MOUNDSVILLE - For several years, companies drilled into the Marcellus shale in West Virginia and the Utica shale in Ohio. Now the Utica rush has come to the Mountain State.
Fossil Creek Ohio is signing Utica shale leases in Marshall County, with plans to start sinking wells in the near future. The company said each well will cost up to $22 million to drill, compared to about $7 million that some companies have publicly said they are paying to drill in the Marcellus.
Other companies also are signing leases. The Utica shale sits below the Marcellus, more than a 2 miles beneath the Earth's surface.
"I can't tell you how much we are paying per acre, but it is more than any other company over there," Fossil Creek President Chris Rowntree said. "It depends on where your land is located, though."
The highest known offers for Marcellus shale leases in the Ohio Valley would pay $7,300 per acre, along with 20 percent in production royalties. Landowners who have signed Marcellus leases may or may not have also leased their Utica rights, depending upon the individual agreements.
The Marcellus formation lies about 6,000 feet beneath the surface. Rowntree said his company could drill as deep as 13,000 feet to reach the Utica formation in Marshall County. To put that in perspective, there are 5,280 feet in a mile, so Rowntree's company could drill nearly 2.5 miles deep to tap the natural gas reserves.
"Not many people have drilled that deep in West Virginia," West Virginia Oil and Natural Gas Association Executive Director Corky Demarco said. "We have not done a lot of exploration on (the Utica) yet. It has been more economical to drill only to about 6,000 feet to get gas than to go clear to 13,000 feet."
After drilling several Marcellus wells in Marshall County, Gastar also is aiming for the Utica formation. The company hopes to drill its Simms 5H well 11,100 feet vertically before turning it to go another 4,200 feet horizontally.
In Marshall and Ohio counties, the Marcellus gas tends to be liquids-rich, so it also contains ethane, propane, butane and pentane, in addition to the dry methane. The gas requires processing before it can go to market. However, Rowntree said this will not be the case with Marshall County's Utica formation.
"Back in the Marcellus (shale) days, you needed processing. This is dry gas that can go straight to market," he said.
Even without the added value of the wet gas, Rowntree believes the price of natural gas, currently around $4.58 per unit on the New York Mercantile Exchange, is high enough to make extracting this gas profitable. The $4.58 figure is up from a $1.82 per unit value two years ago.
Marshall County property records show Fossil Creek has agreements to drill throughout the county. The company's lease documents indicate a Bedford, Texas, address, but Fossil Creek's website states it soon plans to open an office in Wheeling.
"We are going to be working in Ohio County as well," Rowntree said.
Weirton attorney Jeffrey Rokisky said Chevron and Trans Energy also are interested in leasing the Utica formation in Marshall County.
"The companies are now coming back into this area because there are signs that our Utica shale is going to be productive," he said.