Breaking News: BP Says It's Pulling Out of Utica Shale

YOUNGSTOWN, Ohio -- Less-than-impressive results from test wells drilled in Trumbull County has caused BP America to abandon its interests in the Utica shale, two years after the energy giant spent more than $300 million to secure leaseholds in this section of the play.

"Following on from the decision to create a separate BP business around its lower 48 [states] onshore oil and gas activities, and as a consequence of its appraisal results, BP has decided not to proceed with development plans in the Utica shale," the company said this morning in a statement released as part of its first quarter earnings report.

No additional information was provided.

In April 2012, BP America moved into the northern tier of the Utica and acquired more than 80,000 acres in leaseholds in Trumbull County that involved about 1,900 landowners. The lease signings involved bonus payments of more than $333 million. The deal called for landowners being paid $3,900 per acre and 17.5% royalties based on well production.

But production at five test wells coordinated by BP in the county have, at best, proved anemic.

According to fourth-quarter production reports issued Friday by the Ohio Department of Natural Resources, BP drilled four wells in Trumbull County, and its appraisal partner, Brammer Engineering, drilled one well.

The most productive of these wells is the Lennington well in Johnston Township, ODNR reports. That well produced 1,889 barrels of oil and 20,316 per thousand cubic feet of natural gas, or Mcf over a 92-day period. BP's Buckeye well in Hartford Township produced 378 barrels of oil and 20,322 Mcf of gas during a 75-day period; BP's Zerovich well in Mecca Township produced 746 barrels of oil and just 2,884 Mcf of natural gas over 30 days; and its Jewett well in Johnston Township reported no production results.

A fifth well drilled by Brammer Engineering -- the Morrison well in Mecca Township – produced 1,078 barrels of oil 9,487 Mcf of natural gas.

The average oil production per well across the Utica stood at 4,089 barrels of oil over a 65-day period. Average gas production stood at 122,514 Mcf, ODNR reported.

BP is the second energy company to formally announce it would suspend drilling operations in the northern Utica. Last month, Halcon Energy said that it would hold off further exploration in Trumbull County and western Pennsylvania (READ STORY).

Still, Halcon’s Kibler well in Trumbull County is thus far the most productive oil well in the northern tier of the Utica shale, according to the ODNR reports. The Kibler 1H produced 10,235 barrels of oil over 65 days, according to the ODNR report. Average oil production across the entire Utica stood at 4,089 barrels over an average of 62 days.

The highest producing oil well in the Utica was Gulfport Energy’s Boy Scout well in Harrison County at 26,095 barrels over 80 days.

Companies End Plans to Develop Bluegrass Pipeline Project

Copyright 2014 The Business Journal, Youngstown, Ohio.
CLICK HERE to subscribe to our twice-monthly print edition and to our free daily email headlines.