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BP Formally Ends Shale Development In Ohio

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Energy giant BP is a major player in the global energy market, but not so much anymore in Ohio’s burgeoning shale industry. The company announced Tuesday that it’s ceasing operations in the state’s Utica Shale play. Ideastream’s Brian Bull reports:

Tuesday, April 29, 2014 at 10:35 pm

The announcement came in BP’s first quarterly report of 2014. It’s writing off more than $520 million from its shale investment – most of that for leased land in Ohio’s Trumbull County. Its four active wells there have produced meager returns.

“We certainly respect and understand BP’s decision,” says Mike Chadsey, spokesman for the Ohio Oil and Gas Association (OOGA). He expressed confidence that BP’s decision is not a bad omen for the state. He says there’s still lots of money to be made from oil and gas in the Utica shale region.

That BP would pull out doesn’t surprise Jim Willis, though. He’s editor of the Marcellus Drilling News, and monitors the shale industry closely.

He says from the get-go, BP was slow to develop the lands it leased, and a handful of test wells didn’t have the payoff expected.

“They thought that they were getting into a good area….and it is a good area for dry gas….but it’s not a good area for wet gas, or natural gas liquids, you know -- the other components that come out of the well, that can really make or break it as far as profitability goes. And so they rolled the dice, and they guessed wrong.”

It’s unclear who might take these leases off BP’s hands or what they’d pay but other companies do have plans to keep buying and expand drilling in eastern Ohio. Industry observer Willis says the jobs aren’t going away.

“Everything from catering to fencing companies, welders…I mean there’s just a huge variety of different companies that are involved in this supply chain," he says. "You don’t necessarily have to be right there where the action’s happening, you could be 2-3 counties away, a state away in some cases.”

The Ohio Department of Natural Resources reports that in the last quarter of 2013, natural gas production was up 28 percent over the previous year.

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