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Dearing Compressor and Pump is seeing a rejuvenation in their business since shale development has begun in the Utica and Marcellus.  The company makes compressor packages for the oil and gas industry, which help transport natural gas and liquids through pipelines to utilities and processing plants across America.  Within the past four years, business has taken on a whole new life thanks to shale development. 

With a flurry of projects happening in our region, Dearing is keeping busy filling orders for their customers.  In 2004, Dearing Compressors and Pumps employed around 45 people.  Today, they are employing around 180  and are still looking for more qualified workers to help weld, fabricate, and assemble their compressor packages.  The company, which has been has been servicing industrial and energy customers at its Youngstown location, is a family business that has based their reputation on service, reliability, integrity, and innovation fueled by customer confidence since 1945.

With strong reliance on innovation, Dearing saw the opportunity shale development would bring and began building and supplying compressor packages to customers in Pennsylvania.  The average compressor station puts out anywhere from 1,500 to 5,000 horsepower costing $1 million plus.  During our tour, there were 7 compressor stations being built in the bays of their 50,000 square feet facility with each one ranging from $1.2 million to $3.4 million. 

As their compressor station began to increase in size, Dearing found their 36,000 square foot facility wasn’t nearly large enough to handle all of their new business.  As a result, in 2010 they started building a 50,000 square foot manufacturing and assembling area next to the existing 36,000 foot space to accommodate the growing business.  Today, only two years later, they are looking to expand to over 125,000 foot workspace while remaining at the same location. 

Each compressor package is built from scratch at the Youngstown facility, minus the engine and compressor, which are bought from companies like CAT and Ariel Corporation.  From the skids where the station sits, to all of the fittings, pulse bottles and scrubbers, each component is fabricated on site.

The operation is amazing as compressor stations are built in multiple bays, each one made to the customer’s unique specifications.  Their customers range from utilities, natural gas processing plants like the M3 project, to pipelines responsible for getting our natural gas to heat our homes.

As Dearing Compressor and Pump continues to grow, they will continue to need qualified employees to help them supply the oil and natural gas developers not only in our region, but across the United States.  Luckily for Ohio, we have a manufacturer like Dearing employing Ohioans and supplying companies developing resources in our state.  It is success stories like these that show the true potential for Ohio as oil and gas development continues to increase.  

Last night at the Maplewood Career Center in Ravenna, Portage County, a public forum was held to address concerns, answer questions and provide information to the public on Utica shale development.  The event drew about 50 people who learned about the history of the oil and gas industry in Ohio, the oil and gas production process and the economic and energy security opportunities associated with Ohio’s shale development. Energy in Depth was proud to moderate and our team enjoyed interacting with our neighbors and friends in Portage County.

The first speaker was Rhonda L. Reda. Ms. Reda serves as Executive Director of the Ohio Oil and Gas Energy Education Program and the Ohio Oil and Gas Energy Education Foundation. She helped form the organization in 1997. Prior to OOGEEP, Ms. Reda served as Vice President of Internal Affairs and Public Information for the Ohio Oil and Gas Association for more than a decade. She knows a thing or two about oil and natural gas production as she’s worked in the industry for more than twenty-five years.

Rhonda discussed the history of the industry and how crude oil and natural gas provides thousands of products we use in our  everyday lives.

The second speaker was David R. Hill. Mr. Hill is President of David R. Hill, Inc., which is an oil and natural gas producer in Ohio and West Virginia. He graduated from Muskingum College in 1980, receiving a Bachelor of Science degree majoring in Geology. Mr. Hill is Vice President of the Ohio Oil & Gas Association and is a past Chairman of the Ohio Oil & Gas Association Energy Education Program. Mr. Hill has served under Governors Taft, Strickland, and Kasich on the State of Ohio Technical Advisory Council and has been a member of the American Association of Petroleum Geologist for 31 years.

David talked about the process of developing an oil and gas well and the state regulations that are enforced during the entire process of production. David also discussed waste water disposal and class II injection wells and explained what an injection well is and why we use them.

“The water that we inject into the ground in Ohio represents 1/2 of 1% of all of the water that is injected in the United States.” — David Hill (1:19)

This educational forum was co-sponsored by Lakeside Sand and Gravel, Therm-O-Link, Kimble Companies, the Ohio Energy Resource Alliance, and the Ohio Shale Coalition. These are local companies that are seeing a direct benefit from the exploration and production of Utica shale resources. Since Energy in Depth is an active part of the Ohio Energy Resource Alliance it is important to be present in communities all across Ohio talking about oil and gas development with co-sponsors like these local businesses.

