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Old February 23rd, 2011, 05:57 PM   #1
Bond James Bond
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The Midwest/Plains Oil Boom Thread

I know quite a bit about these things, and I follow news about Chesapeake Energy, and I can tell you, if Chesapeake Energy is leasing a million acres in eastern Ohio, there's about a 95% chance this is going to be BIG. But it will take a few years to gather steam.

There are formations similar to this in North Dakota, south Texas and Colorado/Wyoming. The one in ND was first and has utterly gone through the roof. The one in Texas (mentioned in the article) is about 2 years behind the ND one. The one in Colorado/Wyoming is about 3 years behind the ND one.

Also, it's not mentioned in the article, but I know for a fact that this thing extends into Michigan. However I don't know if it's prospective for oil up there, but I do know it is for natural gas.

LINK
Quote:
Ohio Braces for Oil Shale Boom
by Ryan Dezember|Dow Jones Newswires|Wednesday, February 23, 2011

For many residents of this northeast Ohio hamlet, the oil bonanza began with a knock at the door. City Hall received a fax.

Spit from that machine last summer was a mineral rights lease offer -- just like those being hand-delivered to homeowners -- from oil and gas explorer Chesapeake. In the subsequent months Chesapeake's oil-field leasing agents swarmed the region, laying claim to what the company and others say may be one of the last big unconventional oil discoveries in the U.S.

"It was a mad rush," said Mayor Rob Donham. Windham eventually sold Chesapeake the right to drill underneath 100 acres that hold the town's municipal buildings and ball fields for $55,000 -- enough to buy two new police cars -- and the prospect of decades of oil royalties.

Ohio is bracing for an oil boom as companies, led by Chesapeake, gobble up leases covering millions of acres in the eastern half of the state. While no one's yet proven the commercial potential of the Utica formation, an oil-rich layer of rock that underlies this area, some believe it will yield crude on par with the largest shale reservoirs in the U.S. and spark a Rust Belt resurrection.

[...]
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Old July 30th, 2011, 12:16 AM   #2
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More news out today

Northeast Ohio gonna BOOM within about 5 years! I kid you not. Do some research on what's happening around San Antonio with the similar Eagle Ford Shale, and that's what's going to happen here.

I noticed today on Chesapeake Energy's website they're starting to hire in Canton.

CEO of Chesapeake Energy sez ...
Quote:
With regard to the Utica Shale, we are happy to report confirmation of market rumors that Chesapeake has made a major new liquids-rich discovery in the Utica Shale of eastern Ohio ...

While we are not ready yet for competitive reasons to discuss our production results to date or our reserve estimates for the future, I can confirm that we have drilled 9 vertical wells, have drilled 6 horizontal wells, have drilled and analyzed 3,200 feet of proprietary Utica core and have examined over 2,000 well logs that have penetrated the Utica to date ...

We're also very excited about the Utica's very positive implications for the state of Ohio and, in fact, for the entire U.S., as the Utica should emerge as a key driver in the future growth of U.S. energy supplies, especially in natural gas liquids. I would like to complement the efforts of Chesapeake's Appalachian Basin asset team for their discovery of this play and for assembling the remarkable and dominant leasehold position we have acquired in the past year.

I would also like to express my appreciation to Governor John Kasich, who was elected Ohio's Governor in November of last year. Governor Kasich, like Governor Corbett in Pennsylvania, is a no-nonsense pro-business leader, and he has already built a strong team that is supportive of our industry and also supportive of a stable and business-friendly legislative and regulatory environment. In addition to supporting the industries that supply energy, Governor Kasich's administration has consistently demonstrated encouragement for the capital investment, job creation and collaboration with industrial energy consumer that can also help expand demand for natural gas.

Finally, there is a significantly underutilized workforce in eastern Ohio. And through our drilling efforts, leasing efforts, midstream pipeline and processing efforts, plus our plan to help build out the nation's badly needed CNG and LNG transportation infrastructure, we accept -- expect to assist in a major economic rejuvenation of Ohio.

[...]
Cleveland is gonna be the next Dubai!
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Old July 30th, 2011, 12:17 AM   #3
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Oh and, BTW ... this thing also goes into southern Michigan, particularly some parts of southwest Michigan. More on that later.
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Old July 30th, 2011, 12:20 AM   #4
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That's great news.

