They Dig It: Gas Chiefs Impressed by Utica Shale

PITTSBURGH – Gulfport Energy reached a preliminary production level of 20 million cubic feet of natural gas per day from a Belmont County Utica Shale well – and EnerVest Ltd. is extracting natural gas liquids from Ohio.

“I suspect that in Ohio, once we get the right completion method, we will have oil wells flowing,” said John B. Walker, president and chief executive officer of Houston, Texas-based EnerVest, as he spoke during the Wednesday Developing Unconventional Gas East Conference and Exhibition in Pittsburgh.

Walker acknowledged his comments seemed to contradict those recently made by Chesapeake Energy Chief Executive Office Aubrey McClendon, who noted drillers may not be able to extract much oil from Ohio. Mentioning the partnership between the two companies for some of the Ohio acreage, Walker said he believes EnerVest’s 1.2 million-acre leasehold in the Buckeye State will pay large dividends.

“A year ago, we could not say the (natural gas liquids) window would work. Now, we can,” he said of the portion of the Utica Shale that produces ethane, propane, butane and pentane, in addition to the dry methane. “We are still making improvements, but there are some terrific wells.”

Much of this NGL window – based on EnerVest’s maps – includes western Belmont, Harrison, Jefferson and Monroe counties. This includes the Belmont County area known as Egypt Valley, home to the productive Gulfport well located on property in the name of Shugert.

“We are really pleasantly surprised by the results,” said Jim Palm, chief executive officer of Gulfport. “We do still have a lot to learn. We are doing our best to science it out every day.”

Many Belmont County residents who originally signed leases with Wishgard LLC or Tri-Star Energy have seen those contracts turned over to Gulfport, while Gulfport has also signed many county landowners to their own leases. Terms of the leases can range widely depending upon when they were signed and a multitude of other factors. However, some property owners have received at least as much as $5,900 per acre, with as much as 20 percent of the production royalties.

Information provided by Hart Energy, the conference’s organizer, stated that lease payments in Ohio may have reached as high as $8,000 per acre. Trevor Rees-Jones is the founder and chairman of Chief Oil and Gas – the company which sold its Marshall County assets to oil giant Chevron last year.

“I am here to thank you on behalf of every citizen of the U.S.,” Rees-Jones said to his fellow gas and oil executives for their work to help the U.S. achieve energy independence.

“We do work here in the Marcellus that cannot be done by a guy on a phone in India. You have to be here,” he added.

In addition to the speakers, hundreds of vendors showcased their wares at the exhibition. Everything from drilling bits to fracking valves to a 2011 Chevrolet Camaro that runs on compressed natural gas could be found on display.

Those attending the conference today may find some anti-fracking protesters chanting outside the convention center. According to the group, Marcellus Protest, there will be a gathering at 11 a.m. to voice concerns regarding the duties of Pennsylvania Department of Environmental Protection Secretary Michael Krancer, who is scheduled to address the conference at that time.

“DEP chief Michael Krancer should resign and make way for a regulator who will protect the people of Pennsylvania,” the group said in a statement Wednesday regarding their plans for today.

During the 2010 conference, a large crowd of anti-industry protesters gathered outside the convention center to express their opposition to the fracking process, claiming the process contaminates groundwater. Two years later, some of the same concerns remain. Reports of methane possibly contaminating a Marshall County residential drinking water well caused some local residents to wonder how safe the drilling process is.