BP's U.S. division exploring for gas and oil in shale rock has decided to call it quits in Northeast Ohio after drilling just four wells.
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BP PLC's CEO Bob DudleyCLEVELAND, Ohio -- Facing disappointing results from its shale test wells in Northeast Ohio, BP, Plc. said Tuesday it will not drill additional wells in the approximately 84,000 acres it leased in Trumbull County just two years ago.
And the company will write off the more than $500 million it has spent here, BP announced as part of its first quarter financial results.
"We have taken the write off of the assets where we have made the appraisal wells," Jessica Mitchell, head of investor relations, told analysts during a teleconference in London, England. "It's premature to say what we'll do with the remaining parts of that asset base, but I think we've made it very clear that we don't intend to proceed with where we are today."
The company never released what it paid landowners for five years of drilling leases, but published reports at the time estimated the amount at about $4,000 per acre. Monthly royalty payments were to be figured at about 18 percent.
State records show that BP drilled only four wells in Trumbull County. Two years ago, Chief Executive Bob Dudley told The Plain Dealer he anticipated the operation to result in new jobs and a new corporate presence for BP in Ohio.
"We've got to do the exploring and unlock it," Dudley said. If BP finds natural gas liquids in the shale, as expected, "the number of jobs will really begin to take off, certainly in the thousands," he said. "Not just drilling jobs. Jobs in finance, accounting, leasing."
Larry Wickstrom, the former chief geologist for the Ohio Department of Natural Resources and now in private business, told the 1,500 attending the Ohio Oil and Gas Association annual winter conference in March that the most productive wells drilled so far were not in Northeast Ohio.
He said the best sites were located in a strip that runs from Carroll County in the north to Washington County in the south.
Wickstrom said the shale under Northeast Ohio is less porous and contains less oil and gas than the rock to the south.
