Shale formation in Ohio, Pennsylvania, West Virginia could be another energy barn burner
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As executive vice president of the Ohio Oil and Gas Association, Thomas Stewart has had a front-row seat -- but never an invitation -- to the natural gas party happening in Appalachia's Marcellus Shale.
"Up until now, we've all just been watching what a wonderful time you're all having in Pennsylvania," he said.
That "until now" clarification comes courtesy of the oil and gas in a different black rock underlying major portions of the Buckeye State.
The Utica Shale, another relic from the primordial era, is deeper and thicker than its Marcellus counterpart; but enthusiasm for its reserves already has energy executives and landowners staking a claim and making sure another trillion-dollar opportunity doesn't pass them by.
Two major drillers, Chesapeake Energy of Oklahoma City and Consol Energy of Cecil, recently announced exploratory plans for the Utica Shale, evoking a sense of deja vu from the early, quieter days of Marcellus development.
Attention so far has fixed on Ohio and the Utica's oil-rich regions, but gas found in the Utica below southwestern Pennsylvania and northwestern West Virginia are considered "very worthwhile," said Nick DeIuliis, president of Consol Energy.
Under a joint venture with New York-based Hess Energy, Consol initially will focus on the "dry gas" portions of the Utica Shale, where extracted gas doesn't come with additional compounds like ethane attached. Hess plans to operate in the liquid-heavy zones of Consol's 197,000 Utica acres, said Mr. DeIuliis.
The deal between the two companies was worth $593 million -- a bargain in the regional shale industry, which has become accustomed to dealing in billions of dollars.
Mr. DeIuliis credits the recent interest in the Utica Shale to a combination of price points: The land is still unexplored and therefore cheaper than Marcellus acreage, and the price of oil is hitting record levels.
Oil is currently trading at nearly $100 per barrel, so it's "not a shock" that the Utica has sparked interest, said Mr. DeIuliis. Consol is counting on the tapping of the resources there being a "30- to 40-year opportunity for our shareholders."
There's a lot of acreage still left: The Utica covers a larger swath of land than the Appalachia-centered Marcellus, heading as far south as Tennessee and as far north as Canada.
First Published September 18, 2011 12:00 am
