The following is an excerpt from my copyrighted book entitled “The Utica/Pt. Pleasant Play in Ohio”. Although it is primarily focused on Ohio, it is germane to most of Appalachia, including Central and West-Central PA, and much of the Northern half and the Western half of WV. Obviously, the parts concentrating on the Utica and the Pt. Pleasant are specific to Ohio, but the mention as to the source rocks, and the process of migration and the concept of both permeability and porosity are equally important in all three states, and nationwide really.

A few important terms which we will discuss that may need some clarification.

1) Migration – the process by which hydrocarbons naturally rise from deep in the Earth’s core and move toward the surface

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2) Porosity – the quality or degree of having minute holes or spaces through which hydrocarbons (or other materials) may enter and be absorbed into a reservoir, in a sponge-like manner.

3) Permeability – the state or quality of a material which allows hydrocarbons (or other materials) to pass through and continue upwards towards the Earth’s surface.

4) TOC (Total Organic Content) – a measure of the total amount of carbon or carbon-like materials (organic compounds) which exists in shale or conventional reservoirs.

5) Kerogen – a solid, insoluble organic matter that exists in sedimentary rocks. It consists of organic matter including plants, algae and other microorganisms that have been compressed and heated by geological processes. Type 1 and 2 kerogen are most promising for the formation of petrocarbons - Type 1 being derived from lipid-derived material, commonly from algae deposited in oxygen-deprived environments. Type 2 kerogen is planktonic, meaning it is derived primarily from marine organic materials deposited in reduced sedimentary environments. Either is a good indicator of oil, condensate, or natural gas liquids.

6) Oil in place – an estimate as to the total oil or petrocarbon content of an oil reservoir (conventional or unconventional).

7) Recoverable reserves – the amount of oil and gas reserves which are economically and technically feasible to extract at the existing price of oil.

The Trenton Limestone

The Trenton Limestone and accompanying Black River rocks are important in that they serve as the source for much or all hydrocarbon formation in the Appalachian Basin. Generally speaking, the Trenton Limestone serves as a cap rock for the underlying Black River source rocks. Because it is not as thick in some places, it has allowed hydrocarbons formed by the Black River group to migrate naturally into the Marcellus in PA and WV and into the Utica/Pt. Pleasant in Ohio. To the East in WV and PA, oil and LNG’s may be trapped deeper, or their thermal maturity may have been negatively impacted by the thicker Trenton limiting the occurrence of such desirable migration into porous reservoirs.

Generally speaking, as hydrocarbons were formed in these source rocks millions of years ago, the process of migration occurred whereby oil and natural gas moved upward through adjacent formations, impeded and impacted by the porosity and permeability of structures located above them. Where significant porosity exists, the structure will absorb and contain the hydrocarbons, holding them in either a conventional or unconventional reservoir (shale). When permeability allows, the oil and gas will continue to rise toward the surface, passing through one formation and continuing to move upward. Shale is typically low in permeability and serves as a containment source that stops migration and creates a reservoir. Because of their porosity, the Utica and Marcellus are both particularly adept at serving as a reservoir because they stop the hydrocarbons from continuing to migrate, and absorbs and holds them in containment.

The stacked layers of shale and interbedded limestones existing in Ohio adjacent to the Utica, referred to alternatively as either the Upper Devonian Shale or the Point Pleasant, serve further to absorb and contain whatever materials make it through the maze of permeability problems posed by the Utica. Upper Devonian shale may include not only the Utica or Marcellus, but any number of interbedded gray or black shales, including the Rhinestreet Shale and Burkett Shale. For general discussion purposes, we will address them as being one and the same, with the bulk of the discussion being directed more specifically to the Point Pleasant, which merges with the Utica as it enters Ohio, forming an attractive target for exploration.

The Point Pleasant Formation

The Point Pleasant formation has been described as marking the end of Middle Ordovician time. The Ordovician Period is characterized as the greatest submergence of the North American plate because shallow seas covered such an extensive area, including all of Ohio and much of PA and WV. In this environment, the Acadian mountain-building event occurred whereby sediments high in kerogen were shed from the highlands into a somewhat enclosed basin, lowering the amount of available oxygen. As they were buried and subject to the pressure and temperatures of the earth’s crust and core, the environment became conducive for the formulation of petrocarbons, especially oil and natural gas liquids (NGLs).