Hopefully it will spur more development in Canton, Akron, Youngstown and those other places that could use it.
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Old July 30th, 2011, 12:23 AM   #5
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I always knew Ohio was oily!
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Old July 30th, 2011, 12:49 AM   #6
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Here's an example of what's going on in south Texas and San Antonio. This will be northeast Ohio in 5 years! Maybe less. They're already starting to build oil/gas pipe plants to service the new discovery. A smaller example here.

And now would be a really good time to buy a fixer-upper in Akron, Youngstown or Canton and put a bit of work into it.

Eagle Ford's calling card: help wanted
Quote:
Welcome to a county that's at the heart of the Eagle Ford shale, which some have called the most promising oil play in the nation.

Just two year ago, no one would have suspected that Dimmit County, pegged by the U.S. census as the 19th-poorest county in the United States, would be at the heart of a boom. There were few wells being drilled in the region, and local businesses were begging for customers.

But drilling in the Eagle Ford, a 400-mile-long formation stretching from East Texas to Webb County, has touched off a hiring frenzy in South Texas that is generating thousands of jobs. Now, drilling is moving so swiftly that the scramble for workers has caught some short. Drug-testing companies don't have enough employees to administer tests. The Texas Railroad Commission, the industry regulator, has openings because oil and gas companies have hired away longtime veterans from its field offices.

Not all of the jobs are in the oil patch. Oil companies have quickly opened field offices to supervise drilling in San Antonio and nearby cities. A Canadian oil-services company is now the biggest employer in Cibolo, and oil field service companies are bidding top dollar for space in Pleasanton's once- moribund industrial park.

The job explosion is expected to continue.

Last year, the Eagle Ford shale generated 6,800 full-time jobs and paid $311 million in salaries and benefits, according to a study completed in February by the University of Texas at San Antonio's Center for Community and Business Research.

When spinoff jobs are included — from wholesalers to waiters - the study found the development in the shale play supported 12,600 jobs and paid $512 million in salaries.

Because development is just beginning, the UTSA study estimates that by 2020, 5,000 new wells will be drilled, and the Eagle Ford will support almost 68,000 full-time jobs, account for almost $21.5 billion in total annual economic output, and add almost $1.2 billion to Texas' revenues.
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Old July 30th, 2011, 01:03 AM   #7
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Quote:
Originally Posted by Bond James Bond View Post
Northeast Ohio gonna BOOM within about 5 years! I kid you not. Do some research on what's happening around San Antonio with the similar Eagle Ford Shale, and that's what's going to happen here.

I noticed today on Chesapeake Energy's website they're starting to hire in Canton.

CEO of Chesapeake Energy sez ...

Cleveland is gonna be the next Dubai!
Would be a very remarkable turnaround indeed!

Remember though Cleveland was the original HQ of Standard Oil.
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Old July 30th, 2011, 01:07 AM   #8
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Remember though Cleveland was the original HQ of Standard Oil.
Yes, quite true. Somewhere recently I saw a photo of some oil fields in northeast Ohio from about a hundred years ago. I'll see if I can find it again.

In the meantime, from Chesapeake Energy's investor presentation out today, here's a screen shot of page 14 which describes the new discovery. The area in green in where the oil is located.


It's Buckeyes, not snake eyes!
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Old July 30th, 2011, 01:24 AM   #9
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Quote:
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Somewhere recently I saw a photo of some oil fields in northeast Ohio from about a hundred years ago. I'll see if I can find it again.
EDIT: I should have said northwest Ohio. Looks like there used to be (and maybe still are) conventional oil fields there.

Here it is! In Wood County, south of Toledo.


Article

Another one:

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Old July 30th, 2011, 01:30 AM   #10
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I hope they negotiated a good price. Otherwise there won't be any "boom", as all the money (and oil) goes to Texas.
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Old July 30th, 2011, 01:33 AM   #11
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I hope they negotiated a good price. Otherwise there won't be any "boom", as all the money (and oil) goes to Texas.
Actually, Chesapeake Energy is located in Oklahoma City.

Don't worry, between all the field staff, truck drivers, rig workers and various support staff they'll be plenty of workers needed, no matter where the HQ of the company is located.

Most of the oil from here will probably end up in the northeast US, I would imagine.
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Old July 30th, 2011, 01:45 AM   #12
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Originally Posted by Bond James Bond View Post
Actually, Chesapeake Energy is located in Oklahoma City.

Don't worry, between all the field staff, truck drivers, rig workers and various support staff they'll be plenty of workers needed, no matter where the HQ of the company is located.

