Value Of Utica Shale May Top Half Trillion
The CEO of Chesapeake Energy, Aubrey McClendon, stated at the recent Ohio Governor’s 21′st Century Energy and Economic Summit in Columbus that the value of the new Utica Shale formation play in Ohio may be worth over half a trillion dollars. McClendon added that the new Utica Shale discovery, which is expected to hold as much as 25 billion barrels of oil in addition to natural gas, is “biggest thing economically to hit Ohio, since maybe the plow”.
Speaking of the technology of hydraulic fracturing in the Utica shale, McClendon also told an opponent in the crowd “I’m the world’s biggest fracker, I’ve done 16,000 times since 1989 an I’m proud of it”. The procedure of hydraulic fracturing, where high pressure water, sand and chemicals are used to break apart the shale formation thousands of feet underground, has been the subject of controversy, since some claim it can pollute groundwater. The procedure has been safely used thousands of times over the past 50 years, according to the oil and gas industry, and is believed to be much less of a threat to the environment than coal mining. It should be noted that the Utica shale lies thousands of feet below Ohio’s water aquifers, with multiple layers of solid rock lying in between.
Ohio Landowners Already Cashing In On Utica Shale With Lease Bonus Payments
Utica shale lease bonus rates, or the amount paid to landowners to lease property for exploration for 3-5 years, have been climbing in recent months, nearing or topping the $3,000 per acre mark in some Ohio counties.
Chesapeake expects to drill over 12,500 wells in the Utica shale formation. Mr. McClendon expects that around ten companies will invest more than 200 billion dollars in Ohio over the next 20 years.
Still An Unproven Oil Play
Chesapeake Energy has made statements to the effect that the Utica Shale is most likely “superior” to the Eagle Ford shale play in South Texas. The Eagle Ford shale is one of the largest discoveries of crude oil in the United States in the past 40 years. There is simply not enough production data yet to validate these claims however. A large 3D seismic study of the Utica Shale was announced recently. Tidelands Geophysical Services will begin a major Utica shale seismic survey using 3D technology starting in the first quarter of 2012. The Tidelands 3D seismic survey area is located in Northeastern Ohio. The survey will cover over 196,000 acres and take approximately 7 months to complete. It will give oil and gas companies a much clearer picture of what lies beneath the surface and where the most “liquids rich” areas are. It is the “sweet spot”, “liquids rich” acreage that is most desirable to oil and gas companies right now, since natural gas prices are depressed and oil prices are high. The highest Utica shale lease bonus payments will be paid in these areas of the play
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For maps of the Utica Shale play in Ohio see: Utica Shale Maps