Hilcorp Drills Ahead in Mercer, Lawrence Counties

YOUNGSTOWN, Ohio -- Houston-based Hilcorp Energy Co. is aggressively staking out its position in western Pennsylvania, securing more than a dozen new horizontal well permits last week for oil and gas exploration in the northern tier of the Utica shale.

The Pennsylvania Department of Environmental Protection issued 13 permits to Hilcorp for new horizontal wells in Lawrence County, according to the agency website.

Seven wells were permitted June 9 for Hilcorp's YEO site in Mahoning Township while six others were secured the following day for wells at the Kester farm in Pulaski Township, the agency reports.

Two weeks ago, the Pennsylvania DEP approved five new Hilcorp wells in Lackawannock Township in Mercer County, Pa.

That makes 47 new well permits Hilcorp has secured in either Mercer or Lawrence counties since March 10, the day a series of small earthquakes rumbled through eastern Mahoning County, at just across the state line.

The Ohio Department of Natural Resources has since linked the quakes to a well site at the Carbon Limestone Landfill in Poland Township where Hilcorp was hydraulically fracturing a well.

Hilcorp has ended its drilling operations at that particular Carbon Limestone pad in Poland and applied for revisions on six of its well permits there. Wells drilled there before the quakes will be placed into production.

To transport its natural gas from its Utica well, Hilcorp and its venture partner, NiSource Midstream, have created Pennant Midstream LLC, which is building the Hickory Bend system. The system is a 55-mile pipeline and processing network that stretches from Mercer County, Pa., through Lawrence County and into Mahoning and Columbiana counties.

Earlier this year, a $150 million cryogenic processing plant opened in Springfield Township in Mahoning County. The plant separates dry gas, such as methane, from wet gas such as ethane, butane and propane. A pipeline from the Poland well site to the plant is finished, as is a pipeline into Columbiana County.

Work on the western Pennsylvania leg of the pipeline system is underway. The objective is to string gathering lines from wells to the pipeline and transport the gas to the processing plant.

Another component of the project is a 17-mile natural gas liquids pipeline that runs from the Hickory Bend plant to UEO Buckeye's Kensington cryogenic plant in Columbiana County. From there, the liquids would be shipped to another UEO Buckeye plant in Scio, in Harrison County, where the wet gas is separated into specific products such as ethane, propane and butane.

Hilcorp's attention to the northern tier of the play bucks a trend that's been evolving for a year as other companies have either abandoned this section of the Utica or are limiting their drilling operations to southeastern Ohio, where wells appear to be more productive.

In April, BP America announced it was pulling out of the Utica in Ohio and placing its leasehold acreage in Trumbull and Mahoning counties up for sale.

Meantime, Halcon Resources Corp. said it would put its exploration program on hold this year in the Utica, and concentrate on other plays across the country.

However, that doesn't mean Halcon has suspended drilling activity on the wells already in development, according to the ODNR.

On May 27, Halcon filed a permit application with ODNR to reissue a new horizontal well on the Lutz farm along Layer Road in Warren Township in Trumbull County. According to ODNR's website, that well is being drilled.

Last week, ODNR issued 37 new horizontal permits, almost all to companies exploring in counties in southeastern Ohio.

Gulfport Energy secured 11 permits, six in Belmont County, two in Harrison County, and three in Monroe County; XTO, a subsidiary of Exxon Mobil, was awarded four permits in Belmont County; Chesapeake Energy Corp. secured seven permits total, four in Carroll County, one in Geauga County and two in Harrison County; and American Energy Utica landed three new permits in Guernsey County.

In addition, Hess Ohio secured three new permits for wells in Harrison County. Antero Resources was awarded two permits in Monroe County. And PDC secured a single permit for Guernsey County, ODNR reported.

Copyright 2014 The Business Journal, Youngstown, Ohio.
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