DULLES, Va.--(BUSINESS WIRE)--The Utica Shale could be worth $500 billion, and the "biggest thing economically to hit Ohio, since maybe the plow," Chesapeake Energy Corp. CEO Aubrey McClendon told an audience in Ohio on Wednesday, according to a report by Natural Gas Intelligence (NGI).
"I prefer to say half a trillion," McClendon said at the Ohio Governor's 21st Century Energy & Economic Summit in Columbus. "It sounds bigger." While admitting that fluctuating commodity prices make it difficult to estimate value accurately, McClendon called his estimate "reasonable."
Although merely an estimate and not a scientific analysis, the figure is among the first offered for the infant Utica. McClendon previously turned heads by saying the Utica "is likely most analogous, but economically superior to, the Eagle Ford Shale in South Texas."
"We started to look at Utica in Ohio here about two years ago and arrived at two conclusions: One, it's big. Two, a lot of the acreage on it was owned by EnerVest," McClendon said, pointing to EnerVest Ltd. CEO John Walker. "We'd always been friends, but I got chummier."
"Now we're best friends," Walker said.
EnerVest is the leading conventional oil producer in Ohio. Chesapeake and EnerVest formed a joint venture recently to explore the Utica, but each company is also exploring outside of that joint venture. Chesapeake spent $2 billion on its 1.25 million acres in the play.
McClendon also continued his role as the shale industry's most aggressive promoter, telling two opponents to hydraulic fracturing as he entered the Ohio auditorium: "I'm the biggest fracker in the world. I've done it 16,000 times since 1989 and I'm proud of it," before elaborating that his "plan" involved increasing jobs, lowering the cost of energy and helping the country become energy independent. "So what is your plan?" he asked.
When they told him they want the energy supply to come from renewable fuels, he said, "It's not reality. It can't happen."
Chesapeake is comparing the Utica to the Eagle Ford because both plays have dry gas, wet gas and oil windows, allowing both plays to remain economic even at times such as now when natural gas prices are depressed, but unlike the Eagle Ford, the Utica is still too new to measure, McClendon said.
"We know it's big. How big is big? We don't know and I can't put volumes on it yet," he said. That said, Chesapeake plans to drill as many as 12,500 wells in the Utica and McClendon expects around 10 companies to compete in the play, investing as much as $200 billion in Ohio over the next 20 years. Chesapeake is currently running five rigs in the Utica and plans to gradually increase that to 40 rigs by 2014, but McClendon said Ohio should expect more than 100 rigs in the Utica at full buildout. CONSOL Energy Inc. and Hess Corp. recently formed a joint venture in the Utica and Anadarko Petroleum Corp is getting drilling permits.
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Intelligence Press Inc., is an independent publishing company serving the energy industry since 1981 with real-time news and prices for the natural gas market in its publications: Natural Gas Intelligence, NGI's Daily Gas Price Index, and NGI's Weekly Gas Price Index. NGI natural gas price indices have been utilized for price discover by energy producers, marketer, traders, utilities and end-users for more than 20 years.
NGI's new publication, NGI's Shale Daily at http://shaledaily.com/ is the first daily publication devoted exclusively to the unfolding shale revolution that is rewriting the energy outlook in North America. NGI has drawn upon its 30 years experience surveying and publishing natural gas prices to develop the first natural gas Shale Price Indices (SPI) for 11 key unconventional resource plays in North America.