establishing more of a presence on the ground,” Laliker said.
Hilcorp has more than 1,000 employees, and while it primarily does oil and gas production, it also has some midstream services operations, he said. Reports are that Hilcorp is doing preliminary survey work for a pipeline project in Springfield Township.
“Our goal is to develop both oil and natural-gas projects as safely and efficiently as possible. We have been fortunate in that we have experienced a lot of growth since we were founded in 1989,” Laliker said. “You don’t experience and sustain the growth we have seen at Hilcorp if you don’t do things the right way. The fact is we have employees that live and work in the areas we operate. That gives us a vested interest in doing things the right way.
“We want to be a good neighbor and a good partner in our communities. An example of this is our giving program in which the company matches employee donations to charitable causes. Since 2008, our employees have given over $4.2 million dollars to charity through this program alone. We are very proud of our good reputation in this business, and we strive to maintain it in every area we operate.”
Locally Hilcorp also has been active with local government agencies. The company signed an $836,000 deal for 167 acres of oil- and gas-drilling rights with Campbell and has made an offer to Lowellville Local School District for 28 acres of district-owned property for $4,000 an acre.
Hilcorp has a reputation of being aggressive in seeking leases but overall appears to be a strong company with plenty of cash on hand, said Alan Wenger, an attorney from Harrington, Hoppe and Mitchell LTD.
The company in 2011 began developing leases mostly in Pennsylvania just across the border, before moving into Ohio this year, Wenger said. The company also had been working to make deals with larger landowner groups that were ultimately unsuccessful.
“The company started going after smaller landowners in southern Mahoning County and northern Columbiana, traditional Chesapeake territory, which didn’t make sense until the [July] announcement that Hilcorp would develop [Nisource’s] storage fields in Columbiana County,” he said.
These purchases must somehow tie into that work, Wenger said.
Mahoning and Trumbull counties have several advantages for oil and gas companies. There is a large population that needs jobs, many of them have educations and there is a lot of oil and gas expected to exist in the Utica Shale, Stanislaw said. He believes it makes sense for companies to invest now in mineral rights despite the current low price for natural gas.
“The oil and gas industry recycles. During the trough, if a company is able to buy rights at a reasonable price and hold onto them for a while, it could be a win for the company when prices go back up,” he said.
Companies cannot make money immediately from extracting natural gas, but rising prices later allow both the surface owner and company to make money, Stanislaw said.
“There is enough of the resource available that everyone could be winners,” he said.