Dry natural gas drilling is coming to a standstill, but BP plc is “looking to see if it might expand” in the liquids-rich Utica Shale after securing a leasehold earlier this year, CEO Bob Dudley said Tuesday.
The energy giant in March bought close to 84,000 net acres in Trumbull County, OH (see Shale Daily, March 28). In late July Dudley traveled to Ohio to check on the new acquisition and to meet with Gov. John Kasich, he said during a conference call.
“I was just there last week,” said the CEO. “I spoke with the governor to get a sense of the commitment by the state to industry and I got nothing but encouragement from that, of having BP in Ohio…It’s one area we are looking at. We are being measured and careful about it and not jump in too deeply but the Utica has additional promise.”
BP isn’t the only producer looking for liquids-rich targets, Dudley noted.
“Nobody’s had enough of it. Everybody feels having more is the right thing to do…all the way down to the oil shales. Ours has been redirecting to it step by step by step…first in the Eagle Ford and now the Utica. We are looking to see if we might expand there…”
BP today has seven rigs still drilling dry natural gas targets in the United States but the “rig count likely will be down to five by the end of the year,” he said. Most of company’s dry gas unconventional focus to date has been in the Fayetteville Shale.
“This is a very, very significant resource base,” Dudley said of unconventional gas, but it’s not making enough money today. “We’ve moved out of the Fayetteville and into more wet gas like the Eagle Ford.”
BP’s North American gas drilling operations outlook is “based on prices below $4.00/Mcf.”
A lot of BP’s North American gas “has a fairly fast payback…We are very responsive to the price environment,” said the CEO. He noted that gas prices “have moved up from a $1.94 low and closed at $3.21” on Monday. “There’s some incentive there and we are heading in the right direction to get back to work. But we are prudently planning to keep activity low and focus on the liquids-side of things.”
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