Jefferson County expected to become one of the top five natural gas producing counties in state
STEUBENVILLE — Jefferson County is expected to become one of the top five natural gas producing counties in the state this year, a confident Mike Chadsey, public relations director of the Ohio Oil and Gas Association, explained.
Chadsey was one of three people who spoke Monday about the oil and gas industry during a workshop luncheon sponsored by the Jefferson County Chamber of Commerce.
Amanda Finn, government relations manager for Ascent Resources, and Jackie Stewart, external affairs director for Encino Energy, also made presentations during the seminar held at Hellenic Hall.
Tricia Maple-Damewood, chamber of commerce president, said the chamber now has an oil and gas committee, which is chaired by Terry Bell of the county township trustees association.
Chadsey said the Ohio Oil and Gas Association now has more than 2,000 members in the downstream, midstream and upstream segments of the oil and gas industry.
He said Belmont County continues to lead the state in gas production, with 630 wellsite permits. The counties of Carroll, Harrison, Monroe and Guernsey round out the top five in the state. Jefferson County is now sixth, but Chadsey expects it will move into fifth place by the end of the year. There are 229 permitted sites here now, he said.
The Ohio Department of Natural Resources reported there are 3,062 wells permitted in the state, with 2,446 wells drilled. There are 2,179 producing wells and 14 rigs in the state.
Encino, which purchased Chesapeake Energy’s leased properties and wells, has the most permitted wells, with 891. Ascent has 560 permitted wells, Chadsey said.
Pennsylvania leads Ohio with about 15,000 Marcellus wells, he said.
Ohio had 59 rigs operating in 2014 due to a downswing in the price of oil because OPEC countries increased their production, Chadsey said. He said domestic producers figured out a faster and cheaper way to drill wells, and production increased during the past couple of years.
If Ohio, West Virginia and Pennsylvania were their own country, it would be the third largest producing natural gas producing country in the world, Chadsey said. He said the return on production in the Appalachian region is better than southern states, something the industry is emphasizing in its Shale Crescent campaign. He said the Shale Crescent campaign is attracting a lot of business to the region.
Chadsey said there were five major pipeline projects in the state during the past several years, with an $8 billion investment. He said there are five natural gas power plants in production, capable of producing a combined 11,702 megawatts of electricity. That replaces 10,000 megawatts of electricity lost when coal-fired power plants went offline.
The Shell cracker plant currently under construction in Monaca, Pa., represents a $6 billion investment. The PTT Global Chemical plant proposed for Dilles Bottom is about an $8 billion investment. Both will use ethane gas to make materials used in the plastic industry.
All in all, about $74 billion has been invested in the oil and gas industry in Ohio since 2011, Chadsey said.
Finn said Ascent Resources has 311,000 acres of land leased in the Utica Shale play across Ohio. The company has pumped $65 million into the state’s economy during the past several years and made $200 million in royalty payments to landowners last year.
Ascent Resources has made more than $22 million in road and infrastructure improvements under road use maintenance agreements, Finn said.
Ascent has hit 2 billion cubic feet of gas production, with 257 wells producing in Ohio, she added. Ascent has 29 of the top 40 producing gas wells in the state, she said. There are seven drilling rigs operating in a four-county area, with three each in Jefferson and Belmont counties. She said drilling will be focused in Smithfield, Mount Pleasant and Cross Creek townships in Jefferson County.
Stewart said Encino acquired 933,000 acres of rights in Ohio from Chesapeake Energy in August for $2 billion. The Canada Pension Plan Investment Board, which provided the capital, and Encino Energy formed Encino Acquisition Partners.
She said Encino is here because Ohio is a business-friendly state. She said the company looked at assets all over the country but chose Ohio.
Encino has more than 900 producing wells in the state, she said. The core asset area in 2019 in order includes Harrison, Jefferson, Carroll and Columbiana counties. She said Encino has 55,000 lessors and will issue 6,000 royalty checks in May. She said there are two rigs drilling 40 wells in the core-asset area. She said wells are performing 20 percent to 40 percent better than expected.
Check stubs received by lessors now have a better explanation of royalty payments, Stewart said. She said Encino listened to the state Legislature and the Farm Bureau about being more transparent with the royalty explanations.
“Encino believes there is a better way to manage an oil and gas company. We want to have a long-term, sustainable, positive impact with communities,” she said.