BP Cautions Entry into Trumbull 'Very Early'
YOUNGSTOWN, Ohio -- The enormity of the number of acres -- 84,000 -- and the prevalence of wet gas and liquids in what geologists more precisely call the Point Pleasant formation of the Utica shale is why BP North America is entering into a $331.5 million deal with the Associated Landowners of the Ohio Valley to lease shale gas drilling rights in Trumbull County.
“The liquids uplift actually makes this play look very, very favorable in relation to our portfolio,” says Tim Harrington, regional president of BP North America’s gas business.
The energy giant set up a conference call with Ohio reporters this morning, during which Harrington cautioned his company's entry into Trumbull County’s Utica shale fields is in its “very, very early" stages.
Last night Trumbull landowners who belong to the Associated Landowners met at the Covelli Centre and voted nearly unanimously to accept BP’s offer of $3,900 an acre. The math works out to lease signing bonuses amounting to $331.5 million – assuming BP’s due diligence confirms all landowners’ rights.
The term of the leases is five years, Harrington said, declining to provide more details.
In the next six months, BP will sign the actual leases with the individual property owners, then begin seismic testing to determine the best spots to drill its gas wells, Harrington said.
“Over the next two years we will get a better idea of what the resource base will look like” through seismic testing -- “understanding the geological data without actually drilling the well,” he explained.
“It’s too early to do any comparisons” with volumes of natural gas liquids extracted from top-producing wells owned by Chesapeake Energy Corp. in Carroll and Columbiana counties, he added.
As for the processing plants and pipelines that will be needed to take the wet gas to market, Harrington underscored the very early nature of BP’s plans for drilling in Trumbull County. “Until we understand what the resource base is, we can’t talk to midstream development,” he said.
In a prepared statement that accompanied BP’s official announcement, Harrington noted, “BP is committed to hiring and purchasing locally whenever possible and we anticipate having a positive impact on the region while providing a new source of energy for America.”
The Utica/Point Pleasant shale is at a depth of about 6,000 feet, the company said. The rock formation is of similar thickness to the Marcellus and has the potential to deliver higher liquids rates.
BP cited estimates from the Ohio Department of Natural Resources that put the recoverable Utica shale potential between 1.3 and 5.5 billion barrels of oil and between 3.8 and 15.7 trillion cubic feet of natural gas.
MORE: CLICK HERE to read BP’s announcement.