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Last night, voters in the City of Youngstown roundly rejected an ill advised “Community Bill of Rights” charter amendment that threatened the city from regaining its status as the economic powerhouse it once was.  The final vote tally shows the charter amendment was handily defeated by a 57% to 43% margin.  In the end 3,821 voted against the measure while only 2,880 voted to enact the amendment which sought to place a ban on the use of hydraulic fracturing within city limits.

The ballot initiative was brought to a city wide vote after Frack Free Mahoning put oil and natural gas development in its sights earlier this year.  The group succeeded  in duping 4,000 residents into signing a petition to ban oil and gas development as well as other potential industries by seeking to approve the so-called “community bill of rights”.  

However, after thorough review, many saw this effort for what it truly is. An attempt to not only stifle economic development in the city that would be entirely unenforceable.  For this reason, many stakeholders from local chambers of commerce to local union organizations rallied to defeat the measure. As a result, many people who originally signed the petition rethought their support and voted against the measure as support on election day fell by over 1,200 people.  

To combat this measure a group representing the diverse stakeholders opposing the measure - called the Mahoning Valley Coalition for Job Growth and Investment - was formed.  The group was a partnership of local businesses, trade unions, chamber of commerce and civic leaders who recognized the measure would be devastating to the city’s continued economic progress.  The group held a press conference in April that outlined their concerns in which they condemned the ballot initiative.

“The problem is they took a shotgun to kill a fly and they are harming a whole lot of people in the process. This piece of legislation is government by chaos because you are creating private cause of action,”- Mahoning Democratic Party Chairman Dave Betras (Group lobbies against anti-frack ballot issue, 4/6/13)

The ballot initiative created more questions than answers.  In fact, it was so hyperbolic that Energy In Depth took a closer look at how improperly written the “Community Bill of Rights” was and therefore the possible implications its enactment could bring to the city. 

Luckily the people of Youngstown saw through the scare tactics put forth by Frack Free Mahoning and their supporters.  Oil and gas development is helping re-ignite the passion of Youngstown and its residents for which they are well known.  It is providing an amount of jobs and economic opportunity that haven’t been seen here in years.  In fact, just this morning it was announced the Northeast region of Ohio has seen $1.8 billion investment with over 36,000 jobs created in 2012, many of these investments and jobs were created by oil and natural gas development.

Of course, this charter amendment would have tried to reverse this trend and put a closed for business sign on Youngstown.  Had the measure passed companies would have thought twice before they moved to Youngstown because of new improperly vetted regulations.

“Our elected officials, labor, business and community leaders have worked very hard to get Youngstown moving in the right direction. Factories are opening, office space is being leased and workers are being trained for good paying jobs.  Thankfully, the voters rejected a very bad law that would have hurt our progress.”–Youngstown/Warren Regional Chamber President Tom Humphries

In the end, the community recognized the effort for what it was, namely an albatross of ill conceived anti-development rhetoric.  Last night was a victory for the people of Youngstown as they can continue to pursue an economic renaissance being realized thanks, in large part, to increased oil and gas development.  Case in point, the City is now the 5^th fastest growing manufacturing city in the nation and with the no vote on the “Community Bill of Rights” on Tuesday, it will continue to move in the right direction.

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UPDATE (5/7/13 11:00 am ET): In the six months since Energy In Depth’s first visit to Marlington High School‘s Gas and Oil Technology Program, the class has garnered statewide attention.  The flagship program led by instructor Bob Givens has received support from Governor John Kasich, hosted visits from big names in oil and gas, and even recently gave students a special opportunity with their local state representative.

