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Antero Resources Corp. is finalizing terms of an extensive oil and gas lease with Ohio's largest water conservancy district that would give the company access to 6,700 acres in Belmont and Harrison counties.
The Appalachian pure-play operator already has more than 107,000 acres under lease in the rich gas and condensate window of the Utica Shale. If it lands a development deal with the Muskingum Watershed Conservancy District, where members of the board could sign off on the lease as soon as April 18, it would give the company another prime slice of land in an area where other exploration and production companies have seen growing liquids volumes (see Shale Daily, Nov. 19, 2013).
The watershed district covers more than 8,000 square miles and spans five counties, along with portions of 22 others in Ohio, before draining into the Muskingum River. The conservancy is a political subdivision of the state that oversees a system of reservoirs and dams that help reduce floods and preserve water.
Last year, the district signed a non-development lease for land it owns at Seneca Lake in Guernsey and Noble counties to Antero (see Shale Daily, Feb. 21, 2013). It also signed Utica Shale leases with Gulfport Energy Corp. in Harrison County in 2011 and non-development leases with Chesapeake Energy Corp. in Carroll County in 2012. It has sold water to Antero and Gulfport in the past as well (see Shale Daily, April 23, 2013).
Although the district has also managed conventional oil and gas leases over the course of its 80-year history, Theodore Lozier, chief of conservation, said the district is committed to environmental safeguards and has initiated a thorough public input process since unconventional operators began expressing an interest in the Utica Shale under property it owns.
Both parties are still negotiating the financial terms of the latest lease. But Lozier said some of the protections already agreed upon will give the district an opportunity to review and approve erosion control, construction plans, surface operations, reclamation efforts and light and sound controls, among other things.
Antero is one of the Appalachian Basin's most active operators. As of March, the company had 15 drilling rigs running in West Virginia and six running in Ohio. It also holds 352,000 acres in southwestern Pennsylvania and West Virginia. Last year, production across its acreage increased by 119% from 2012 to reach 522 MMcfe/d (see Shale Daily, Feb. 27). In Ohio's Utica, production was 57 MMcfe in 4Q2013, with a mix that consisted of 2,200 bbl of natural gas liquids and oil.
Ohio records show that Antero has only permitted and drilled wells in Monroe and Noble counties, which are immediately south of where the company is currently negotiating its lease with the water district in Belmont and Harrison counties. Lozier said he expects that Antero will establish two well pads on the district's property and added that others will be located outside its boundaries as well.
Environmental groups have voiced concerns about a lack of competitive bidding and the absence of an environmental assessment before the negotiations began. The district's board is currently accepting public comments until it meets again on April 18.