The appropriate balance of hydrogen and carbon along with the corresponding favorable oxygen/carbon ratio (along with suitable temperature levels) created primarily type one or two kerogen content materials. Because they were formed from fossils containing mostly proteins and lipids, and to a lesser degree, from pollen, spores, or plant/animal decompositions, conditions became prime for oil or a mix of oil and wet gas. It is particularly important to recognize that the Utica and especially the Pt. Pleasant have been identified as having high TOC (total organic content) and type one or two kerogen levels, two of the most important factors to realize if you are indeed searching for wet petrocarbons, i.e. oil, condensate, or natural gas liquids. Certain areas of the Marcellus have equal potential for the emergence and extraction of these same products.

The Pt. Pleasant is characterized as having “three westward-thinning tongues of calcareous strata separated by shalier eastward-thinning tongues.” It is further described as being 60% limestone and 40% shale, interbedded, gray to bluish in color and up to 200’ thick in parts of Ohio. A well log which I located from a Tuscarawas County, OH well showed the Utica/Pt. Pleasant merged to create a 255’ core with an excellent TOC as high as 3.75%. Pretty darn impressive. Chris Perry, chief geologist with ODNR, claims the Pt. Pleasant to be the sweet spot of the entire play in Ohio, with the highest TOC and a propensity to be highly brittle and contain significant natural fractures. Further, he claims formation thickness of a little as 50 feet to be commercially productive. Some excellent Marcellus wells in central PA purport to have similar formation thickness and potential.

In the inception of Utica exploration, ODNR’s Larry Wickstrom offered that ”the Pt. Pleasant lies just beneath and adjacent to the Utica, making the formation actually thicker and higher in total organic content. It is very unusual. It is a black organic rich crystalline limestone interlayered with black organic-rich shale. The Utica is a wonderful rock, but it is even better with the Pt. Pleasant beneath it. Since it is interlayered with the Pt. Pleasant, it is more frackable.” He believes the Utica/Pt. Pleasant package covers most of Ohio, but to what geographic extent it is commercially productive remains to be seen.

It is important to recognize it as being calcareous shale because it contains a high calcium carbonate content derived from ancient algae, which is the perfect content for petroleum formation. Consequently, it is high in TOC and contains level one kerogen making it a wonderful source for formation of hydrocarbons, especially oil. The Pt. Pleasant and the Utica are both identified as having a much higher carbonate and lower mineral clay content than the Marcellus. It is economically similar to the Eagle Ford. Production and fracking techniques have surely been borrowed from experience gained in the Eagle Ford play

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Now it is time to make a bold statement. The characteristics described in the preceding two paragraphs could easily be used to describe the Bakken. It is not a true shale play. Instead, it is various limestone and sandstone formations interbedden with shale. Consequently, it can achieve optimum production only through horizontal drilling and hydraulic fracturing.

Gulfport Energy has made a name for itself in Ohio’s Utica. They hold a substantial leasehold interest there and have delivered many of the best of the early wells in the play. They released the following prospectus as to their interest in the Utica Shale here. They purport to have a drilling cost of less than or equal to the Bakken or the Eagle Ford. Further, and of more importance, they purport to have more oil in place, a higher recovery factor, better average formation thickness, and a much higher porosity then either of the other two shale plays mentioned. They have proven to be pretty accurate with this diagnosis, making the Utica one of the best shale plays in America, based upon potential productivity and the simple economics of the deal. Considering the results of some of their Belmont and Harrison County completions, it is no wonder that they have paid up to $10K an acre to acquire 30,000 net acres from Windsor Ohio, LLC in eastern Ohio. The acreage appears to be concentrated primarily in Belmont and Monroe counties, although the specifics were not released.

Generally speaking, the Pt. Pleasant exists above the base of the Trenton limestone to the base of the Cincinnati group (Kope formation). Of importance is noting that the source rocks of the Trenton Limestone and the Pt. Pleasant formation have been credited with generating 75B bbls of oil. Of this, due to permeability of subsequent formations some has migrated into the Silurian reservoirs, including the Clinton formation.

