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By Jon Cassidy | Ohio Watchdog
Drilling rigs may not be seen as often as first expected in eastern Ohio.
COLUMBUS — Investors are cooling somewhat on the prospects of Utica shale development, which means thousands of new jobs and billion-dollar development may be slow in coming.
PDC Energy Inc. announced this week it was unable to find a joint venture partner to develop 45,000 acres in Ohio, so it will develop the area alone.
It matters what investors think, because the big operator in the state — Chesapeake Energy Corp. — is overextended and severely short of cash for investment and operations. Starved by low natural gas prices, Chesapeake sold off $7 billion in assets earlier this month just to get through 2012.
If Utica well production is as unimpressive as natural gas prices, it will be hard for hard Chesapeake to raise drilling cash through partnerships, Bloomberg reported.
“The numbers are going the wrong way,” Morningstar analyst Mark Hanson told the news service. “This indicates it’s still too early to say the Utica is the next big thing.”
On the one hand, the PDC announcement just means that the company and its potential partners disagreed on the value of the land leases.
The market for land leases cooled off over the summer, as most of the players have acquired a backlog of drilling locations. A glut of natural gas on the market has brought well-drilling to a crawl.
“Prices have dropped so far that companies can barely afford to drill in pure natural gas plays,” Reuters reported.
Even with the near-term uncertainty in the market, eastern Ohio is seeing economic benefits, as the industry prepares for an eventual boom once prices recover.
Carroll County, the busiest of three eastern counties where gas development is centered, is collecting $50,000 a month more in sales tax than it did last year — about 25 percent more — according to the local Times Reporter. Energy companies have spent around $30 million on road improvements in phe last year, the paper said.
Contact: jon@ohiowatchdog.org
