The Houston-based arm of energy giant BP plc Tuesday said it was leasing thousands of acres in a yet-to-be explored area of northeastern Ohio’s Utica/Point Pleasant Shale formation near the Pennsylvania border for future natural gas and oil production.

The lease agreement for about 84,000 acres in Trumbull County, OH, is with the Associated Landowners of the Ohio Valley (ALOV), a group representing about 1,000 area mineral owners. ALOV voted late Monday to approve the arrangement; terms are to be executed with each landowner and would be confidential.

Financial details were not disclosed. However, during a conference call Tuesday BP’s Tim Harrington, regional vice president for the company’s North American Gas (NA Gas) business, said the company was “committed to the value equation” and optimistic about the shale production’s future cash flow.

“We actually think this has the opportunity to be very good for Ohio, very good for BP,” said Harrington. Leaseholders will be signed up over the next six months and an appraisal program will follow to determine the extent of the oil and gas resources.

BP was intrigued by the region because it offers dry and wet gas, as well a liquids, said the BP executive.

“One of the things that we quite like was the potential for the liquids-rich gas opportunity,” he said. “We think it has the potential to compete well in our portfolio.” The company’s internal appraisal will determine the economics of the deal. “This will depend on the nature of the product, how wet, how liquid-based it is,” said Harrington. “What we would hope to find is we would have an infrastructure that would build out.”

One BP insider said acreage prices to be paid Trumbull County landowners is expected to be about $3,900/acre, with a royalty payment of 17.5% for the oil and gas produced. At the high end, BP likely would be paying in total about $350 million for the acreage to be leased, the source told NGI’s Shale Daily.

The leasing rights to acquire some Ohio unconventional land have topped $8,800/acre, but more typical leasing bonuses are about $2,500/acre, according to the Ohio Department of Natural Resources (ODNR) Division of Oil and Gas Resources Management.

To date, about 3.9 million acres in Ohio have been leased by oil and gas drillers, state officials said. Even though Trumbull County borders Pennsylvania, it is relatively unexplored.

Producers holding leases in Trumbull County include Chesapeake Energy Corp., which last year also signed an lease agreement with ALOV (see Shale Daily, May 11, 2011). Also holding leased acreage in Trumbull are Chevron Corp., as well as EV Energy Partners LP, which partners with Chesapeake on some leases. In addition, joint venture partners also with leases in the county include Carrizo Oil & Gas Inc./Avista Capital Partners (see Shale Daily, Oct. 3, 2011); and Consol Energy Inc./Hess Corp. (see Shale Daily, Sept. 8, 2011).

Little exploration activity had been undertaken in the county through February, according to well permit information compiled by state officials. Chesapeake has one completed well on the southern border of Trumbull in Mahoning County. It also was drilling a well in late February to the west of Trumbull near the border in Geauga County.

“We are very encouraged by what we have seen of the Utica/Point Pleasant formation,” said Harrington. “Our focus in 2012 will be to better understand the geology and devise a plan to safely develop the resource.”

BP, he said, is “committed to hiring and purchasing locally whenever possible, and we anticipate having a positive impact on the region while providing a new source of energy for America.”

The London-based company is the sixth largest U.S. gas producer — and it was the top domestic gas marketer in 4Q2011 and for 2011, according to NGI‘s Top North American Gas Marketers Rankings.

BP is the second largest oil and gas producer in the United States, and it is the second largest domestic oil and gas employer, with a workforce of about 23,000 people. The Houston-based arm operates in seven states with more than 10,000 producing wells and 70,000 royalty owners. U.S. capital investments from 2007-2011 totaled more than $52 billion — more than in any other country.

In the Lower 48 states alone BP and its co-owners operate fields that hold nearly 50 Tcf of natural gas, which is enough to satisfy U.S. consumption for more than two years. The NA Gas unit currently has active positions in the Woodford, Haynesville, Fayetteville and Eagle Ford shales. In Wyoming operations are anchored on the giant Wamsutter gas field. In the San Juan Basin of Colorado and New Mexico BP operates in the country’s largest coalbed methane field, while operations in Oklahoma and Texas include the Arkoma, East Texas and Anadarko basins. BP also operates a gas processing plant in Pascagoula, MS.

Through heritage companies Standard Oil of Ohio and Amoco, BP’s roots in Ohio date back to 1870. BP operates the BP-Husky refinery near Toledo, which it owns in a joint venture with Husky LLC, and it is also a leading fuel marketer in the state. BP heritage companies also have been active in the upstream business throughout the state’s history, the company said.

“BP is excited to expand our presence in Ohio in a way that will create jobs, bolster the local economy and provide additional sources of energy from an important emerging America resource,” said BP America Chairman Lamar McKay. “Over the past five years BP has been America’s largest energy investor with vast experience in developing natural gas resources. We intend to bring our expertise and the highest industry safety and environmental management practices to this project.”

The Utica/Point Pleasant Shale formation, which underlies the Marcellus Shale at a depth of about 6,000 feet, has the potential to deliver higher liquids rates, according to the Ohio Geological Survey. The Ohio Department of Natural Resources estimates a recoverable Utica Shale potential of 1.3-5.5 billion bbl of oil and 3.8-15.7 Tcf of natural gas.

Chesapeake is the largest leaseholder in the Utica/Point Pleasant, with an estimated 1.21 million net acres even after a recent deal which shifted a one-quarter stake in its leasehold to French energy giant Total SA (see Shale Daily, Jan. 4). EnerVest (760,000 net acres), Chevron (600,000 net acres), Anadarko Petroleum (240,000 net acres) and Devon (235,000 net acres) also hold significant positions in the formation.

Ohio’s busiest counties most recently for oil and gas leasing and acquisition have been Belmont, Guernsey, Jefferson, Monroe, Noble and Washington, according to ODNR. The state agency is forecasting that 160 wells will be drilled this year in Ohio. Another 650 wells are expected to be drilled in 2013, with 1,075 in 2014.

For the week ending March 23, ODNR’s Division of Oil and Gas Resources Management reported that 17 horizontal permits were issued for Utica/Point Pleasant Shale wells, bringing the total number of permits issued since December 2009 to 176. Fifty-three total horizontal wells had been drilled as of last week, with seven horizontal wells producing.

Nearly all of the permits issued last week were to Chesapeake subsidiary Chesapeake Exploration LLC for field activity in Carroll County, OH.