The West Virginia Department of Commerce will allow hydraulic fracturing under the Ohio River, according to reports from local media outlets. The state had previously leased out about 474 acres of land in Marshall and Wetzel counties and retains a 20% royalty of the produced resources. Statoil (ticker: STO) has already finalized a deal with an average cost of about $9,000 per acre. Other producers, including Noble Energy (ticker: NBL) and Gastar (ticker: GST), are in the process of finalizing drilling contracts.

Statoil holds a prominent position in the United States’ greatest producing gas play, with 512,000 net acres spread across three states. Its average vertical well depths are roughly 8,000 feet, while the average depth of the Ohio River is about 24 feet. The Department of Commerce had said leases were awarded to bidders on a mile-by-mile basis and were “based upon the Director’s determination the bidder will operate responsibly and develop the prospect that protects the interest of the State of West Virginia.”

Trans Energy Acreage

Trans Energy Acreage

The Ohio River and its surrounding areas are also prospective for the Utica Shale, which is a deeper and more liquids-based formation than the Marcellus. Its Marshall and Wetzel counties are home to numerous producers who have flocked to the play, including micro-caps like Trans Energy (ticker: TENG), a Marcellus pure-play with approximately 45,000 gross acres in the area.

Drilling under rivers, while relatively uncommon, does exist. Operators have been drilling below the Susquehanna River in Pennsylvania for roughly five years and are monitored by the Susquehanna River Basin Commission, which has a fact sheet detailing the process and its requirements. The sheet reads: “Potable water is about 850 ft below ground surface. Shale gas formations are vertically separated from freshwater aquifers by at least 2,000 ft of sandstones and shales of moderate to low permeability.”

West Virginia Commerce Secretary Keith Burdette admitted state budgets are very tight and said the royalties could “create what could be a substantial revenue stream.” Pennsylvania received $10.5 million up-front in March 2014 and in 2010 from Chesapeake (ticker: CHK) to operate under the Susquehanna River, not including royalties.

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