For example, students met Representative Christina Hagan at an Ohio ACTE event at the statehouse earlier this year.  Hagan, a Marlington High School alum, told students she always wanted to learn how to operate a bulldozer, so the students invited her up to learn just that.  John Deere donated the class a bulldozer for two weeks, and Rep. Hagan returned to Marlington to learn from the students.  After a quick lesson, Hagan looked like a professional:

Givens explained that not only did students get to meet their state representative, but the experience gave them an opportunity to show that they understand the significance of what they’re learning.  He encourages the students to teach others so that in a future job interview, they can fully explain their experience and knowledge, both of which have been gained in and out of the classroom.  The students have visited well sites, trade shows, and welding facilities to get first hand experience, and two students were given the opportunity to job shadow on a well site for a full day.  Senior Alex Hatfield chatted with Energy In Depth about his experience:

“It’s big time…it shows me places to go, what opportunities there are. It’s going to help me big time in the future.” –Alex Hatfield (:37)

With Ohio’s shale industry growing rapidly, more jobs will need to be filled.  Students like those at Marlington High School are getting a jump start toward the opportunities changing the state’s economic landscape.

- Original Post from December 4, 2012 -

Throughout the past three months, Marlington High School in Alliance has caught the eye of Ohio media for leading the way in vocational education. To name a few, the Canton Repository, Akron Beacon Journal, Alliance Review, and Farm and Dairy have covered the school’s Gas and Oil Technology Program.  While many of the articles have focused on the senior class, EID was invited to visit the program’s junior class that will participate in the program a full two years.  12 juniors and 10 seniors enrolled in Ohio’s first oil and gas technology program.

Instructor Bob Givens explained that the program will give students a head start in the industry by learning basic mechanical training that used to be taught in now defunct shop classes. He highlighted the fact that students will learn to use tractors, trailers, loaders, hydraulic equipment like log splitters, and chainsaws; learn welding, piping, block laying, wiring, electrical work, and plumbing.

While some time with equipment is donated by local companies, Givens looks to rent equipment rather than purchase. Since technology changes so rapidly, he wants students to learn from new equipment and stay up to date.

Some students hope to get an entry-level job upon completion; others hope to receive college credit to use after graduation.  He stresses to his students how early in Ohio’s shale development we really are and the incredible opportunities it will bring through job creation:

They’re learning that this industry is not just a fly-by-night, it’s a long term, and they’re looking at all the different options of what the job opportunities might be—whether it’s transient movement with the rigs, or staying with a permanent job in a community with processing and the delivery of those products—Robert Given, Marlington High School Gas and Oil Technology Program (1:35)

Since this is a pilot program in collaboration with the Ohio Department of Education and Stark State College, grants will be needed to fund the program after its two year trial. Currently, Marlington High School itself funds the class.  Next year, they hope to expand the program providing open enrollment to neighboring schools and bringing on another teacher to fulfill needs.  This school year, the class plans to present to Governor Kasich’s Ohio Economic Education Summit and applied to present at the 2013 Legislative Seminar.

The program also aims to develop a curriculum that can be used in other school districts across Ohio.  Schools in Ohio, Pennsylvania, and West Virginia have inquired about Marlington’s program in hopes of starting their own.

The hands-on experiences using large equipment has given juniors Otha Loving and Darrian Nelson hope of finding jobs in the oil and gas industry or related fields. EID was able to bring them out of class for a few minutes to chat about their experience:

I thought it’d be a great opportunity to get a head start of everyone else who doesn’t have the experience we’re getting in the two years—Otha Loving, Marlington High School Gas & Oil Technology Program (:04)

After a year or two of learning the industry’s terminology, safety practices, mechanical basics, and operating and maintaining large equipment, Marlington High School’s students will be better prepared to take part in Ohio’s oil and gas revolution. These are great first steps towards ensuring a brighter, more prosperous future.

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On Friday, Zane State College hosted a ribbon cutting ceremony for the opening of its oil and gas land laboratory at the Willett-Pratt Training Center in Cambridge, Ohio.  The lab, which was constructed by Oil and Gas Engineering Technology program students, will help give students a hands-on approach to learning about the Ohio’s booming oil and gas industry. The lab consists of a pump jack, metering station, and a tank battery to give students a better sense of what it is like to work in the field, instead of just learning about it in the boring old classroom.

The land lab gives Zane State College students a unique learning environment, which will also provide them the tools needed to be prepared for the oil and gas field when they graduate.  Not only will the students be learning how each station works, but they will be learning the building and maintenance of each station, which is not something no other program in Ohio offers. 

To make this project work, Zane State had to think a bit outside of the box.

