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As Others Exit Trumbull County, BP Is Staying
VIENNA, Ohio – BP says that the company is committed to its position in Trumbull County for the long-term, and expects to start drilling its first well in April, its spokesman says.
"We're still very optimistic about this play," said Curtis Thomas. "We will be drilling in April and we hope that the rocks show us some very good things for this area."
Thomas emphasized BP is keeping to its strategy of developing acreage it holds in Trumbull County, just as other energy companies are pulling out and repositioning their assets to potentially more lucrative areas of the state.
On Monday, Carrizo Oil & Gas of Houston announced it sold for $43 million 19,000 acres of leasehold positions in Trumbull County, as well as Mercer and Crawford counties in Pennsylvania. The company said it wanted to use the money to acquire a bigger position in the southeast portion of the state, where other companies have experienced productive returns on their gas wells.
Halcon Resources, also based in Houston, purchase the leasehold positions from Carrizon, The Business Journal reported Tuesday (READ STORY).
Two weeks ago, Consol Energy confirmed that it would cease work on a well pad in Vienna where it planned to drill a horizontal well, and instead focus on developing acreage further south.
“We're still moving forward," BP's Thomas said. "What we've come to do is to develop this area if the rocks tell us its profitable. We plan to be here for a long time."
BP acquired about 80,000 acres of mineral leases in Trumbull County last yea for $331 million, and plans to develop this acreage as part of its Utica shale portfolio, Thomas said.
Thomas spoke to The Business Journal shortly after a presentation to members of the local media by Rhonda Reda, executive director of the Ohio Oil and Gas Energy Education Program, or OOGEEP, at The Avalon at Squaw Creek.
Thomas said BP organized the informational event to provide reporters with insights to the drilling process and terminology used in the oil and gas industry.
"Sometimes, they're [reporters] asked to do stories that they have very little knowledge about and are asked to be experts on very quickly," Thomas said. "In this case, it’s the oil and gas industry."
Reda delivered a presentation that lasted for more than an hour, and described in detail the history of the industry in Ohio, its economic impact, as well as the processes used to extract oil, natural gas and natural gas liquids from shale formations today.
In Mahoning County, for example, there are 2,456 producing wells (but not from the Utica shale formation) and a total of 4,232 have been drilled over the last five decades. The county's wells produce 7.3 billion cubic feet of natural gas each year, and 200,045 barrels of oil each year.
Landowners already receive royalties amounting to $6.5 million a year in the county, she said.
In Ohio, Reda said there are 64,000 active wells, and that number is likely to grow.
"We're having a hard time keeping up with demand," she said, as energy consumption increases.
The key for Ohio is to develop a comprehensive training program that can produce the next generation of industry workers. "The average age in the industry is 55," Reda said.
Part of Ohio Oil and Gas Energy Education Program's mission is to grab the attention of young people when they are still in elementary school, some as early as the 7th Grade, Reda said. "This is when they start to take an interest in science."
This is also the first year the organization has developed a scholarship program for vocational disciplines, designed to encourage students to pursue careers in welding or machining.
About 70% of the jobs created in the Utica shale would be staffed by Ohioans, Reda projected, but it's going to take a strenuous education program for workers to meet the criteria needed to work there.
The Utica is likely to be a long-term development, Reda said, noting the play will provide time for Ohio to develop a qualified workforce to staff the jobs that come available.
"Our biggest concern is to get well-qualified workers," she said.
Although the Utica shale is still in its exploration phase, Reda said that the state and region is already starting to see the benefits.
"Initially we projected $1.4 billion of investment in the Utica by the end of 2012,"a number she admits was wrong. "The actual investment is about $3.4 billion."
Copyright 2012 The Business Journal, Youngstown, Ohio.