Posts Tagged ‘barnett shale’

The atrium of the Penn State Downtown Theatre Center was standing room only last Wednesday for the first Research Unplugged event of the fall semester, a conversation with Marcellus Center for Outreach and Research co-directors Michael Arthur and Tom Murphy on the economic and environmental impacts of Marcellus Shale drilling in Pennsylvania.

Tom Murphy opened with the question “Why here? Why now?”

“The geology here is really superior,” Murphy noted. He presented data showing that the first six months of gas extraction in Bradford (the highest-performing county in Pennsylvania) has resulted in more than double the yield of a comparable county in Texas where gas companies are drilling into the Barnett shale.

Tapping the gas reserves in Pennsylvania’s Marcellus Shale will have a big impact on the state’s economy, he said. “We’ve been a net importer of energy over the course of time…but the expectation is that by 2013 we’ll actually be a net energy exporter.”

Murphy explained that yields from the wells are already exceeding early expectations. “Most of these wells are expected to run somewhere between 30 and 50 years…They’re looking at the overall yield for those wells at being somewhere between 3.5 and 4.5 billion cubic feet of gas over that whole duration of time,” he said.

Geoscientist Michael Arthur stepped in to explain the technical steps of extracting gas from the Marcellus Shale, including the controversial process known as hydraulic fracturing—or “fracking. Arthur explained that proper cementing of well shafts is critical to protect groundwater. “As you can imagine,” said Murphy, “just statistically, if nothing else—with more trucks, more people, more activity, with an industrial process—there’s going to be accidents and we’re seeing those occur…That’s likely something we’re going to see again statistically going forward. But the level of that at this point in time, with the amount development that’s occurring, still seems relatively low.”

Fielding questions from the audience, Murphy and Arthur touched on a variety of concerns, including where the large volume of wastewater goes, the prospect of a severance tax for the extraction of natural resources, the impact of well construction on highway traffic, and several other issues.

In wrapping up the hour-long discussion, Murphy stressed the importance of proper well construction. “My concern goes back to the integrity of the well as it is being drilled. The way it’s being cased—the grouting and the standards that are being used there—that’s where my concern is.” And, he added, well safety standards are being addressed, among a number of other issues, by Pennsylvania’s Department of Environmental Protection, with more inspectors being added to enforce the state’s environmental regulations.

Join us Wednesday, October 20, for our next conversation: “The Diabesity Tsunami: Facing the Crisis of Diabetes and Obesity,” featuring Associate Professor of Medicine, Robert Gabbay.

— Kelsey Bradbury, Research Unplugged intern

Originally Posted At: PSU.edu

He tells symposium Pa.’s “bureaucratic BS” is limiting operations.

PLAINS TWP. – To hear John Baen describe it, Pennsylvania is like an awkward, naive suitor, dithering over the details so much that it’s stumbling on the walk to the front door and turning off its hot date: natural gas drillers.

The industry has recently increased its complaints about what it sees as the state’s excessive regulatory procedures – or “bureaucratic BS,” as Baen put it on Wednesday – that are souring hopes to ramp up drilling in the potentially lucrative Marcellus Shale about a mile under much of northern and western Pennsylvania, among other states.

Keeping things green is important, the real-estate expert and University of North Texas professor said, but not as much as making some green. “I know you’re sensitive to your environment and all that, but it’s four acres (disturbed for drilling) out of 5,000” acres that are then producing gas, he said. “Would you allow a drilling rig in your back yard? … It depends on what they’re willing to pay you extra.”

Baen was one of three gas industry experts speaking at a Marcellus Shale Symposium hosted by the Joint Urban Studies Center at the Woodlands Inn & Resort. The center, a partnership of local colleges and universities, provides economic research for regional planning.

The experts were brought in to discuss their impressions from the proliferation of drilling in the Barnett Shale, a similar gas-filled rock formation in north Texas. Though concerns were addressed, such as potential environmental damage and likely workforce shortages, sanguine profiteering was emphasized repeatedly.

William Brackett, the managing editor of an influential Barnett Shale newsletter, noted the local job market and economy ballooned 50 percent in 2007 to 83,823 jobs and an $8.2-billion economic benefit. The same good fortune is befalling rural Pennsylvania farmers who were near destitute, he said. “All the sudden, they get a new barn and are able to send their kids to college.”