Zane State noticed early on that shale development was going to be a very important industry to our region.  With that foresight, Zane State has been working tirelessly to put together oil and gas programs that will help area students be prepared for the future of our region.  First, they put together their two-year oil and gas engineering program, which will graduate its first class this spring.  Next, they began figuring out how best to prepare students for the real life experiences out in the oil and gas field.  That is where the land lab comes into play.

Thankfully, Ohio has a rich 150 year history of oil and gas development, with many operators and suppliers in the area who are always more than happy to help.  Express Energy Services, Permian Pump & Supply, Ridge Tool Company, Triangle Gasoline Company, and Westerman Companies — along with several other companies and suppliers — assisted Zane State College in creating the outdoor laboratory.

“This land lab is opening at a critically important time as opportunities…in the shale oil business are continuing to expand.  The real world experience and hands on training our students will receive will provide them with relevant knowledge of the life of oil field operations, which is extremely valuable to our employers.” —Dr. Paul Brown, President of Zane State College

Zane State’s new land lab will help ensure that its students have the tools and real life experience to prepare them for their future in the oil and gas business in Ohio.  Thanks to Zane State and its generous contributors, the Willett-Pratt Training Center will be producing many of the future oil and gas workers here in Ohio as Utica Shale development continues to provide opportunities.

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For The Sunday Shale Show this week, Energy in Depth sat down with Mr. Scott Smith, a professional engineer with Environmental Resources Management (ERM). ERM has over 5,000 employees working in 39 countries. In Ohio, ERM hosts two separate locations in Cleveland and Cincinnati that work on shale development.   The Cleveland operations has 13 staff members while the Cincinnati operations has 25 employees.

 I defiantly see this being a wave that will create more jobs in Ohio and produce more opportunities for our company, our business. – Scott Smith, ERM (3:57)

As Mr. Smith acknowledged, there is great potential in the future development of our state’s shale deposits, and its potential is recognized worldwide, with more and more interest and investment coming in to the Buckeye State.

For this reason, ERM and other organizations (like Energy in Depth) have placed a priority on educating the public about the industry, its practices, and the incredible benefits this continued development will bring for Ohio’s workforce and its communities.

Energy in Depth thanks Mr. Smith for his efforts, and for joining us on The Sunday Shale Show. We look forward to continuing to work with those working directly or indirectly with the oil and gas industry to provide in-depth analysis of what’s taking place in Ohio (and beyond), and what it means for our communities and our state.

Stay tuned for The Sunday Shale Show next week!

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A recent article in the Columbus Dispatch, entitled “Drillers: Ohio easy place to do business in,” left readers with the impression that Ohio has a rubber stamp system for permitting oil and gas development, and by extension a lack of proper scrutiny on safety and environmental protection. While it’s true that Ohio has an incredibly efficient permitting system, make no mistake: bringing a well online requires a heckuva lot more than a handshake and a couple of signatures.

In preparation for developing a well in Ohio — that means before securing an actual permit to drill — an operator must first fill out and submit an authority and organization form to the Ohio Department of Natural Resources (ODNR), specifically the Division of Oil and Gas Resources Management (DOGRM).  This form essentially acts as a registration of your company to develop oil and gas in the state.

Once the company has filed its notice to operate in the state, the company must next follow the bonding requirements set forth by Ohio Revised Code.  In addition to fulfilling the bonding requirements, companies must also make sure they meet the liability insurance requirements, also established by the Ohio Revised Code.  Both of these requirements must be met before the division will even consider moving forward with permitting.

It’s not a perfect analogy, but to put this in perspective: think about filling out those lovely forms at the DMV to get a driver’s license or license plates. Not exactly a fun and simple process, is it?

Once these qualifications have been met, the company can begin obtaining a permit.  The company must first fill out the application detailing how and where the well will be developed.  These items include:

• Type of Well- Vertical, Directional, Horizontal, etc.
• Type of Drill- Rotary, Cable, Service
• Proposed Cementing and Casing Program- Up to 7 different casing strings, detailing Borehole depth and length; Casing depth and length; Cement volume and each formation the casings will be cemented back to the surface
• General Information- Including API Well#, Formation, Lease Name, Location, Acreage, etc
• Source of water used in production
• EMA Contact Information
• Road Use Maintenance Agreement

Even after all of the above-mentioned paperwork and filings are completed, an operator has still only barely scratched the surface in terms of developing a well.

