JEROMESVILLE, Ohio — A Houston-based energy company with exploratory wells in the Ashland and Richland County area has ceased operations there on the heels of poor production results.
Cabot Oil & Gas Corp., which operates Marcellus shale wells in Pennsylvania, spent the past couple years exploring the horizontal well potential in north central Ohio — hoping to extract oil or natural gas.
Company spokesperson George Stark told Farm and Dairy that, based on the data from the first wells, Cabot will cease operations and close its office in Jeromesville.
The company constructed four well pads in the area, and sought lease amendments from landowners through 2018, hoping for additional horizontal wells in the future.
Exact production results are unknown, but during Cabot’s end-of-year conference call in February, President and CEO Dan O. Dinges said results were unsuccessful.
“One specific operating expense I want to highlight is the exploratory dry hole cost we incurred in the fourth quarter resulting from unsuccessful drilling results in our second exploratory area,” Dinges said. “As a result, we do not expect to allocate any incremental capital to exploration at this time.”
Lease amendments
Cabot had offered landowners $25 an acre and 12.5 percent royalty payments, in exchange for signing an amendment to allow horizontal drilling. The amendment was necessary because much of the land in these counties is currently leased to TransCanada (formerly as Columbia Gas Transmission), and limited to vertical wells.
At the time, some landowners were concerned the offer might be too low, however, Cabot said that unlike eastern Ohio, the north central counties were unproven and the company did not know what it would find.
Carl Ayers, a dairy farmer from Loudonville and president of the local landowner group, the Mohican Basin Landowners Association, said one of the group’s main concerns is that the land used for exploration gets restored back to farmland.
“We’re concerned that Cabot will reclaim this to the best of their ability, and put it back into farmland,” he said.
Lease language
Ayers said the Mohican group is also concerned about the language in the lease amendments, and whether those who signed could have their leases bought and sold by other energy companies in the future.
The landowner group functions as an educational organization for landowners, Ayers said.
A spokesperson from the Ohio Department of Natural Resources told Farm and Dairy in December that Cabot would be required to report its production by March 31. With the decision to end operations, however, it’s unclear what will be made available.
