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News Analysis: BP's PR Includes Lots of 'Ifs'
NORTH JACKSON, Ohio – Reporters and photographers crowded into the lobby of BP’s new Ohio headquarters at the Youngstown Commerce Park here, waiting for Monday’s news conference to begin. At precisely 1:30 p.m., three BP executives stepped up to the microphones, an indication for journalists reconciled to tardy starts that today’s BP misses no PR beats.
“BP now officially has a home in Ohio,” declared Curtis Thomas, BP Ohio director of government and public affairs, as he stood in front of a graphic with a rendering of the Home Savings tower that read, “At home … in the Mahoning Valley.”
Thomas, a former TV anchorman whose previous post with BP was public relations mop-up following the Deepwater Horizon spill, introduced the energy giant’s Ohio’s operations manager, Joe Uppercue, and its Ohio program manager, Bruce Abbuhl.
“We’re excited to be here,” Abbuhl said.
The executives took turns explaining the types of functions the energy giant’s employees and contractors will perform at its new Ohio operations center at 12111 DeBartolo Drive. The 5,000 square-foot office building and 36,000 square-foot warehouse formerly housed FedEx operations. Leased by its owner, Redstone Investments of Youngstown, for three years to BP with six years of renewal options, the building will house technical support and maintenance personnel, the first of whom will move in later this week.
As PR professionals scurried to post more welcoming signs in the first room past the lobby door, many of them featuring laudatory quotes about BP published by local newspapers, the larger story emerged. BP will begin drilling the first of 10 “appraisal wells” in April in the northern half of Trumbull County, “both east of Mosquito Lake and west of the lake, north and south,” Abbuhl said, and invest “a couple hundred million dollars” in 2013.
BP has leased the mineral rights for some 84,000 acres in Trumbull County as part of a $331 million agreement with the Associated Landowners of the Ohio Valley. Company executives appeared last week before regulators in Columbus for a “unitization” hearing, the first step in obtaining its first permit to drill in Trumbull County.
“As we said all along, we would start in April and we’re on track to start in April,” Abbuhl affirmed.
The BP executives repeatedly used the term “appraisal wells,” careful to couch expectations and not lend their credibility to hyping talk of a shale “boom.” Indeed, as they endeavored for nearly full disclosure, and expressed hopes to drill many more than 10 wells in Trumbull County, they offered no assurances.
“The purpose of the those 10 [appraisal wells] is to test the subsurface, look at the test data and determine what type of liquids potential we have here along with [dry] gas to better understand what our development program will look like going forward,” said Abbuhl.
In other words, if the appraisal wells do not meet expectations, and the return on investment is insufficient, BP may never drill more than 10 wells in Trumbull County.
The converse is also true.
“Assuming success in those initial appraisal wells, our drilling rigs would continue to move into Trumbull County,” Abbuhl said.
Asked about Consol Energy’s decision to walk away from a well it drilled earlier this year in Vienna Township, the BP executives declined comment.
Questions turned to infrastructure development. Could a cryogenic processing plant be built in Trumbull County? Perhaps.
“There is limited [midstream] infrastructure here,” Abbuhl said. “It will quickly outpace the development if development Is successful here.”
Again, the “if” word.
“There are a number of things we need to look at to determine if this is a success,” he continued. “The thickness of the Utica, the quality of it, the types of liquids or gas potential. Our initial appraisal program is designed to acquire that subsurface data that will allow us to know those answers toward the end of next year.
“If it’s everything we think it is, then under the obligation we have in the leases -- a five-year primary term, we will have to drill enough wells to hold those initial leaseholds,” Abbuhl said.
Caution flags notwithstanding, Ohio contractors and vendors can be assured that BP plans to hire locally, said BP’s Ohio operations manager, Uppercue.
“For the initial 10 wells, we are reaching contracts with all local suppliers on civil construction, electrical as well as mechanical, and making sure we hire Ohioans for this initial appraisal program,” he emphasized.
As reporters departed BP’s new Ohio headquarters, another new sign was being hung on the front lobby window.
“This is the warmest welcome we’ve had anywhere,” said Uppercue.
MORE:
BP to Drill 10 Wells in Trumbull County Next Year
Copyright 2012 The Business Journal, Youngstown, Ohio.
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