An old-fashioned land rush is happening here, sparked by the promise of a new reserve of natural gas and lots of it.

The source? Two shale formations, known as the Marcellus and the Utica, stretch from upstate New York through Pennsylvania and Ohio and as far south as Tennessee.

Oil and gas giants such as Oklahoma-based Chesapeake Energy and Texas-based Ener-Vest have been tapping into the shale’s potential in Pennsylvania for several years, and now the companies are setting their sights on eastern Ohio.

“Ohio is where Pennsylvania was in 2007,” says Tom Tugend, deputy chief of the Ohio Department of Natural Resources’ Division of Mineral Resources Management. “We’re seeing a huge increase in leasing and exploratory wells.”

GAS FACTS ⊲ By mid-January 2011, 72 permits were issued in Ohio to drill the Marcellus Shale and 18 to drill the Utica Shale. ⊲ In Ohio, the Marcellus Shale goes as deep as 5,000 feet underground but is at most 80 feet thick. In contrast, it reaches depths of 9,000 feet in Pennsylvania and thicknesses of 300 feet. ⊲ Drilling for oil and natural gas in Ohio dates back to the 1800s. More than 270,000 wells have been drilled in Ohio during that time, and 64,000 are currently producing here. ⊲ Oil and gas reserves have been found in 76 of Ohio’s 88 counties. ⊲ In 2010, 520 new natural gas wells were drilled in Ohio. ⊲ More than 1 million U.S. wells have been fracked since the technique was first used in the late 1940s. Sources: ODNR, Ohio Oil and Gas Association, Penn State Marcellus Center for Outreach and Research

And that means a new wave of rivals for local gas exploration companies like Austintown-based Ohio Valley Energy.

“It’s competition,” says Rick Liddle, Ohio Valley’s vice president of operations. “The price of poker just went up.”

In business since 1986, Ohio Valley Energy operates about 300 wells in the state and focuses its current exploration efforts on Northeast Ohio. The company drills 17 to 20 wells a year, which Tugend says puts them in the top third of Ohio’s 1,500 commercial well operators.

Liddle’s business model is simple. Ohio Valley Energy seeks out landowners who meet geological and acreage criteria, asking them to lease the rights to drill on their property. In return, landowners get signing bonuses, royalties, free gas and other negotiated perks.

Ohio Valley’s new national competitors have yet to drill the Marcellus or Utica shales in Ohio north of Jefferson County, but they’re snapping up the rights to drill in our region now.

“They research certain areas they think have shale,” Liddle says, “and lease as much as they can,” leading to the land rush we’re seeing today.

Most of Ohio’s homegrown oil and gas exploration companies, such as Ohio Valley Energy, are small operations without the substantial resources required to tap into shale formations, which involves drilling horizontally using a method called hydraulic fracturing, or fracking.

But that doesn’t mean that Ohio Valley Energy and its local competitors will be shut out of the natural gas boom.  

“They have to deal with us because we own the rights [to drill in Northeast Ohio],” Liddle says. “Our opportunities will be as an investment partner or joint-venture with the majors since we own [the rights to] so much land.”

And the potential gas volumes? Companies currently drilling the Marcellus Shale elsewhere are tight-lipped about the particulars, but ODNR estimates that one Marcellus well could produce 2 million to 10 million cubic feet (MMCF) of natural gas a day, or around 4 billion cubic feet in its lifetime. In contrast, vertical wells produce on average of 200 million to 500 million cubic feet in their 20-year lifetime.

“One horizontal well might be the equivalent of 10 vertical wells,” Tugend says.

Yet Liddle remains optimistic about the future for local well operators. “We have to use the next five years working with these larger companies to operate in this new environment,” Liddle says.

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