After the company has filled out and submitted its application for permit, ODNR must review the permit to check for completeness.  The permit must be filled out correctly and have the proper fees in place to permit the well.  If they deem the permit not to be complete, it goes back to the company to correct and re-file. (To continue the analogy, have you ever made a mistake on a DMV form after waiting in line for two hours — and had to redo it? Yeah, that.)

If the permit is deemed complete, then local officials, possible affected mine owners, and the inspector are notified of the permit.  The permit name is also posted on the ODNR website. 

Next, the company must submit the Surveyors Plat, in which a certified surveyor will map the pad site the company plans to use when developing the well.  The company also has to develop a restoration plan for when they plan to reclaim the site.  ODNR must approve both of these plans.  In addition, the company must sign and notarize the landowner affidavit certifying it is permitted to develop the resources where the pad will be located. 

Operators must also fill out federal Clean Water Act 401 and 404 permits for wetlands and water quality to the Army Corps of Engineers and EPA to ensure the waters of Ohio are not negatively impacted by development.  Ever hear opponents of oil and gas development claim the industry is “exempt” from the Clean Water Act? Not true.

Once these permits have been reviewed and approved — and when you’re talking about the EPA, that’s hardly a given — it is now time for ODNR to perform the technical review of the drilling permit.  ODNR checks to make sure the casing and cementing plan is sufficient to properly produce from the well, while also ensuring that groundwater will remain protected under the Safe Drinking Water Act (yet another “exemption” talking point from the activist community is shattered). The reviewers check the geology, casing plans, as well as any special permit conditions.  Once they are assured the well construction is sufficient, technical review is complete.

Ready to drill, right? Wrong.

Next, the operator performs water testing for all homes within 1,500 feet of the wellhead, as mandated by Ohio SB 315.  The results are distributed to the landowners, ODNR, as well as the company.

If there is going to be a fresh water impoundment on site, then these impoundments will also be regulated by ODNR. Two separate offices within ODNR — DOGRM or Soil and Water Division — oversee impoundments, depending on the size.   

To build the actual well pad, there are still a few more items that need to be attended to. 

First off, the operator must get permits from the Ohio Department of Transportation for driveway permits for lease roads, and the company must obtain overweight and/or over length hauling permits to allow them to get the materials to build the pad.  Of course, these permits would all be moot if the township trustees, county engineer, and the county commissioners have not signed off on the proposed Road Use Maintenance Agreement.

Each pad site also has sanitary needs, which of course need to be permitted as well.  These facilities are inspected by the Ohio EPA and Department of Health.

Okay, so the site has been constructed.  The permits are in place, and now the operator is ready to notify ODNR that it is ready to spud the well. 

Err, not so fast. 

The operator must also work with the EPA and Ohio EPA to file a SPCC Plan.  SPCC stands for Spill Prevention, Control, and Countermeasure rule, which includes requirements for spill prevention, preparedness, and response to prevent discharges to navigable waters. 

In addition to the SPCC plan the operators file with the Ohio EPA, operators must also file for an permit to install and operate (PTIO) air permits with the Ohio EPA for their production facilities that will be onsite.  The PTIO regulates emissions that would be coming from a production site as regulated under the Clean Air Act — yet another one of those laws that anti development folks like to pretend the industry is “exempt” from.

Many know the industry uses an average of five million gallons of water to hydraulically fracture a Utica Shale well.  But how does the industry obtain that water?  There are a variety of places an operator can get its water: public water supplies, which are permitted by the Ohio EPA; drill a water well, for which they would have to obtain a permit from ODNR and the local health department; or from a pond, for which they would also have to register with ODNR.

Obviously, this extensive process is a lot to take in, so here is a diagram to give a better description of the planning and permitting that goes into developing a well.

But wait, we still need pipelines to get the gas to market!But what does it take to permit a pipeline?

Permitting pipelines is another extremely time intensive component of oil and gas development that many seem to forget.To get gas from the well to market, there are various surveys and permits that each company must follow for each and every pipeline it installs.

