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Chesapeake announcement could mean billions for county

July 31, 2011
By KATIE SCHWENDEMAN - Staff Writer ( , The Review

CALCUTTA - An oil and gas drilling company that has leased several acres of land in Columbiana County is confident the Utica Shale in Eastern Ohio will reap billions of dollars.

On Thursday, Chesapeake Energy Corp. announced it believes drilling in the "liquids-rich play" of the Utica Shale could produce at least $20 billion.

The announcement was included in the Oklahoma-based company's report of financial results for the second quarter.

Utica Shale is a thick layer of rock located about 8,000 feet beneath the central and eastern region of Ohio.

The company began actively seeking leases from local property owners over the last year.

In July of this year, Columbiana County commissioners signed a $1.3 million lease with the company.

According to the five-year lease agreement, the county will receive $2,250 for each of the 568 acres leased, plus 17.5 percent royalties should drilling produce any oil and natural gas.

Just south of the county seat, the Beaver Local School District agreed in April to lease all of its 132 acres to the company at $2,250 an acre and 17.5 percent royalties as well. The Southern Local School District entered into an agreement with the company that same week.

Other individual land owners, school districts and municipalities in the county have been presented with, and in some cases approved, various gas leases from exploration companies like Chesapeake.

The company currently has five rigs located in the Utica Shale region-including Columbiana and Carroll counties-and hopes to have 20 in operation by the end of 2012, according to the announcement.

Jeff Bailey, of the Associated Landowners of the Ohio Valley (ALOV), said drilling is expected to begin in Columbiana County in November.

He said Chesapeake Energy will likely start with a well located on Smith Road just south of Beaver Creek State Park.

The well lies in Middleton Township but the drilling unit extends Southeast into St. Clair Township, covering 230 acres, according to a map available on the ALOV web site.

The ALOV is a Salem-based nonprofit organization formed to help landowners negotiate the lease agreements.

Bailey said around 10,000 acres in Columbiana County have been leased and at least 100,000 acres are currently up for bid in the eight neighboring counties.

Those figures do not include land leased that the ALOV is not representing, he added.

"There is going to be an immense amount of money (coming in) shortly," he said.

Once drilling begins in the county, hydraulic fracturing will occur about 500 to 600 feet out from the underground pipeline on each side, Bailey explained.

The company is not permitted to conduct any drilling less than 5,000 feet below the surface of the ground, he added.

"When they frack they have to be careful not to over-frack or they will lose their production, which made me feel better," he said.

Hydraulic fracturing, or "fracking," is a process in which water, sand or other material is "injected" into the shale formation to create a fracture that releases the oil or gas.

The process is currently under scrutiny by those who claim it contaminates the ground water table.

Bailey said he is aware of concerns regarding the fracking process, but believes the company has the capability to perform the drilling safely.

The company is obligated, according to the lease, to test any water sources near the wells prior to drilling.

"The deeper they go, the less of a chance there is for it to violate our water table," he said.

St. Clair Township resident Mark White is one local resident concerned about the process.

He said his residential water supply comes from a well located on the property.

"This could be very devastating. People get sick from using their water (after fracking)," he said.

White said he learned about the water contamination in Pennsylvania after watching a special program on television. In that case, more than 20 beef cattle were placed in quarantine after reportedly coming in contact with wastewater from a nearby well.

Drilling was being conducted on the Marcellus Shale in that region, and Chesapeake Energy was not the company responsible.

Salem-based Farm and Dairy reported in July that the cattle were placed in quarantine after coming in contact with water that appeared to have seeped from a holding pond that was collecting flowback water from the fracking process.

According to the Chesapeake Energy lease agreement given to the Beaver Local School District, the company is not permitted to have a disposal well located anywhere on the leased property, or perform any other means of disposal of wastes or drilling liquids on the property.



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