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Wednesday, April 4,2012

State's update pushing Athens Co. out of core shale play area spurs mixed reactions

Many taking a wait-and-see attitude

By Jim Phillips

Depending on how you feel about oil and gas development in Athens County, a recent state geologist's report could make the glass look half-empty or half-full.

Some Athens County residents, it seems safe to say, are eagerly awaiting an influx of oil-and-gas drilling here, while others are dreading such a development.

A recently issued state report seems to indicate that Athens County is one or two counties south of the southern edge of the possibly oil-rich Utica-Point Pleasant shale play, and therefore is less likely to be "fracked" than counties to the north and northeast of us –  or at least will have to wait longer for this to happen.

The main concern about Utica shale drilling is the use of horizontal hydraulic fracturing (or "fracking") to unleash oil and gas resources deep underground.

People on both sides of the issue, however, when contacted by The Athens NEWS, seemed to be cautious about reading too much into the report before there's more hard data available.

A number also stressed that the amount of fossil fuel in the shale here won't be the only deciding factor – there are also unanswered questions of how easily accessible it is, how much it will cost to get it, and how much it will bring on the market at the time it's drilled.

ALEX COULADIS AND his wife are among the hundreds of county residents who have signed lease options with a West Virginia company, Cunningham Energy, for possible drilling. The company recently asked for an extension of the signing date for the leases, which had been March 15, to May 8.

If the lease pays out, Couladis stands to receive a bonus payment of some $1.7 million on his 680 acres in Athens Township, minus some $34,000 in attorney fees; on top of this he would get royalties on any oil or gas produced.

He has chosen to extend his lease option with Cunningham, and said he's still hopeful it will pay off, but that only time will really tell.

"Obviously, it's going to take some drilling before we find out," he said. "My guess is, we're just going to have to wait to find out."

Couladis added that he also knew the possibility of drilling here was always just that, and had already heard that Athens County might not be in the richest or thickest part of the Utica shale. That's one of the reasons, he said, that he signed with Cunningham for what he considered a reasonably good price, rather than holding out for better terms as some landowners are reportedly doing.

"My approach was always, I relied on friends that were in the oil-and-gas business," he explained. "And they all said 'If your geology is suspect, sign a lease sooner rather than later'… I just thought it was a no-brainer to take the Cunningham lease."

CHRISTINE HUGHES, WHO operates three Athens businesses that utilize locally grown food, has voiced concerns about fracking's potential to hurt local agriculture.

While the geology report might seem to suggest that Athens County will get a reprieve from drilling, Hughes said, she's not celebrating yet, nor is she going to lose track of the issue.

"I'm taking it with a grain of salt, because we have had other faulty information, or incomplete information, or untruths, from the industry or the people who have the responsibility to regulate it," she said. "I definitely intend keeping up on my own diligence and keeping track of things… I definitely want people to stay alert."

AN OHIO UNIVERSITY professor stressed that, as state Geologist Larry Wickstrom has acknowledged, the new maps of the Utica shale play in eastern Ohio are based on a limited number of data points.

"The only thing you can probably say is, 'Not sure,'" suggested Gregory Nadon, chair of OU's geology department. He said while Athens County may or may not be drilled eventually, it seems highly likely based on the maps that other counties will be in line before it.

If it's easier and cheaper for companies to get the shale oil farther north, he said. "They're not going to drill here first."

Information it would help to have more of, he said, includes data on the "total organic content" of the shale in various places, as well as its variations in thickness.

This latter factor is important, Nadon explained, because horizontal hydraulic fracturing, as its name suggests, does not just involve drilling straight down into the shale, but also sending out horizontal drillings into the bed. This gets tougher as the shale gets thinner, he noted.

Other geologists, including Wickstrom, have noted that another very important factor is whether the underground carbon resources are under sufficient pressure to come up from the ground.

Unfortunately, in a highly competitive market for a valuable resource, the companies themselves, whatever data they may have collected, aren't making much of it public.

"And they never do, because you're giving away data that's just helping your competitors," he said.

He reiterated his prediction that drilling will work its way southward toward Athens County, and that the first time a dry well is sunk, all the major companies will pull up stakes, leaving the area to whatever wildcatters want to gamble on it.

"The big ones will, because it's going to be really dry after that," he said. "As soon as they stop making money, they will fold up those rigs in a heartbeat."

LANDOWNER BRENT HAYES and his wife signed a lease option with Cunningham for more than 800 acres in Athens, Dover, Canaan and Lee townships in Athens County, which under the lease terms would pay off with around $2 million in signing bonus money.

Hayes said he did not choose to sign the offered lease extension, however.

Like others, Hayes said he doesn't think anyone will know for sure if Athens County will produce until someone actually sinks a well. While he stressed that he believes the standard lease terms worked out by local attorney John Lavelle, and utilized by hundreds of landowners, were very good, he said if the drilling boom does ever pan out, presumably there will be other offers to lease.

"I just felt that it might be a while before something does come to this area, and I kind of wanted to wait and see what other opportunities, if any, come up," he explained. "If it doesn't come, we'll just keep on doing what we've been doing."

BERNHARD DEBATIN, AN OU journalism professor who has been sounding the warning locally about the risks of fracking, confirmed that while the state geologist's report was definitely interesting to those following the issue, it didn't really shine a bright light on what the future will hold.

"Let me put it this way," he said. "I think there are a lot of different theories out there right now, from real conspiracy theories, to, 'OK, it's all over, let's go home."

Some fracking opponents, he said, seem to suspect the report is "mostly a reaction (by the state) to the political push they're getting," and an attempt to damp down concerns about fracking in a county where opposition to it has been very vocal.

"I'm not sure that any of those theories really hold water," Debatin said. "My impression is, it's probably true what (state experts) are saying." He added though, that he also agrees that the data behind the new maps are "really very spotty."

The professor also emphasized the huge role the wider economic picture will continue to play in whatever happens with fracking here. As often happens in booms of any kind when companies race to tie up a resource before their competitors can, he suggested, the big players in this game may be overstretching a bit.

"The whole leasing market got quite overheated," he said, and may now simply be cooling off.

"I think it's pretty much up in the air," he concluded.


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