First off, a pipeline company must obtain a Nationwide 12 Permit from the Army Corps of Engineers.  In addition to the general requirements set forth by Nationwide 12, the company must also perform due diligence on a variety of other items:

• Rare, Threatened and Endangered Species – Companies must consult with U.S. Fish and Wildlife Services and ODNR to ensure creatures like the Indiana Bats and Hellbender salamander are not negatively impacted in Ohio;
• Cultural Resources Management – Companies must also ensure they are not affecting areas that hold some historical or archeological significance like Native American burial grounds; and
• Wetlands and Waterways Surveys –  These surveys help mitigate any disturbance to wetlands, stream or river crossings and ponds.

If companies run into these items and are not able to mitigate them, the companies may have to re-route to pipeline altogether — which can often entail going back to square one in this process.

Of course, these companies also have to obtain permits from the Public Utilities Commission of Ohio, which regulates gathering lines in Ohio.  The pipeline companies have to complete a Pre-Construction Notice as well as an As Built Notice. If a company has to go through a floodplain, then the company has to submit a floodplain notification to the County Floodplain Administrator.

If the companies happen to run into an area controlled by the U.S. Army Corps of Engineers, in which Corps holds perpetual rights, then the company must obtain a federal Flowage Easement.  ACE has the right to approve or deny any request on this matter, which is typically a three month process.

Pipelines tend to run straight and incorporate long distances of travel to get to processing plants or to transmission lines.  To achieve this, companies must get Driveway Occupancy Permits and Highway Occupancy Permits from the Ohio Department of Transmission, County, Township, Village or other divisions.  If a pipeline needs to cross a railroad, the pipeline company must obtain a railroad permit from the railroad operator or owner, which may take up to four months.

Of course, operators also need trucks to haul pipe and equipment, so just like oil and gas companies, the pipelines need to obtain road use maintenance agreements from the county.

Okay, but once we’ve got the well and pipeline approvals, now surely we’re done with the permitting process, right? Wrong.

To move the product from point A to B, we also need compressor stations, which are permitted the same as the pipelines but include one more significant component.

Air permitting is needed on all compressor stations to remain in compliance with the Clean Air Act (yet another “exemption” argument blown away).  Depending on the facility, air permitting involves the preparation of detail permit documents, air dispersion modeling, and design drawings and calculations.  Typically, permitting timelines are 3-6 months for minor facilities and can be 12-18 months for large, complex compressor stations after a complete application is submitted to the Ohio EPA.  The permitting timeline also includes multiple public comment periods and public hearings.

If someone believes that permitting is easy in Ohio, they need to read this post again.  The real story is that these requirements have worked: How many environmental violations have we seen among the 89 Utica Shale wells drilled since passage of SB 315? Zero.

So, the fact that this entire, cumbersome process is both effective and can be completed in an efficient manner should not be conflated with an “easy” or rubber-stamp system that ignores safety. The record speaks for itself. We just wish the folks at the Columbus Dispatch would have actually looked at it before running headlong into a false narrative based on a few out of context remarks.

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As many have heard, an important project is underway in Springfield Township in southern Mahoning County:  $300 million is being spent on the Hickory Bend gas gathering and processing project, which is being developed by NiSource Midstream Services LLC and Hilcorp Energy’s joint venture, Pennant Midstream LLC.  NiSource is mainly responsible for infrastructure development and Hilcorp will work on exploration and production.  The project includes a $150 million cryogenic processing plant, and an additional $150 million in pipelines that will extend from western Pennsylvania to Mahoning and Columbiana counties in Ohio.

NiSource COO Chad Zamarin came to the Mahoning Valley this week to meet with local officials and reporters, revealing the project could see even more investment in the next few years:

“We believe our initial $300 million project has the potential over the next few years to be $1 billion worth of investment in this very footprint” —Chad Zamarin (NiSource Exec: $300M Gas Project Could Grow to $1B, 5/1/13)

You read that right — $1 billion. Foreseeing the need for more infrastructure, NiSource is preparing the site for future investment, as Zamarin explained:

“We’re developing an area that will allow for multiple plants to be sited. When we do come back and expand the location, it can be done at very little impact” —Chad Zamarin (NiSource Exec: $300M Gas Project Could Grow to $1B, 5/1/13)

He also stated that 200 local excavators, operating engineers, and laborers are preparing the site for the new plant. Translation: hundreds of new jobs. As work continues, he said the number of local contractors and members from the building trades could grow to around 1,000.  As the project grows, so will the need for workers:

“We’ve found an incredibly talented work force. The trades and the unions are working with us on training and development programs so that by the time we get ready to do work, the folks are ready to hit the ground running.” —Chad Zamarin (NiSource Exec: $300M Gas Project Could Grow to $1B, 5/1/13)

The cryogenic plant’s construction should begin in June. Zamarin said within 12 months, the plant should be installed and in service.  The plant will chill natural gas to separate wet gas from dry gas. The dry gas will then be pumped into natural gas lines, while the wet gas will go to a fractionation plant.

