Area is at point where Utica, Marcellus formations overlap
Even as oil and gas companies operating across Pennsylvania’s Marcellus Shale formation have curbed some drilling in the East and shifted their focus to wet gas reserves in the Southwest, the market for mineral leases in Mercer County is strong, say county officials and industry experts.
Despite a slight slowdown as drillers wait for pipeline expansions, more market development and a rise in wholesale prices, nearly 600 oil and gas leases were filed with the Mercer County Recorder’s office in January alone.
Although the number is not entirely unusual, in December only 182 leases were filed in the recorder’s office and about 300 at the same time a year earlier.
“The chatter we’ve been hearing from those in the industry is that they’ve moved from a searching phase to more of a drill mode, but we’re beginning to see a lot more leases, including easements for pipelines,” said Mercer County Recorder Dee Dee Zickar. “It’s safe to say there’s been a bump in the number of oil- and gas-related documents.”
The Marcellus formation is more developed compared with Ohio’s Utica Shale play. Pennsylvania’s first horizontal well came online in 2005, according to the Marcellus Shale Coalition.
But Mercer County appears to be the latest forefront of Marcellus activity.
Compared with Lawrence and Beaver counties and points farther south such as Washington, Greene and Fayette counties, little activity has occurred in Mercer, where Pennsylvania Department of Environmental Protection data show only 10 horizontal wells have been permitted. Both Houston-based companies, Halcon Resources Corp. and Hilcorp Energy Co., have obtained the majority of acreage in recent months.
According to experts, the lease grab in Mercer coincides with one under way in Trumbull County in Ohio. The area is a point where the Utica and Marcellus formations overlap.
“There are two potential targets they most likely have in mind, the Marcellus and the Utica,” said Terry Engelder, a professor of geosciences at Pennsylvania State University.
“I can speculate with reasonable certainty that the area includes liquids. This is a good sign for the people of Mercer County that one of those targets is regarded by the industry as having some significant value.”
In order to increase profit and extract deposits with more energy content, drillers have turned their attention to wet gas, pockets of condensate, ethane, oil and gas, that can be sold in separate markets to offset the low price of natural gas.
“The data further underscores how prolific the Marcellus Shale truly is,” said Matt Pitzarella, a spokesman for Range Resources, which has the second most acreage in Pennsylvania behind Chesapeake Energy.
“In many parts of the region, we have a triple-stacked opportunity with Utica, Marcellus and the Upper Devonian shales.”
Among other factors that bode well for both Mercer County and the Mahoning Valley are the clearly defined boundaries of the Utica Shale that became more evident throughout last year.
Operators drilling at the formation’s western and southern edges began plugging wells in places such as Ashland, Medina, Noble and Monroe counties in Ohio, favoring a push east, where Carroll, Columbiana and Harrison county wells were proving themselves.
In that time, oil and gas giants such as BP have also pushed north toward Trumbull County, where they purchased about 84,000 acres for $331 million.
Last October, Carrizo Oil and Gas sold a 50 percent stake of its 19,000 acres in Trumbull and Mercer counties to Halcon, which later purchased another 31,000 acres in the region.
Key to further development in Mercer and Trumbull counties will be BP’s plans to drill 10 exploratory wells this year in Trumbull.
Processing facilities in West Virginia and others planned throughout Northeast Ohio will also help attract more operations along the northern portions of the Pennsylvania and Ohio state lines so long as the exploratory wells announced by companies like BP and Halcon in the region meet expectations.
“It’s very exciting for the region, and still very early in the process,” said Dan Alfaro, a spokesman for industry outreach group EnergyInDepth.
“So, once we see this infrastructure developed — these pipelines and cracker plants coming online in Ohio, West Virginia and Pennsylvania — this development will increase exponentially.”