Land Rush In Eastern Ohio A Boon For The Economy

Oct 13, 2011
Originally published on October 14, 2011 6:28 pm

The latest hot spot for oil and natural gas is in eastern Ohio.

Some analysts say energy companies haven't been this interested in the Buckeye State since John D. Rockefeller opened Standard Oil in Cleveland in the late 19th century.

Now there's a land rush for drilling rights in what is called the Utica Shale.

Chasing Leasing Rights

Columbiana County Recorder Craig Brown has little privacy at his desk. His offices are packed with workers preparing oil and gas leases and researching the mineral rights of local homeowners.

"Yesterday, I actually had four people in here all waiting to use one microfilm viewer," Brown says. "So yeah, I've actually given up some of my own personal space here, which has taken a little bit of adjustment."

It's been like this, every day, for more than a year. That's because less than a mile below this small Appalachian village, and extending across eight states and Canada, is the energy-rich Utica Shale.

Aubrey McClendon heads Chesapeake Energy, the country's second-largest natural gas producer. He didn't skimp on the superlatives when describing the region this summer on CNBC's Mad Money.

"What can it mean in the form of oil? I think this could be 25 billion barrels of oil equivalent — in the form of oil, natural gas liquids, natural gas. It could be one of our biggest discoveries in U.S. history," he said.

Exxon Mobil, Chevron and Royal Dutch Shell are also chasing leasing rights here.

A Concern Over Contaminating Water

But despite the hype, little is publicly known about how much oil and gas the Utica will actually produce.

Tom Stewart, with Ohio's Oil and Gas Association, says new technology makes Ohio an attractive place for drillers.

"It's making formations such as the Utica Shale — where we always believed the rock was so tight and dense that it would not yield oil and gas — it's taking formations like that and turning them into productive formations," Stewart says.

The technology that makes this possible is horizontal drilling and hydraulic fracturing. Drillers inject huge volumes of chemically laced water and sand into horizontal wells to extract oil and gas. The method is controversial, and opponents argue the procedure, also known as fracking, can endanger drinking water.

Bob Rea heads Ohio's largest nonprofit property owners group, the Associated Landowners of the Ohio Valley. Fracking controversies aside, his group has negotiated environmental protections like liability clauses into their leases with energy companies.

"They're not coming here to ruin and wreck, but sometimes common-sense things get overlooked," he says. "Once you contaminate your water, you're stuck. We want to make sure that this industry that's coming here understands how important this water is and any burden of any occurrence falls on the shoulder of the driller."

Good For The Economy

While drilling in the Utica is in its infancy, the land rush has been an economic boon. Mary Catherine Nixon is the recorder in Ohio's Belmont County, just 10 miles from Wheeling, W.Va. On a given day, Nixon says she's collecting $1,400 in copying fees alone from the two to three dozen mineral rights researchers who have camped out in her offices for months.

"And I understand it's going to go on for months," she says. "But it's good for our economy. You know Belmont County's like the rest of the state — we've been hurting and I think this is going to be good for us. I'm hoping!"

Some Ohio legislators have proposed banning fracking at least until the EPA finishes up a study on its effects on drinking water. But the bill isn't expected to pass.

In the meantime, the market for Ohio landowners with mineral rights is booming. Just over a year ago, leases were going for about $75 an acre plus royalties. There are reports now of landowners signing mineral rights leases for nearly $5,000 an acre.

Copyright 2013 Cleveland Public Radio. To see more, visit http://www.wcpn.org.

Transcript

GUY RAZ, HOST:

Energy projects may take awhile to develop, but there is still a race on for drilling rights in eastern Ohio. Some analysts say energy companies haven't been this interested in the Buckeye State since the late 19th century. That's when John D. Rockefeller opened Standard Oil in Cleveland. Mhari Saito of member station WCPN has this story on oil and natural gas and what's called the Utica Shale.

MHARI SAITO, BYLINE: If you want to interview Columbiana County Recorder Craig Brown, don't expect any privacy. As I talked to Brown at his desk, two people line up behind me to use the work station in his office.

CRAIG BROWN: But yeah, and yesterday, I actually had four people in here all waiting to use one microfilm viewer. So yeah, I've actually given up some of my own personal space here, which is, you know, a little bit of an adjustment.

SAITO: Brown's offices are packed with workers preparing oil and gas leases and researching the mineral rights of local homeowners. It's been like this, every day, for over a year. That's because less than a mile below this small Appalachian village, and extending across eight states and Canada, lies the energy-rich Utica Shale. Aubrey McClendon heads Chesapeake Energy, the country's second largest natural gas producer. He didn't skimp on the superlatives when describing the region this summer on CNBC's "Mad Money."

AUBREY MCCLENDON: What can it mean in the form of oil? I mean, I think this could be 25 billion barrels of oil equivalent, in the form of oil, natural gas liquids and natural gas. It could be one of our biggest discoveries in U.S. history.

SAITO: ExxonMobil, Chevron and Royal Dutch Shell are also chasing leasing rights here. But despite the hype, little is publicly known about how much oil and gas the Utica will actually produce. Tom Stewart is with Ohio's Oil and Gas Association. He says new technology makes Ohio an attractive place for drillers.

TOM STEWART: It's making formations such as the Utica Shale where we always believed that the rock was so tight and dense that it would not yield oil and gas, it's taking formations like that and turning them into productive formations.

SAITO: The technology making this possible is horizontal drilling and hydraulic fracturing. Drillers inject huge volumes of chemical-laced water and sand into horizontal wells to extract oil and gas. The method is controversial and opponents argue the procedure, also known as fracking, can endanger drinking water. Bob Rea heads Ohio's largest nonprofit property owners group, the Associated Landowners of the Ohio Valley. Fracking controversies aside, his group has negotiated environmental protections, like liability clauses, into their leases with energy companies.

BOB REA: They're not coming here to ruin and wreck, but sometimes some common sense things get overlooked. Once you contaminate your water, you're stuck. So we want to make sure that this industry that's coming here understands how important this water is and any burden of any occurrence falls on the shoulder of the driller.

SAITO: While drilling in the Utica is in its infancy, the land rush has been an economic boon. Mary Catherine Nixon is the recorder in Ohio's Belmont County, just 10 miles from Wheeling, West Virginia. On a given day, Nixon says she's collecting $1,400 in copying fees alone from the two to three dozen mineral rights researchers who have camped out in her offices for months.

MARY CATHERINE NIXON: And I understand it's going to go on for months. But it's good for our economy. You know, Belmont County's like the rest of the state. We've been hurting and I think this is going to be good for us. I'm hoping.

SAITO: Some Ohio legislators have proposed banning fracking, at least until the EPA finishes up a study on its effects on drinking water. But the bill isn't expected to pass. In the meantime, the market for Ohio landowners with mineral rights is booming. Just over a year ago, leases were going for about $75 an acre plus royalties. There are reports now of landowners signing mineral rights leases for nearly $5,000 an acre. For NPR News, I'm Mhari Saito. Transcript provided by NPR, Copyright NPR.