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Harrison County, OH, Leases Industrial Park Acres to CBM Producer

Officials in Harrison County, OH, have agreed to lease more than 300 acres of the county's industrial park for Utica Shale oil and gas drilling.

Harrison County Commissioner Dale Norris told NGI's Shale Daily that the board agreed at their Oct. 9 meeting to lease 315 of the industrial park's 500 acres to CBM Ohio LLC, at $5,000/acre and 18% royalties. The agreement also contains an option for an additional 148 acres.

CBM Ohio produces coalbed methane (CBM) from abandoned coal mines, hence the company's moniker. Norris said the Cadiz, OH-based company has two CBM wells on the industrial park property, which is also in Cadiz.

According to Norris, the county had an uncomfortable agreement with CBM Ohio's predecessor, Ladd Industries, for CBM produced at the industrial park.

"It virtually was an open lease to the center of the earth, but we never received our royalty checks off the methane back then," Norris, who took office on Jan. 1, said Monday. "But once the [Utica] oil and gas play started, they started sending the royalty checks, which the commissioners would never cash because they felt that [Ladd] had breached the contract.

"So we sat down in equity and came to an agreement where both parties benefit, rather than tie it up in the courts for three or four years. It's good news for the county, and hopefully the county benefits for years to come."

Norris said CBM Ohio was currently in the process of finding a drilling rig. Robert Griffin, general manager for CBM Ohio, could not be reached for comment Monday. It appeared to be the company's first foray into Utica Shale drilling.

According to the Ohio Department of Natural Resources (ODNR), through Oct. 5 there have been 134 cumulative permits issued to drill wells targeting the Utica in Harrison County. Of those, 17 are in the process of being drilled, 50 have been drilled and 17 are producing.

ODNR data shows Chesapeake Exploration LLC leads all operators in Harrison County with 62 permits issued, followed by Gulfport Energy Corp. with 40 (see Shale Daily, Sept. 18). Hess Ohio Developments LLC holds 20 permits, while Chevron Appalachia LLC has seven and Atlas Noble LLC has five.

Despite leading in the number of permits issued, Chesapeake has only five wells in production, or 8% of the total. By comparison, Gulfport has eight wells in production (20% of total), Hess has three (15%) and Chevron has one (14%).

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