Of course, NiSource isn’t new to the Mahoning Valley, and the company will continue to operate as a good neighbor. They’ve already paved two roads in the area and, as a means of reducing emissions, will run the plant on electricity rather than diesel fuel.  Through Columbia Gas, of which NiSource is a parent company, Zamarin explained that the company’s pipelines “have been in this area for over 100 years.”

Projects like Hickory Bend show Ohio’s Utica Shale is not to be overlooked, and the local impact of development can be — and indeed typically is — quite significant. When a company is considering spending $1 billion in a concentrated area, other investment will no doubt follow. The communities benefit from increased revenue and economic activity, and all Ohioans benefit from a plethora of new jobs. More headlines like this are sure to come!

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UPDATE (05/01/13 10:00 am ET):  Chesapeake hosted its first quarter earnings call this morning, during which the company spoke highly of its development in the Utica.  As many know, Chesapeake is the largest operator in the Utica Shale and continues to invest heavily in Ohio.  

Chesapeake is operating 14 rigs in Ohio and has developed 249 wells to date.  They have 66 wells producing, with 86 waiting on pipeline and 97 in various stages of completion. The company also completed and tested three wells in Harrison and Carroll Counties, all of which proved to be significant:

• The Coe 34-12-4 1H in Carroll County achieved a peak rate of approximately 1,980 barrels of oil equivalent (boe) per day, which included 235 bbls of oil, 470 bbls of natural gas liquids (NGLs) and 7.6 mmcf of natural gas;
• The Henderson South 10-12-6 5H in Harrison County achieved a peak rate of approximately 1,625 boe per day, which included 755 bbls of oil, 240 bbls of NGL and 3.8 mmcf of natural gas; and
• The Scott 24-12-5 6H in Carroll County achieved a peak rate of approximately 1,530 boe per day, which included 285 bbls of oil, 350 bbls of NGL and 5.4 mmcf of natural gas.

Chesapeake brought a total of 13 wells online in the first quarter of 2013 with a an average peak rate of 1,200 barrels of oil equivalent per day, and the company is still on pace to reach its goal of 330 million cubic feet of natural gas equivalent (mmcfe) per day.  As of the call this morning, Chesapeake is averaging 60 mmcfe per day.

Kinda makes that Bloomberg News story from a few weeks ago seem even more silly, huh?

–Original post from April 1, 2013–

In one of his first actions as the acting chief executive of Chesapeake Energy, Steve Dixon held an operations update conference call at 8:30 this morning.  While many areas were covered, Dixon’s update on Chesapeake’s Utica Shale operations was worth noting  as it provided a very positive picture of the Utica Shale’s potential.

According to the company’s data, Chesapeake has developed over 240 wells in the Utica/Point Pleasant formation.  This accounts for approximately 75% of all development in the Utica Shale.  With these assets alone, Chesapeake is currently producing 75 million cubic feet equivalent (mmcfe) of natural gas per day. Given the limited sample available these numbers are promising.  In fact, Chesapeake estimates that if it’s production was unconstrained it would be capable of producing double its current production.  Given that, looking forward Chesapeake has a target of 330 mmcfe a day, or 55,000 barrel of oil equivalent, by the end of 2013.  While reaching this estimate depends greatly on processing and pipeline infrastructure coming online as scheduled, the initial outlook in reaching this goal provides reason for optimism.

Also covered on the call was a production update from one of Chesapeake’s wells in Carroll County.  The pad, called the Scott Unit, has 6 laterals.  Chesapeake was able to get development costs down to an average of $6.5 million a lateral on the pad, a notable reduction in cost from the play’s average well cost of $8-$10 million. In addition to getting well costs down, the numbers being produced by the Scott Unit wells also look promising according to figures referenced during the call.

