Hess Is Fracking and Flaring in East Ohio

A bright orange flame along Lude Road shows New York City-based Hess Corp. is fracking for natural gas in Belmont County, while flaring away some of the excess gases.

Hess initially entered the eastern Ohio Utica Shale play in 2011 by paying $750 million to acquire rights from Marquette Exploration. Since then, Hess, Gulfport Energy, Antero Resources, Rice Energy, Chesapeake Energy, XTO Energy and other companies have continued signing leasing contracts throughout the area, some of which have offered mineral owners more than $6,000 per acre.

The Belmont County Recorder’s Office bustles with activity daily with abstractors looking to sign mineral owners to lease agreements, largely due to positive drilling results. Pipeline construction is also ongoing throughout the county to build the network needed to take the gas to market.

Ohio Department of Natural Resources records show Hess holds the permit for the Lude well that has been flaring. The Lude, just east of the Jamboree In The Hills site, well is still in its early stages, so Hess does not yet have any reporting information for it, but the company has reported some results from eastern Ohio wells.

The Capstone 2H9 well, located near Flushing in the area of Ohio 331 and Dutton Drive, produced 2,242 barrels of oil equivalent per day during the first three months of this year. This means the well is yielding an amount of energy equal to what would come from 2,242 barrels of oil, although the well may not be producing a substance that is chemically considered to be oil.

The Capstone well is producing more energy than some Chesapeake wells in Harrison County, as well as Ohio County.

Also, the Hess NAC 4H-20 well in Jefferson County produced 7.5 million cubic feet of dry methane gas per day during the first quarter.

Generally, throughout the Marcellus and Utica shale formations, the farther east one drills for gas, the more likely this gas is to be of the dry type. As drillers move their operations toward the west, they are more likely to find the liquids-rich wet gas – which, in addition to the methane gas, contains valuable ethane, propane and butane.

Because of the relatively low price for dry methane, drillers are looking for the wet ethane, propane and butane. Chesapeake Energy information shows that for a typical dry gas well, the company makes an average of $13,000 in revenue per day. This revenue amount can be as high as $38,800 per day of production for wells that contain liquids.

In Harrison County, the Hess Jeffco 1H-6 well yielded 1,432 barrels of oil equivalent per day, including 20 percent liquids. Also the Harrison County Athens 1H-24 well tested late last year with a rate of 4,230 barrels per day, with 59 percent of this consisting of valuable liquids.

The company’s work in the Utica Shale seems to be paying off. Hess’ 1st quarter 2013 earnings were $669 million, representing a 30 percent increase on a per share basis over the same time period last year.

“Our first quarter results demonstrate our strong operating performance across the company. In addition, we continue to execute our multi-year transformation into a more focused, higher growth, lower risk, pure play exploration and production company – and are making excellent progress toward delivering our forecast of 5 to 8 percent compound average annual growth in production,” said John B. Hess, chairman and chief executive officer.

Though Hess and other companies continue drilling and fracking their way through Ohio’s Utica Shale, some remained concerned about flaring.

According to the National Geophysical Data Center, flaring is a widely used practice for the disposal of natural gas in areas where there is no infrastructure to make use of the gas. These officials believe the practice unloads unnecessary amounts of carbon emissions into the atmosphere.