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Utica Shale area smaller than some thought, bodes well for Valley

Published: Sun, January 6, 2013 @ 12:10 a.m.

By Burton Speakman



The production area of the Utica Shale is shrinking compared with some industry expectations, but that won’t necessarily be a bad thing for the Mahoning Valley.

“It’s a good thing for the Mahoning Valley that the shale play is being defined, and the area is right in the heart of it all,” said Dan Alfaro, spokesman for Energy-In-Depth, an oil-and-gas industry outreach group.

A condensed shale area that is closer to the Valley should mean more impact for the area economically, he said.

Better boundaries of the Utica Shale began being defined after a number of companies drilled wells at what was believed to be its western and southern edges.

Devon Energy, which was operating in much of what was previously believed to be the potential western edge of the shale, elected to plug wells in Medina and Ashland counties, according to Ohio Department of Natural Resources records.

Initial results from Devon Energy’s oil and natural gas well in Ashland County were “not encouraging,” according to David A. Hager, executive vice president of exploration and production, in a statement.

While the Ashland County and Medina County wells are on the northwestern fringe of Oklahoma-based Devon’s leased-acreage in Ohio, company officials said they plan to continue drilling in Ohio, but will move east.

The three most active counties in drilling activity are Carroll, Columbiana and Harrison counties.

Multiple wells belonging to HG Energy LLC and Antero Resources Appalachian Corp. have been plugged in Noble and Monroe counties on the shale’s southern edge. Other wells are still active and producing in both counties, according to ODNR records. Additional wells were plugged in Portage and Stark counties on the current western border of the producing shale. These counties also have producing wells and additional drilling under way.

In the long-term, the condensing of the shale area should help the Mahoning Valley economically because oil-field services companies will be able to locate more centrally and won’t be as spread out, said Eric Planey, vice president for international business attraction at the Youngstown/Warren Regional Chamber.

“It won’t matter as much for the midstream services companies who are locating to position themselves for both the Marcellus and Utica shales,” he said. “I don’t think it will have much impact on the supply chain jobs.”

One of the key aspects that will help determine the local activity are the results of the 10 exploratory wells that BP plans to drill in Trumbull County in 2013, Planey said. There could be significantly more local economic development if Trumbull County wells are successful.

Companies already are looking at northern Trumbull and Ashtabula counties, and the proximity between Interstates 80 and 90 puts them in good position in terms of transportation, he said.

BP, Chesapeake and Halcon already have spent millions of dollars to lease land in Trumbull County. BP invested more than $300 million in leases, Halcon $194 million, and Chesapeake spent about $35 million to purchase mineral rights leases from Eastern Everflow.

It’s important that companies learn the limitations of the shale and define its borders, Alfaro said.

“I don’t think a lot of people understand how much companies spend for exploration,” he said.

Once these companies start drilling, there are no guarantees they are going to find anything, Alfaro said.

One of the area’s clearest signs of economic development in the Valley related to shale is the Exterran building that is nearing completion on Salt Springs Road.

Expectations are that Exterran will open the facility in late February with about 50 employees, said Susan Moore, spokeswoman for the company.

“Things will continue to ramp up from there and we’ll be up to about 80 employees by the end of the quarter,” she said.

The company is still recruiting welders, machinists and material handlers, who will make up the majority of the employees at the Youngstown site, Moore said.

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