American Oil and Gas Reporter - January 2012 - 68

Oil & Gas Shales
Chesapeake Energy announced in December it had closed a $750 million preferred share placement in its wholly
owned, unrestricted subsidiary, CHK
Utica LLC. The closing completes a financial transaction led by EIG Global
Energy Partners and results in total proceeds of $1.25 billion of CHK Utica preferred shares.
Chesapeake reportedly has 1.25 million
prospective Utica acres leased and a projected inventory of 10,000 net wells to
be drilled. Chesapeake also has announced
a letter of intent with an international
major energy company in a joint venture

to help accelerate its Utica development
program. According to a company press
release, the joint venture partner will acquire an undivided 25 percent interest in
570,000 net acres of Chesapeake's leasehold in the wet natural gas area of the
Utica Shale play for $15,000 per acre, or
$2.14 billion.
Chesapeake has announced the results
of its first four horizontal wells completed
in the wet and dry gas phases of the play,
three of which were completed in western
Ohio and one in eastern Pennsylvania.
According to company announcements,
lateral lengths varied between 4,152 and

FIGURE 4
Utica Shale Drilling Activity Since January 2010

OPERATOR

EXPLANATION
Well type - status
Horizontal - drilled or drilling
Horizontal - permitted
Vertical - drilled or drilling
Vertical - permitted

Ohio Department of Natural Resources, 2011, Utica Shale Well Activity in Ohio, 2010-Present:
Ohio Department of Natural Resources, 1 inch equals 21 miles.

Source: Ohio Department of Natural Resources

68 THE AMERICAN OIL & GAS REPORTER

SYMBOL

ANADARKO E&P COMPANY LP
BECK ENERGY CORP
CHESAPEAKE APPALACHIA LLC
CHESAPEAKE EXPLORATION LLC
CNX GAS COMPANY LLC
DEVON ENERGY PRODUCTION CO
ECLIPSE RESOURCES I LP
ENERVEST OPERATING L
HG ENERGY LLC
HILL DAVID R INC
MARQUETTE EXPLORATION LLC
OHIO BUCKEYE ENERGY LLC

APC
BEC
CHK
CHK
CNX
DVN
ERI
EOS
HGE
DRH
HES
BPI
TOTAL

COUNT
14
1
9
84
5
4
2
5
2
1
1
4
132

6,418 feet and daily peak production
rates were as high as 3,010 bbl/d of oil
equivalent. Chesapeake has reported that
it expects to increase the number of rigs
it has in the Utica Shale play to 20 by the
end of 2012, and will double that again
to 40 by 2014.
"Chesapeake estimates its wells will
cost $5 million-$6 million each, which
compares favorably to the Eagle Ford,"
Trammel reports. "The company has said
it anticipates $15 billion-$20 billion value
for its Ohio acreage."
"The development of the Utica Shale
is good news for the midstream industry,"
Braziel adds. "There are 14 oil or NGLdirected rigs operating in Ohio, and Chesapeake has five of them. Seven of them
are drilling horizontal wells. There are
3.3 million acres leased in Ohio with
28,000 potential locations. The Utica
well decline looks like the Eagle Ford so
far, with a rate of return north of 100
percent. That will attract a lot of attention."
Braziel admits that it can be difficult to
get information from companies as new
plays start to take off. "Given the competitive pressures of leasing and development,
the players are understandably not enthusiastic about letting their competition know
exactly where they are standing and what
they are up to," he offers.
Tuscaloosa Marine Shale
The onshore Gulf Coast region has
three shale plays emerging: the Tuscaloosa,
the Conesauga and the Floyd. "The Conesauga and Floyd both got going with the
shale gas revolution, but they have since
tapered off with lower gas prices," says
Trammel. "There is nothing dramatic
happening there now. I consider them
sleeper plays, but the Tuscaloosa Marine
Shale is an exciting play."
The Tuscaloosa Marine Shale stretches
from the Sabine River in far East Texas
through Louisiana into Mississippi, according to Trammel. He says it has long
been considered a source rock for the
Tuscaloosa sands, which have produced
more than 1 billion barrels of crude oil.
The shale is 200 to 400 feet thick at
depths between 11,000 and 14,000 feet.
Figure 5 shows a generalized stratigraphic
cross-section of the Tuscaloosa Marine
Shale in Central Louisiana.
Trammel projects that the Tuscaloosa

American Oil and Gas Reporter - January 2012

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