Drilling Down

Gasearch Looks for Local Producers

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LIBERTY TOWNSHIP, Ohio — A company ithat supplies natural gas to industrial and commercial customers in northeastern Ohio doesn’t rely on the big energy corporations that have dominated the state’s oil and gas industry over the last four years.

Instead, Gasearch LLC obtains its supply from small, local producers – those companies that for decades have drilled the various natural-gas producing formations across the state long before the emergence of the Utica shale play.

“We work with about 20 producers locally in northeastern Ohio,” says Eric Wright, president of Gasearch. “We’ve been purchasing local gas production before shale gas was even around.”

Gasearch has contracted with local producers that for years have prospected the Clinton and Rose Run formations for oil and gas, Wright says. The company, now 15 years old, purchases natural gas directly from these producers and then sells it to commercial end users.

“You need a broker in this business,” says Jeff Moore, a partner at Moore Well Services in Mogadore. “Eric has always made it as good as it can get for conventional producers like us.”

Over the last year, business has been especially tough for producers such as Moore Well Services. Larger shale producers and the falling price of natural gas have squeezed them.

“We need a gas broker to market our gas,” Moore notes. “Eric is the in-between guy who buys the well product from us and then sells directly to the customer.”

What’s difficult in this business environment is that many conventional producers are struggling to make ends meet. Their income has been reduced, Moore says. “It’s not a good market right now,” he laments. “We’re operating at 1970s prices. It’s had a direct impact.”

Moore says that nearly all of his company’s wells drill the Clinton sandstone formation, the most conventionally productive natural gas repository in this part of the state. “The majority of our wells are in Summit County,” he adds.

Wright emphasizes that Gasearch does all it can to buy its gas and materials from Ohio producers and suppliers. “We buy and keep our business in Ohio, from marketing materials to the gas,” he says.

Despite the lower prices, business for Gasearch is strong, the company president reports. While producers feel the pinch of a depressed sellers market, consumers are being rewarded with lower prices of natural gas. “It’s a struggle for local producers, but to our end users, it’s fantastic,” he says.

Lower prices have enabled Gasearch to lock its customers into longer-term contracts, says Chris Baum, business development manager. “The most common is either 12 months or 24 months,” he says, “especially when it comes down to where pricing is now.”

Wright says his company is encouraging its customers to consider longer-term contracts. The price of natural gas as of April 20 was $2.56 on the New York Mercantile Exchange.

Indeed, lower prices have enabled customers to book supplies well into 2016, Wright notes. “Between 2014 and 2015, sales volume increased around 20%,” he says. “In 2016, we’ve grown 10% to 15% beyond our existing portfolio because of longer-term contracts. The last six months have exceeded my expectations. I’m very happy with where we are and how we’re growing.”

The company was once affiliated with Ben Lupo, the former owner of D&L Energy who was convicted of violating the Clean Water Act and last year ws sentenced to 28 months in federal prison. Lupo owned a small stake in Gasearch and was at one time a manager at the company, which was initially in the same offices as D&L at 2761 Salt Springs Road.

The company has since relocated to new offices at 4991 Belmont Ave., and Wright says, Lupo “is in no way, shape, or form” associated with Gasearch today.

“We weren’t associated with that operation business-wise,” Wright says of D&L and Lupo. “So, there was never any drawback because of that.”

Baum says the company’s business model focuses on a customer-centric approach and continues to broaden its marketing base through a new website and social media. “We really take a personal approach,” he says. “We feel can do better than others, and that’s why we have a 90% retention rate. When we have clients, we don’t lose them.”

Wright says there are still plenty of conventional oil and gas companies in the region, that the market hasn’t reached a point of mass consolidation among the smaller firms.

“It’s competitive,” Wright says. “The way we run our model, our growth has been consistent year after year.”

Pictured: Gasearch President Eric Wright, right, says that despite low natural gas prices, the company’s business remains strong as customers lock into longer contracts. Pictured with Wright is the company’s business development manager, Chris Baum.

Published by The Business Journal, Youngstown, Ohio.