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Poland Township Wells Key to Hilcorp's Utica Play
POLAND, Ohio -- Poland Township is fast emerging as the nexus of oil and gas production in Mahoning County as Houston-based Hilcorp Energy Co. accelerates its drilling plans and its partner, NiSource Midstream, continues work on a huge cryogenic plant in adjacent Springfield Township.
At the center of this drilling activity is the Carbon Limestone Landfill site – 2,200 acres owned by Republic Services Inc. and leased to Hilcorp for oil and gas exploration in the Utica shale.
Thus far, Hilcorp has constructed two pads on the land and has secured 12 permits for horizontal wells at the site – six for each pad – according to the Ohio Department of Natural Resources.
“They have two well pads and a central facility that connects everything,” reports Michael Heher, division manager of Carbon Limestone Landfill. “They have one well that’s drilled and producing, and are in the process of drilling more wells.”
ODNR issued five permits to Hilcorp for the Carbon Limestone site July 17. A pipeline that extends from the first well pad was finished in May, so dry gas is being pumped into an existing Dominion East Ohio line.
Hilcorp initially proposed six wells on the first pad, Heher reports, but that could change. “They’re able to put up to 10 to 12 wells per pad,” he explains.
The site is a focus of production for Hilcorp and will play a major role in developing Pennant Midstream LLC’s Hickory Bend project, a $300 million pipeline and processing network that reaches from western Pennsylvania, through Mahoning County, and into Columbiana County.
Rocco “Rocky” DiGennaro, business agent for Local 125 of the Laborers International Union, says work on the second leg of the pipeline project is underway and likely will require more manpower than the first phase built from the Carbon Limestone well.
“They’re looking to use about 100 more workers this time,” DiGennaro relates. “From our union, there’ll be about 55.”
On July 16, surveying crews were busy assessing a large clearing off Garfield Road in Petersburg where the next phase of the pipeline will pass. This section would stretch 18.5 miles from Petersburg in southern Mahoning County to Leetonia in Columbiana County.
“They’re just getting started,” DiGennaro remarks. “They’ve got crews clearing, doing environmental work, and boring work.”
The pipeline serves as a gas header that would collect the natural gas that Hilcorp’s wells produce and transport it to the new processing plant when it’s completed.
Pennant Midstream, a partnership between Hilcorp and NiSource, the parent of Columbia Gas, is constructing a $150 million cryogenic plant along Stateline Road in Springfield Township. There, gas flowing from wells such as the Carbon Limestone site and other Hilcorp wells will be separated into “wet” and “dry” gas.
Sarah Barczyk, spokeswoman for Pennant, says the plant should be finished by December, with the second phase of the pipeline to extend into Columbiana County finished by the fourth quarter.
“The Pennsylvania portion is expected to be in service during the second quarter of 2014,” she reports.
Carbon Limestone’s Heher says the landfill proved the perfect fit for Hilcorp.
The site has access roads in place to accommodate truck traffic to and from the wells. “We have a separate road for trucks to enter for refuse collection,” Heher says, “and they can use the same roads for well production and whatever they do.”
Also, in addition to the 2,200 acres at the landfill, another 200 to the north owned by Waste Management could be leased as well as neighboring parcels.
“I think for the most part, everyone is pleased with it,” Heher says. 'I know several neighbors who have leased to Hilcorp or other companies. I think it’s all very positive.”
Wayne Walkama, co-owner of the Countryside Farmers Market on U.S. Route 224 in Poland Township, says his family leased their land to Chesapeake Energy Corp. via Buckeye Minerals when bonus prices were at their peak.
“We ended up leasing for $5,850 an acre,” he says. The family owns 100 acres. While the oil and gas industry hasn’t affected business at the family’s market, Walkama believes it stands to benefit the region as a whole.
“There’s not been too much of an impact, but a lot more truck traffic,” he reports.
Elsewhere across the Utica shale, Hilcorp is moving ahead with opportunities in Columbiana County.
Earlier this year, Chesapeake assigned 1,100 leases near the Brinker Storage Field in north/central Columbiana County to Hilcorp as it further develops its pipeline network through this portion of the Utica.
“They’re doing the same thing with the Grubbs well that they’ve done with Carbon Limestone,” says Jeff Dick, a professor of geology at Youngstown State University and resident of Columbiana County.
Dick says the Salem-Grubbs well in Salem Township is now tied into an existing Columbia Gas line. “It’s well into the wet gas window, and I think they’ve found something there,” he speculates.
However, Dick suspects that while the “wet” gas – that is, gas that can be converted into liquid products such as ethane, butane or propane – is more profitable than dry methane, Hilcorp could be just as interested in tapping the dry gas because of its affiliation with NiSource.
Thus, the company is trying to achieve the best economies of scale by drilling as much as it can at each well pad, especially at the Carbon Limestone site. “It makes sense with the Pennant processing plant and pipelines now well under construction,” Dick says.
RELATED:
NiSource to Resurface Roads Near Gas Processing Plant
EDITOR'S NOTE: The Hilcorp story appears in our August 2013 print edition.
Copyright 2013 The Business Journal, Youngstown, Ohio.
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