Background on the Utica Shale

The Marcellus and Utica Shale
Plays in Ohio
CONFIDENTIAL
1








1450 students on campus
PE program started in 1946; geology 1900’s
260 petroleum engineering majors
36 geology majors
Students from U.S., Saudi Arabia, Kuwait,
Africa, China
Graduates working all over the world
Starting salaries this year > $90,000
Send me your kids!!!!!!!

It appears that there is potential for oil and/or
gas production from both the Marcellus and
the Utica shales in several counties in eastern
and southeastern Ohio
The Marcellus Shale: A Dominant
Resource Play in our own Backyard

The resource underlies over 34,000,000
acres, primarily from WV through PA and
up into NY

Formation thicknesses range up to 900
feet

Estimates of reserves of gas in place could
be as high as 500 Tcf (annual usage = 25 Tcf)

The keys to successful extraction of this
shale gas are horizontal drilling methods
and hydraulic fracturing technology

PSU study says potential $13.5 B economic
impact to region (175,000 related jobs)






Oil and Gas Extraction
NGL Extraction
Drilling Operations
Oil and Gas Support Operations
Oil and Gas Pipeline Construction
Peripheral Jobs
TOTAL
1,468
175
1,603
3,925
724
34,317
>42,000
Unemployment rate in PA = 7.8% < U.S. 8.8
 3,314 permits issued
 1,454 wells drilled

Marcellus Shale Activity:
Horizontal Permits – 14
Horizontal Wells Drilled – 5

Utica Shale Activity:
Horizontal Permits – 26
Horizontal Wells Drilled – 8

CEO of Chesapeake Energy estimates that there
will be 25,000 wells drilled in Ohio at an
estimated cost of $200 billion over the next 20
years

From the gas shales:






Barnett (Ft. Worth)
Fayetteville (Arkansas)
Woodford (Oklahoma)
Haynesville (No. LA)
Marcellus (Appalachian)
To the oil or liquids rich
shales:




Bakken (Williston)
Eagle Ford (So. TX)
Niobrara Shale (CO & WY)
Utica (Appalachian)
CONFIDENTIAL
12
Why Ohio may be the Focus of the Utica-Point Pleasant Play
Ryder, 2008
Gas-prone areas of Utica Shale will be in the deeper portion of the basin. Much of Ohio may contain
appreciable amounts of oil within Utica Wells as illustrated by this NW–SE-oriented schematic cross section
by Ryder illustrating the results of geochemical analyses of well samples.
1.
Organic Content
 Data suggests rich in
organics, with 2-4% total
organic content (in line
with other shales)
CONFIDENTIAL
17
2. Thermal Maturity
 We appear to be in the
oil or wet gas windows
CONFIDENTIAL
18
3. Geomechanical
Properties
The U.S. Geologic
Survey: a “Black Marine
Shale” - interbedded
dark argillaceous
limestone, brown to
black calcareous shales
and brachiopod coquina
layers
 Appears to be brittle,
calcareous rock without
high clay content – like the
Eagleford
CONFIDENTIAL
19

Frac fluid has dangerous chemicals in it.

Fracking will cause conatmination of the
fresh water acquifer.
Generalized Geology and Profile of a
Utica Shale Well Prototype in East
Central Ohio
At these depths, the pressure from
the overlying rocks and fluids make it
physically impossible to induce a
fracture all the way up to the
groundwater layers.





Test well water before drilling begins
Test well water after drilling ends and
annually at least for a year or two
Obtain gas analysis of gas being produced
from shale
Maintain fingerprints!!!!!!
Make sure the testing provision is written in
your lease

Only 10-20% of frac fluid is ever returned and
is flowed back into tanks, not open pits

Recycle and use in other frac jobs

Treat and dispose

Inject in disposal wells



Chesapeake energy will spend between $1.5
and $2 billion on over 1.25 million acres of
leases this year
Anadarko Petroleum expects to spend $1
billion on leases
Estimates of oil reserves in the shale range
from 4 billion to as high as 38 billion barrels of
oil in place in Ohio

Area needed to drill one 7,000 ft horizontal Utica shale well: 8000 ft(L) x
1000 ft(W) = 8 million ft2 = 184 acres for one well (Most operators drilling
off a multi-well pad will seek 640 acre block or section)

A typical well “may” yield 4 Bcf of gas x $3.50/Mcf ($14 million) and
100,000 STB of oil x $80/STB ($8 million) or the equivalent of
approximately $22 million/184 acres equal to $120,000/acre

The lease bonus will be small compared to what a long horizontal well
should provide the landowner over its life ( approximately $18,000/acre
based on above numbers and 15% royalty)

Leases will be most likely be unitized (640 to 1280 acres). Usually all unit
members will receive fraction of all production equal to “their acreage
divided by total acreage in unit”

In 2008, Chesapeake paid almost $2.0 billion in
royalties to approximately 130,000 individuals,
families and other entities across the U.S. These
payments served as a pleasant source of additional
income during the country’s economic recession.

Business activities enhance the lives of people and
businesses in areas where oil and gas companies
operate through increased tax revenue, well-paying
job opportunities for local residents and additional
revenue for community vendors and businesses.
Ohio Division of Geological Survey
 www.ohiodnr.com/geosurvey
Penn State Marcellus Center
 www.marcellus.psu.edu
Frac Focus
 www.fracfocus.org
Ohio Oil and Gas Energy Education Program
 www.oogeep.org
Landowners and Leasing
 http://www.dnr.state.oh.us/Portals/11/oil/pdf/landowners_leasing.pdf