Leasing Frenzy In Ohio For Shale Oil, Chesapeake Energy Spends $1B, Creating Instant Millionaires

Mark Perry
updated | Author's Website
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.”

You may also like: