What lurks below campus could be worth millions
Published: Thursday, April 26, 2012
Updated: Wednesday, April 25, 2012 22:04
There’s a hole 60 feet beneath Kilcawley House that runs southward, snaking under the campus core.
In the 1850s, coal was extracted from that mine owned by Henry Wick, a Youngstown homesteader. It was the last time that the land Youngstown State University rests on was mined for minerals.
Wick sold the property and mineral rights, stripped of coal. The property was sold and sold again, until the university purchased the plot of land.
Nearly a mile below the coal beds is an intersection of two layers of organic rich shale rock, explains Jeffrey Dick, chairman of the geological and environmental sciences department at YSU.
That layer of shale, estimated to hold trillions of cubic feet of natural gas, has triggered a drilling bonanza in eastern Ohio.
And, according to YSU officials, mineral rights for the university’s 151 acres of public land remain intact.
The Utica shale play, as oil and gas drillers call it, has drawn national attention for its concentration of lucrative natural gas liquids, like propane, butane and ethylenes.
“They’re much more valuable, particularly the ethane, because that’s the raw material for polyethylene plastic, the most common plastic around, as far as I know,” Dick said.
With increasing amounts of natural gas in storage and declining natural gas prices, drillers and energy companies from Texas and Oklahoma look to Ohio’s Utica shale for these wet gases.
But the process used to extract gas and oil from dense shale has also drawn the ire of the public, especially when done in densely populated areas.
YSU owns approximately 151 acres of mineral-rich shale. The land surrounding campus, however, is urban, which Disk said could create problems for oil and gas companies.
Dick said energy companies would first deplete and explore rural claims that are easier to develop.
Since May, there have been eight Utica gas wells permitted in Mahoning County and one completed well, which entered the production phase in October. Gas production numbers have not been released for this well, which produced nearly 10 barrels of oil a day during the completion phase.
All nine wells have been or will be drilled 12 to 19 miles to the south and west of YSU.
According to a land deed, YSU owns the mineral rights under Kilcawley House, which was mined for coal more than 150 years ago.
“To the best of my knowledge, every piece of land the university owns, we also own the mineral rights,” said Greg Morgione, YSU associate general counsel.
The land is owned by the state. And negotiating the leasing of mineral rights would be handled by the Ohio Oil and Gas Commission under the Ohio Department of Natural Resources, Morgione said.
In the event that the state would lease university land, YSU could still have a voice in the operation.
“YSU still has the right to say we do not wish for there to be any oil and gas exploration,” Morgione said.
But while the shale gas below YSU remains undisturbed, universities in north Texas have harnessed the minerals below their campuses.
“Since wells on campus started production in 2008, the University of Texas at Arlington has received nearly $10 million in royalty payments,” said Kristin Sullivan, assistant vice president for media relations at UTA.
Sullivan explained that UTA was approached by multiple oil and gas companies in 2007 when energy companies realized that the urban centers of Fort Worth and Arlington sat atop the “sweet spot,” an area that has yielded trillions of cubic feet of natural gas in the past decade.
In 2008, the first six wells on went into production on the north Texas campus.
No wells have been drilled on any of Ohio’s 13 public universities, and Morigione said no company has approached YSU for its minerals.
The 420-acre UTA campus has 22 natural gas wells and one pad site. The site is located on the southeast corner of campus in downtown Arlington, less than a mile from the Dallas Cowboys Stadium.
The university receives 27 percent of all natural gas produced. The funds support undergraduate scholarships and graduate fellowships, as well as the retention and recruitment of faculty and staff.
“It really enables our community to accomplish things we wouldn’t have been able to accomplish before,” Sullivan said.
While industry and businesses have touted the economic benefits for universities and publicly owned land in Texas, estimates on total gas reserves in Ohio’s Utica shale vary widely, between 2 trillion cubic feet and 69 trillion cubic feet.
A Chesapeake Energy Corporation production report released by ODNR in early April shows that the company’s first five Utica wells produced 2.6 billion cubic feet of natural gas in 2011.
The wells are a new breed in Ohio, which houses 49,000 vertical gas and oil wells. These wells are considered conventional because they do not extend 6,000 to 8,000 feet into shale formations.
Production has increased, as much as 300 times over by some state estimates, as companies employ a horizontal drilling technique that allows energy companies to open up to a mile of shale rock then inject chemicals mixed with sand and water in a process known as horizontal fracturing, or fracking.