The Clinton Formation

The Clinton formation has long been the most prolific producing formation in Ohio, with production as far back as 1887. Over 100,000 Clinton wells have been drilled in Ohio. It experienced a renaissance in the 1950’s with the introduction of vertical hydraulic fracturing. During the late 70’s and early 80’s, the Clinton ran rampant. During the peak year of 1981, there were 6085 wells drilled in Ohio, of which 70% were completed in the Clinton sandstone. Because it is interbedded with shale, it responds well to artificial stimulation. Using this technique, the Clinton success ratio increased to 85% completions. This was almost 40 years ago. The Clinton is famous in Ohio and for good reason. Let me tell you why that is newsworthy.

Despite its prolific history and reputation, the Clinton has been proved to hold only those hyrdrocarbons which escaped through permeable sections of the Utica/Pt. Pleasant. In fact, of the 72B bbls of oil generated by lower source rocks, only 400M bbls of in-place oil can be accounted for including all Clinton production going back 125 years and encompassing thousands of wells. Obviously, there is a huge amount stored in the lower reservoirs (i.e. Utica and Pt. Pleasant) waiting to be discovered.

Further, studies of well logs from these many wells have allowed us to pinpoint very specific areas which have a high propensity for oil. Interpreting these wells logs gives us targets with which we can search with relative certainty – at least with as much certainty as you can achieve in this business. A study by the Ohio Department of Natural Resources (ODNR) tried to come up with an approximation of the recoverable reserves relating to the Utica Shale only and estimated that the formation might hold from 3.98 to 8.2 billion barrels of oil equivalent just from Ohio alone. Yes, that’s billion, with a B and does not even take into account the accompanying Pt. Pleasant or Upper Devonian Shale formations. Of interest is a quote from Terry Engelder, among the country’s most respected geologists (credited with discovering the Marcellus) purporting these estimates to be, in his estimate, artificially low.

In researching this project, I located a study proposed to geologists and petroleum engineers in the 2013 Winter Meeting of the Ohio Oil and Gas Association. It was prepared by Martin Shumway, CPG PE with MacKenzie Land and Exploration, Ltd. It considers all costs associated with establishing production – lease, drilling, pipeline and operating costs, among others, and uses township boundaries as geographic areas for analysis. It uses a controlled date base of over 25,000 Clinton wells reporting production since 2005. 158 townships total were included in the report.

Exhibit 10 (sorry, not available here) is a map from the study showing Clinton wells used in the study superimposed on central and Eastern Ohio. Wells reflected in green are oil producers. The red wells are primarily dry gas. What we can learn here is where the most profitable Clinton wells are, especially which ones likely contain oil only because it has been allowed to bleed through the Utica or Pt. Pleasant containment because of lesser permeability in that area. It is a reasonable assumption that much more oil lies beneath the Clinton, trapped in the Utica/Pt. Pleasant due to the excellent porosity of the formations.

We can now identify target areas in Ohio by shale thickness, TOC levels, kerogen content, structure depth, thermal maturity levels, and known oil reservoirs. Again, proper due diligence in terms of research increases that level of success exponentially. I am confident in my research and sources. It all comes from reputable sources that do not have a dog in this hunt, and no secret agenda to promote. What was once speculation has now become cold, hard facts, and exactly the kind producers so eagerly anticipated.

Now…..as to the Marcellus

The Marcellus Shale is prolific in PA and WV but is relatively unproven in Ohio. The most prolific wells, and there have been many of them, have been in PA or WV. The formation itself is huge, estimated to be as large as 3 million acres or more. Total recoverable reserves have been estimated to be as high as 1500 TCF or more – over 30 times the original estimate. Penn State refers to this 1500 TCF as being “gas in place”, a big difference, but impressive just the same. Almost every major not married to the Bakken or the Permian basin in now active in pursuing the Marcellus in PA and adjoining states (except NY, of course).

