BP Plc (BP/), Europe’s second-largest oil producer, entered into the Utica shale formation in Ohio with a deal to lease 84,000 acres of land for an undisclosed price.
BP signed an agreement with the Associated Landowners of the Ohio Valley, which represents mineral owners in the Utica and Point Pleasant area, for future oil and gas production, the company said in an e-mailed statement. While terms of the deal are confidential, the basin may be a “potentially significant” liquids-rich gas source, it said.
The boom in extracting hydrocarbons from shale by grinding underground rocks has turned the U.S. into the world’s largest gas producer. Prospects for shale oil promise to cut U.S. dependence on imported energy. Hess Corp. in September paid about $750 million for 85,000 acres on the Utica formation.
“We like the prospectivity of where we are, and it’s the liquids component that drove us there,” Tim Harrington, head of BP’s North American gas unit, told journalists on a conference call today. He declined to comment on the cost of the deal or on whether the price of land in the Utica shale is rising.
BP edges out Exxon Mobil Corp. (XOM:US) as the seventh-largest leaseholder in the Utica formation with this latest transaction, according to data compiled by Bloomberg Industries. Range Resources Corp. (RRC:US) and Chesapeake Energy Corp. (CHK:US) dominate the prospect with about 700,000 and 407,000 acres, respectively.
Ohio’s Department of Natural Resources estimates Utica may hold as much as 5.5 billion barrels of oil and 15.7 trillion cubic feet of natural gas.
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