Most of the oil from here will probably end up in the northeast US, I would imagine.
Besides even if all of the employees were from Texas/Oklahoma they will need a place to eat/stay as well, which will pump money back into the local economy.
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Old July 30th, 2011, 05:35 AM   #13
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Just curious, earlier it was mentioned this field might extend into SW Michigan..........was that supposed to be SE Michigan? Sure would be interested in hearing how significant a deposit is there as both states could use a huge boost
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Old July 30th, 2011, 05:36 AM   #14
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Maybe the oil money could be used to pay for transit expansion in Ohio's three largest cities.
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Old July 30th, 2011, 08:07 AM   #15
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Just curious, earlier it was mentioned this field might extend into SW Michigan..........was that supposed to be SE Michigan? Sure would be interested in hearing how significant a deposit is there as both states could use a huge boost
No, it's in southwest Michigan - and central Michigan too, maybe. I think the way the geology works is, the rock is good for a while in Ohio, then it gets too shallow in western Ohio and SE Michigan, then deepens (which makes it better) in SW and central Michigan.

Devon Energy - this is a big company
Quote:
Portions of that $400 million in added exploratory spending will also be allocated to five new oilfields in which Devon has recently built positions.

Those new positions include 300,000 acres in Wyoming's Niobrara Shale,150,000 acres in Oklahoma's Mississippian oilfield, 110,000 acres in Ohio's Utica Shale, and 300,000 in Michigan's portion of that same rock formation.
Several months ago I ran across an article saying there was a frenzy of leasing by oil companies around (I think) Holland and that general area, but I can't find it anymore. I don't know if it was Devon doing the leasing, since Devon's map here shows it to be more in central Michigan, but maybe the dot on this map is just generalized. Typically these shale oil plays extend over large areas.


This was from pg. 13 of Devon's July investor presentation (PDF). Notice they, too, have been leasing some land in Ohio, though not remotely as much as Chesapeake's 1.25 million acres.
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Old July 30th, 2011, 08:19 AM   #16
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Several months ago I ran across an article saying there was a frenzy of leasing by oil companies around (I think) Holland and that general area, but I can't find it anymore.
I found it!

LINK
Quote:
Is Michigan — including parts of West Michigan — about to be hit with a new wave of oil and natural-gas drilling?

Could be, say Michigan State University land experts.

Recently, companies have been contacting landowners in Oceana and Newaygo counties, among other places, seeking mineral rights. Hoping to answer landowners’ and local officials’ questions, MSU Extension has scheduled a workshop Thursday evening in Fremont on “Oil and Gas Leasing — What Do Landowners Need to Know?” ... In the case of Oceana and Newaygo counties, Talley suspects the interest is more in oil rights than natural gas.
So this sounds like the Holland-Muskegon-Grand Rapids area. Maybe over to Lansing if we take into account the dot on Devon's map.
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Old July 30th, 2011, 09:03 AM   #17
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Thanks for all the info............guess it will be interesting to see how all this all translates into the economics. Whatever revunues it generates for the states I am hoping they use the money well. There are going to be all the *experts* with their ideas, but I am putting the cart ahead of the horse.............1st lets see if this pans out
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Old July 30th, 2011, 06:54 PM   #18
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This is the last area that the Rust Belt needs to try to hitch its wagon to- a dirty, polluting industry. The problem with the Midwest is its backward focus. It needs to focus on clean, high-tech, and environmentally sound industries instead of ripping apart its land in a vain effort to make money off of dwindling oil supplies.
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Old July 30th, 2011, 10:06 PM   #19
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This is the last area that the Rust Belt needs to try to hitch its wagon to- a dirty, polluting industry. The problem with the Midwest is its backward focus. It needs to focus on clean, high-tech, and environmentally sound industries instead of ripping apart its land in a vain effort to make money off of dwindling oil supplies.
It's better than nothing, really. And oil is leagues away from the dirtiness and pollution that comes from coal.
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Old July 30th, 2011, 10:57 PM   #20
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Quote:
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This is the last area that the Rust Belt needs to try to hitch its wagon to- a dirty, polluting industry. The problem with the Midwest is its backward focus. It needs to focus on clean, high-tech, and environmentally sound industries instead of ripping apart its land in a vain effort to make money off of dwindling oil supplies.
I know what you mean, but beggars can't and almost always won't be choosers.

No matter how short-sighted it may seem.
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