Currently, most of the horizontal drilling has been concentrated in WV and PA, Northeast toward NY. The “fairway” as it was originally described by Penn State geologist Terry Engelder, runs roughly through the center of PA and into SE New York. This area is most attractive because it has the thickest parts of the shale formation and the highest total organic content (TOC). More recently, emphasis has shifted to SW Pennsylvania, just North of Hancock County, WV after Range Resources made three huge liquid Marcellus wells in what they call “the super-rich area”, rivalling production found anywhere in any of the three target states. Step-outs will continue to occur adjacent to proven productive areas. Who knows where the sweet spots will ultimately be discovered? It is a huge play, and has production, in various forms, over a large tract of land.

In discussing its potential in Ohio again, characteristics remain consistent with the rest of the Susquehanna River Basin. The difference is that the Marcellus begins to thin as it enters Ohio. The Utica is deeper and lies beneath the Marcellus in Eastern Ohio. Here, the Marcellus structure is typically estimated to be 50’ to 150’ thick, whereas it may be as much as 250’ thick at peak formations in PA, WV and NY (we’ll never know about the latter, will we?). However, this should not be discounted too quickly, as we have already discussed how some of EXCO’s best PA Marcellus wells has a show of only about 100’ at the core.

Further, the Marcellus is much more accessible in Ohio. Not only is the terrain more conducive to drilling, but the formation is typically not as deep. The Marcellus exists in Ohio at proven depths of about 5000’ and structure maps show it to be as shallow as 3000’ deep in some areas with decent structure thickness. Conversely, Marcellus wells in Appalachia East of Ohio are typically 7000’ to 9000’ deep and consequently are much more expensive to drill. Exploration of the Marcellus in Ohio should be considerably cheaper for these two main reasons.

Peak formations in WV and PA are estimated to hold as much as 1245M of cubic feet of gas per square mile. However, this is only in a very narrow ribbon which is actually very near Ohio’s Eastern border. For the most part, reserves are between 710 and 1244 M cubic feet per square mile. This seems to be just fine for proven Marcellus production. Coincidentally, Eastern OH shows identical untapped riches, a by-product of the high TOC present in both areas.

At present, Ohio has 81 wells permitted for the Marcellus Shale as of March 12 of this year. Most are listed as active and producing according to the Ohio Department of Natural Resources (ODNR). They have identified at least three counties as being potentially productive for the Marcellus in Ohio, being Belmont, Columbiana, and Carroll County, where the Utica exploration really took off. At one point, either Chesapeake or Rex Energy had leased damn near every parcel in the county. Chesapeake’s position is now owned by Encino. As for Rex, they were bought out in 2018 by PennEnergy Resources.

Pennsylvania was, and remains the heart of exploration regarding pursuit of the Marcellus shale. This will likely always be the case. In addition to the prolific oil, gas and NGL production, it was recently established that the flow-back water from Marcellus wells there contain commercially productive amounts of Lithium, an essential element for many items, including batteries for electric vehicles and military equipment. We had previously relied predominately on China for acquisition of such, and they are not a reliable partner to do business with. Besides, why not keep the production income in-house, so to speak, rather than outsourcing to an unfriendly rival?

Summary

Appalachia is incredibly fortunate to have two of the best shale formation in all of America, and their potential is only beginning to be realized. Drilling in PA to explore the deeper Utica which exists there is only now beginning. I would say this area is very likely to be productive, but it has yet to be truly de-risked. Likewise, the Marcellus, as it exists further West into Ohio, is still in its infancy. There are producing wells, but nothing considered prolific. However, do not discount the potential for the producing window to be unlocked there. It is fairly economical, as far as shale wells go, to proceed with initial exploration and determine the economics of Ohio’s Marcellus production. No matter what, even if things only stay at status quo regarding the two formations, Appalachia will truly be blessed economically, and its towns will be flush with impact fees and severance taxes and its farmers will be blessed with bonus and royalty payments, enabling them to modernize their farming and fund the purchase of new equipment and facilities. “The biggest thing to hit Ohio since the plow” (the Utica Shale) seems equally pertinent to WV and particularly PA in the form of the Marcellus Shale. Appalachia was due for a break, and they are finally realizing one.

*The above is original copyrighted material and is not to be redistributed or reproduced without making clear reference to John W. Howard, as its sole author. Failure to do so may result in copyright infringement and potential litigation