WARREN - BP announced today an agreement to lease thousands of acres in Trumbull County for future oil and gas production in the Utica/Point Pleasant shale formation.
The BP drilling deal was announced to property owners who gathered inside Youngstown's Covelli Center Monday evening.
The deal would lease about 84,000 acres in Trumbull County to BP. It was with the Associated Landowners of the Ohio Valley (ALOV), a group representing area mineral owners. Members of ALOV voted Monday evening to approve the lease arrangement.
Terms of the agreement, to be executed with each landowner, are not being released.
However, previous deals with other landowners in Mahoning and Trumbull County with other companies have been going for $3,000 to $5,800 per acre in signing bonuses, plus additional royalties on the minerals produced at a rate of between 17 and 20 percent.
At $3,000 per acre, the deal would mean an influx of more than $250 million into the local economy when the signing bonus checks are released. That is expected to be in about six months.
"BP is excited to expand our presence in Ohio in a way that will create jobs, bolster the local economy and provide additional sources of energy from an important emerging American resource," said Lamar McKay, chairman and president of BP America. "Over the last five years BP has been America's largest energy investor with vast experience in developing natural gas resources. We intend to bring our expertise and the highest industry safety and environmental management practices to this project."
Through its heritage companies of Standard Oil of Ohio (SOHIO) and Amoco, BP's roots in Ohio date back to 1870. BP operates the BP-Husky refinery near Toledo which it owns in a joint venture with Husky, LLC, and is also a leading marketer of fuels in Ohio through independently-owned marketers under the BP brand. BP heritage companies have also been active in the upstream business throughout its history in the state of Ohio.
The Utica/Point Pleasant shale is at a depth of about 6,000 feet. This rock formation is of similar thickness to the Marcellus and has the potential to deliver higher liquids rates. The Ohio Department of Natural Resources estimates a recoverable Utica shale potential between 1.3 and 5.5 billion barrels of oil and between 3.8 and 15.7 trillion cubic feet of natural gas.
"We are very encouraged by what we have seen of the Utica/Point Pleasant formation. Our focus in 2012 will be to better understand the geology and devise a plan to safely develop the resource," said Tim Harrington, regional president for BP's North America Gas (NA Gas) business. "BP is committed to hiring and purchasing locally whenever possible and we anticipate having a positive impact on the region while providing a new source of energy for America."
BP is the second largest oil and gas producer in the U.S.