We drilled six wells from a common PAD with average 24-hour restricted test rates of 1,250 boe per day, which included 310 barrels of oil, 200 barrels of NGL, with ethane not recovered, and 4.4 mmcf of natural gas per day, at flowing tubing pressures exceeding 3000 psi.- Steven C. Dixon, Acting Chief Executive Officer, Chesapeake Energy

While Chesapeake’s initial results are encouraging, the company’s opportunity for future Utica growth seems even more encouraging taking into account that companies like MarkWest, and others, will continue to expand Ohio’s midstream infrastructure assets throughout the year.   This will allow Chesapeake, and other upstream producers, to develop additional wells that will enable more natural gas and natural gas liquids to be brought to market.

Thanks to these early successes, Chesapeake’s data on the play’s productivity and expected forthcoming investments, Dixon outlined some pretty prolific  estimates for Utica Shale wells it will develop in the coming years.  Specifically, Dixon stated;

Based on Chesapeake’s geoscientific, petrophysical and engineering research during the past two years – and the results and detailed analysis of wells we have drilled to date –  Chesapeake is targeting ultimate reserve recoveries of 5 to 10 billion cubic feet equivalent (bcfe) per well in the Utica, depending on location and commodity mix within the play.- Steven C. Dixon, Acting Chief Executive Officer, Chesapeake Energy

Again Chesapeake is leading the way in the Utica Shale.  As they continue to bring more wells on line without processing constraints, they will be putting up great numbers.  Hopefully by years end, constraints will be relieved so eastern Ohio can see the true potential Chesapeake and others are providing thanks to Utica Shale development.

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Building on strong numbers from the first quarter of 2013, Utica Shale development in the second quarter of 2013 has been taking off in Ohio. Of course, we see headlines each week in newspapers all over the Buckeye state indicating new jobs, investments, and opportunities thanks to increased oil and natural gas production, so this shouldn’t really surprise anyone.  And while development is good news for getting Ohio back on track, it is equally important to understand where Utica Shale development is helping boost Ohio’s economy.

To date, there have been 627 permits issued by the Ohio Department of Natural Resources for wells in the Utica/Point Pleasant geological formation. Of those 627 permitted wells, 310 of them have been developed, and 89 of those are in production.

Thus far, Utica Shale permits have been issued in the following 22 counties (updated county numbers in bold):

• Ashland -1
• Belmont – 22
• Carroll – 249
• Columbiana – 68
• Coshocton – 5
• Geauga – 1
• Gurnsey – 34
• Harrison – 80
• Holmes – 3
• Jefferson – 33
• Knox – 2
• Mahoning – 17
• Medina – 1
• Monroe – 27
• Muskingum – 3
• Noble – 32
• Portage – 14
• Stark – 13
• Trumbull – 4
• Tuscarawas – 13
• Washington – 4
• Wayne – 1

All of these permits have been provided to 27 companies that are developing Ohio’s shale resources (updated permit numbers in bold):

• Anadarko E&P Company LP – 12
• Antero Res Appalachian Corp – 22
• Atlas Noble – 5
• BP – 1
• Carrizo Utica LLC – 3
• Chesapeake Appalachia LLC – 6
• Chesapeake Exploration LLC – 394
• Chevron Appalachia LLC – 4
• CNX Gas Company LLC – 22
• Devon Energy Production Co - 13
• Eclipse Resources LP – 1
• Enervest Operating LLC - 16
• EQT Production Company – 3
• Gulfport Energy corporation – 47
• Halcon Operating Company Inc. – 3
• Hall Drilling – 1
• Hess Ohio Develop. LLC – 11
• Hess Ohio Resources LLC – 7
• HG Energy LLC – 16
• Hilcorp Energy Company – 3
• Mountaineer Keystone LLC – 7
• Petroleum Development Corp – 5
• R E Gas Development LLC – 13
• Sierra Resources LLC – 3
• Swepi LP – 1
• Triad Hunter – 3
• XTO Energy Inc. – 5

While still very early in its development, the Utica Shale is already showing some very exciting results. The best part is that this development, and the jobs and revenue that come with it, has occurred without a single environmental violation.  That successful track record is due to the diligence of companies operating in the state and Ohio’s strong regulations put forward in Senate Bill 315, the bi-partisan update to those regulations.

Thanks to our natural resources, the public commitment of these companies, a strong regulatory foundation, and the billions of dollars being invested from development, there is a renewed sense of optimism in Ohio thanks to the Utica Shale.

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