Leasing Frenzy in Ohio for Shale Oil, Chesapeake Energy Spends $1B, Creating Instant Millionaires
Could Ohio Be Next?
From today's Wall Street Journal, "Shale Lifts Prospects in Ohio":
Windham, Ohio -- "An oil-rich underground layer of rock, called the Utica Shale, has sparked a leasing frenzy and the prospect of a new flow of cash and jobs to a development-starved corner of the Rust Belt.
Chesapeake Energy Corp. and other oil companies have swarmed this northeast Ohio hamlet and others nearby, buying mineral-rights leases to drill into what the company and some analysts say might be one of the U.S.'s last big unconventional oil fields yet to be developed on a commercial scale. Chesapeake said it has spent about $1 billion acquiring mineral rights on more than a million acres from public and private landowners.
The Utica deposit lies below sections of eight states, from Tennessee to New York, as well as parts of Canada. But drilling companies believe eastern Ohio has the most concentrated oil reserves that are the easiest to extract. The companies are in the testing and exploratory stage now. Hydraulic fracturing processes have been used to recover oil and gas from rock formations for decades through traditional vertical drills.
Hydraulic fracturing combined with horizontal drilling techniques has allowed producers to retrieve vast quantities of natural gas from shale formations. The techniques were more recently adapted to coax crude oil from deeply buried rocks in states including Texas, North Dakota and now, potentially, Ohio.
In Portage County, home to Windham, dozens of researchers on Chesapeake's payroll have crowded the recorder's office since September, poring over land records. Normally, Portage County records about 20 mineral leases a year; in 2010 there were 1,226.
Local oil and gas attorney Eric Johnson says some of his clients have already reaped life-altering rewards from the leases. One farmer in Ohio's poverty stricken Appalachian region pocketed nearly $1 million for selling drilling rights to his land. If the play pans out, even more money could pour into Ohio via royalties, typically 12.5% per barrel of oil."
Local oil and gas attorney Eric Johnson says some of his clients have already reaped life-altering rewards from the leases. One farmer in Ohio's poverty stricken Appalachian region pocketed nearly $1 million for selling drilling rights to his land. If the play pans out, even more money could pour into Ohio via royalties, typically 12.5% per barrel of oil."
3 Comments:
Yeah, and I just read India is going into shale gas too.
There is just gobs and gobs of this shale and conventional gas around, enough to glut demand for generations.
Natural gas is easily convertable to methanol (they used to run Indy cars on methanol, before the ethanol PR machine got going) and methanol sells for about $1.28 a gallon from a company named Methanex.
$1.28 a gallon, and that is without economies of scale!!!
You can run cars on CNG too.
Time to shut down our overseas military bases, retire our surface ship fleets, and go to domestic natural gas production--we would save trillions of dollars in imports and wasteful federal spending, while putting millions of Americans to work.
Or, we can keep on doing what we are doing. Oh, that makes sense.
Here we go. Chesapeake just reported a loss because natural gas prices were well below its cost. (Which was underestimated due to the use of higher than expected ultimate recovery numbers and unrealistic depletion rates.
my father james thomas brodigan spoke to me about his thoughts on shale oil way back in the 70's when i was in high school, good grief like it's a new thing. he was vice president of columbia steel casting, portland, or. was there for 60yrs. he was the smartest man i ever will come in contact with for sure. i am pleased to hear of the work being done and hope the querks get worked out so people do not continue to get hurt. peace. johanna brodigan oregon
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