BP said Tuesday it is dropping plans to develop its Utica shale acreage in northeastern Ohio as it moves to overhaul its poorly performing onshore shale assets in the US.
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BP said it has taken a $521 million write-off relating to the Utica shale for the first quarter of 2014 after lackluster appraisal results from initial well tests.
"As a consequence of appraisal results. BP has decided not to proceed with development plans in the Utica shale," the company said in an earnings release.
The move comes almost two months after BP announced plan to shift its shale-rich onshore oil and gas assets in the US to a new business to better compete with smaller, more efficient companies such as those which spearheaded the US shale gas boom.
BP said it needed a more nimble business model to reap greater value from the assets, with faster decision-making, quicker field developments and more efficient cost management.
Shell last year announced a strategic review of its US shale portfolio after taking a $2.1 billion impairment on its position due to dire US gas prices.
In Shell's case, it is targeting its loss-making Americas and oil-product divisions which are tying up a combined $80 billion, or 35% of its total capital employed.
BP signed an agreement to lease about 84,000 acres in the Utica/Point Pleasant Shale formation in northeastern Ohio in March 2012. The play is at a depth of about 6,000 feet and is of a similar thickness to the Marcellus Shale, with the potential to deliver "higher liquids rates," BP said at the time.
The Ohio Department of Natural Resources estimated a recoverable Utica shale potential of 1.3 billion-5.5 billion barrels of oil and 3.8 Tcf-15.7 Tcf of natural gas, BP has said.
BP holds a significant portfolio of unconventional resources in the US which are estimated to hold a total of 7.6 billion barrels of oil equivalent.
The assets, which include stakes in the Fayettevile and Eagle Ford shale plays, cover a total 5.5 million acres and an interest in over 21,000 wells.
BP currently produces around 300,000 boe/d in the continental US states, also know as the onshore Lower 48, much of which is gas from shale or other unconventional sources.