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Home / Articles / Editorial / Wearing Thin /  While oil & gas boom doubtful here, it could still happen
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Wednesday, March 28,2012

While oil & gas boom doubtful here, it could still happen

By Terry Smith

So what's the upshot of our story last week that a state geology report does NOT place Athens County inside the "core productive area" for Utica shale development in Ohio?

To call this local development a bombshell would be to understate its explosive effects.

Putting it simply, if the geological report is true – or more to the point, if the geological report, accurate or not, helps discourage oil and gas exploration in our area – it will suck most of the air out of arguably the biggest local news story in my 26 years as editor of The Athens NEWS.

In the past year, we have run scores of news stories, letters and op-eds about the so-called fracking debate. Factions within the county have been at each other's throats about the issue, and neighbors have attacked neighbors over the ethics and morality of leasing land for oil and gas drilling.

The issue pervaded this year's local primary election, advocacy and landowner groups have formed both for and against fracking, and back-and-forth rhetoric on the issue has sizzled like butter on a hot skillet.

Meanwhile, after all of this, a report came out two weeks ago echoing what geologists were saying last October before the debate began heating up – that Athens County is likely on the edge of any productive oil and gas development area, or perhaps even completely outside of it.

According to maps included in the ODNR Geological Survey's "Geology and Activity Update of the Ohio Utica-Point Pleasant Play," the northern and eastern borders of Athens County are about 10 miles from the southernmost edges of the most likely Utica oil and gas development areas.

Though nobody's saying the Geological Survey's report is definitive, to some extent it doesn't need to be. In the oil and gas business, perception is often reality, and substantially drives investor and company decisions on whether to fund a drilling operation (a typical horizontal well costs $7 million to $10 million to drill).

The quality and quantity of the available information usually goes a long way toward determining the success of an oil or gas well.

The good news for Athens County landowners hoping for a cash windfall from their oil and gas leases (and bad news for local fracking opponents) is that the ODNR report isn't the only information available to investors and oil and gas companies. Moreover, it's not likely the main information they're using to make their decisions.

The companies themselves almost certainly have their own geological data to work with, or know where to find it. That information is probably much fresher and more substantial than the data samples the ODNR used in drafting its report.

Larry Wickstrom, who chairs the ODNR's Division of Geological Survey and co-authored the Utica shale update, freely acknowledges that the authors didn't have much to go by when assessing carbon resources in our part of southeast Ohio. However, they had more information than the last time such a statewide assessment was made, in 2006, by the U.S. Geological Survey.

"We felt it was high time to update maps of that core area," Wickstrom said Tuesday. Referring to the maps showing Athens County outside the prime areas for oil and gas development, he explained, "What that means, that's where the data indicates the highest likelihood of having high oil and natural gas liquids content in those rocks. That's where we expect most of the activity will concentrate during the early parts of this play."

However, Wickstrom emphasized that his agency "fully expects people to go outside that core area and explore, and we hope they do."

SO DESPITE THE ODNR STUDY, a basic question remains unanswered – do oil and gas companies have their own information, based on more relevant core samples and cuttings, that would contradict the findings of Wickstrom's agency?

In an interview last November, I asked Joe Blackhurst, land man for Cunningham Energy, the main company locking up oil and gas leases in Athens County, why the company was willing to double down on Athens County.

At the time, he responded, "There's no absence of information. The Utica-Point Pleasant Interval has been drilled for many years, including in Athens in the '60s… There's been (vertical) wells drilled all the way to the basement. We have well logs, records. We have good reason to believe that there's stuff there to go after. Plus we have big engineering firm studying this."

Blackhurst continued, "We wouldn't be over here putting the type of skin in the game that we have so far unless we weren't relatively certain that there was something to go after.

In the same interview, however, Blackhurst also suggested that Cunningham Energy, of Charleston, W.Va., had a joint venture partner waiting in the wings (which they evidently didn't), and intended to get permits and start drilling by early spring (which they definitely aren't even close to doing.)"

AS IT TURNS OUT, THE information in the ODNR geology report that suggests Athens County isn't prime oil and gas country closely mirrors what Wickstrom and other geologists told The Athens NEWS back in October.

For example, professor Robert W. Chase, chair of the Department of Petroleum Engineering at Marietta College in Marietta, noted at the time that Athens County "is on the fringe of the area people are looking at with regard to the development of the Utica shale for oil and gas production.

"In (your) area, the shale gets thinner, shallower, and may be immature in terms of the geologic conditions necessary for oil and gas formation and accumulation," he said. "Until someone ventures into the area and drills a Utica well to test the area, however, this remains just an hypothesis that seems to be governing development of the resource there. It doesn't look that attractive at this point in time."

And Wickstrom, in the late October interview, offered the following:

"Some wells (have been drilled in the local Utica layer), but relatively, very little drilling has taken place in Athens County that has gone through the Utica-Point Pleasant Interval," he said. "Thus, it is largely unknown what the prospect will be for horizontal wells in that area at this time…  I wouldn't expect Athens to be high on the list of most majors involved in this play early on."

Still, he acknowledged, while the oil and gas resources may not be as rich here as other areas, "obviously someone will play the area and drill some wells to see the potential."

So what happened between October 2011 and late March 2012 to make the latest report, more or less reinforcing what the experts said in October, seem like such a stunner?

The main game-changer was Cunningham Energy's arrival on the scene last November, with its frantic efforts to lock up as many Athens County oil and gas leases as possible. They offered signing bonuses and royalty shares nearly rivaling the king's ransoms being paid at that time to landowners living in the east Ohio "sweet spots" for Utica shale drilling.

Soon, landowner groups, aided by attorneys and oil and gas consultants, were organizing huge blocks of property to make their own offers.

All that activity lit the fuse on Athens County's never-dormant-for-long environmental movement, which soon exploded into full-on activism. The story has dominated the local news ever since.

So, essentially, we're back where we started when Cunningham first started holding its lease-signing events in Athens. We're asking the same questions, too:

Was this a legitimate oil and gas company with hard data driving its aggressive campaign in Athens County, or were they playing high-stakes poker, with some promising data but no real knowledge of what cards remained in the deck?

We won't get the answer to that question through hard evidence taken from the earth. Rather, the value of Cunningham's poker hand will be revealed to a large extent by whether the company comes through in the next two months and fulfills its commitment to pay local landowners millions upon millions of dollars on their outstanding oil and gas leases. Stay tuned.

 

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