Of all the speakers, the most subdued in his support of the industry was Matt Sheppard, a director of corporate development for Oklahoma-based Chesapeake Energy, which sponsored the symposium. Though natural gas drilling has been in the state for decades, it has lain pretty low, he said. “This is not an industry that has done a great job of talking about things, explaining things,” he said. “We’re here for one reason, and that is that Americans are demanding cleaner energy right now. … And the truth is we’re not going to the other way.”

The presenters said the industry is looking for straightforward rules like in other states, which have standardized drilling manuals and few other regulatory hoops. But despite Baen’s dire predictions that drillers might pull up stakes, Sheppard assured his company was likely sticking it out.

“At Chesapeake, we’re big believers in organized development,” he said. “You’re not going to see a lot of companies come in here and drill one well and leave. … You invest this amount of money in a state, you’re going to be around a while.”

Copyright: Times Leader

More than a mile beneath parts of Pennsylvania lies a mostly untapped reservoir of natural gas.

Geologists and energy companies have known for decades about the gas in the Marcellus Shale, but only recently have figured out a way to extract it from the thick black rock about 6,000 feet underground.

Now gas drillers are looking to lease local land in an attempt to find and remove the gas, whose value increases as energy prices soar.

In January 2008 leases were being signed for values near $100 per acre. By May that value had increased to over $2000 per acre.

With lease values changing so rapidly, landowners are unsure at what price to accept a lease offer.

Kenneth L. Balliet, a forestry and business management educator with the Penn State Cooperative Extension, recently took a trip to Fort Worth to see the economic impacts of those deposits. He said leases are being signed for $18,000 per acre in areas where production has proven strong.

Though there are only about 20 wells in Pennsylvania so far, Balliet expects local production to eventually rival Texas’ Barnett Shale. He said a gas company confided it plans to spend $1 billion this year in leasing agreements in Pennsylvania.

Northeastern Pennsylvania is Where the Thick Organic-Rich Shale Intervals are Located.

Copyright: Geology.com
Copyright: Timesleader.com

As recently as 2002 the United States Geological Survey in its Assessment of Undiscovered Oil and Gas Resources of the Appalachian Basin Province, calculated that the Marcellus Shale contained an estimated undiscovered resource of about 1.9 trillion cubic feet of gas.  That’s a lot of gas but spread over the enormous geographic extent of the Marcellus it was not that much per acre.

In early 2008, Terry Englander, a geoscience professor at Pennsylvania State University, and Gary Lash, a geology professor at the State University of New York at Fredonia, surprised everyone with estimates that the Marcellus might contain more than 500 trillion cubic feet of natural gas. Using some of the same horizontal drilling and hydraulic fracturing methods that had previously been applied in the Barnett Shale of Texas, perhaps 10% of that gas (50 trillion cubic feet) might be recoverable. That volume of natural gas would be enough to supply the entire United States for about two years and have a wellhead value of about one trillion dollars!
Copyright: Geology.com


Senate hearing set for today at Misericordia, symposium Wednesday at Woodlands.

While landowners are imagining the gobs of cash they stand to make from natural-gas drilling in the Marcellus Shale rock layer underlying much of the region, Don Young hopes there’s room to imagine a few other images, such as gas pipelines crisscrossing once-pristine farmland, benzene contaminating groundwater supplies and an industrywide press to tap every inch of lucrative ground.

And that doesn’t include the Fort Worth, Texas, resident’s concerns about the psychological effects of celebrity-fronted publicity campaigns linking the drilling to patriotism and national security. “It’s Orwellian to see it happening here,” he said. “You’ve got American flags on each well.”

But the leader of Fort Worth Citizens Against Neighborhood Drilling Ordinance hopes the travails that now plague his home above the Barnett Shale are averted in the similar Marcellus Shale. “What you have here in Fort Worth on a grand scale is apathy. People felt, ‘We can’t stop it. It’s too big. It’s big oil,’ ” he explained. “The average busy person, they don’t have time to worry about gas drilling. … They have families, they have lives, they’re struggling, and if you have a few companies handing out money saying, ‘Here’s some money, just forget about it,’ ” they’ll do just that, he said.

Local regulators and educators are already taking steps to avoid those effects, and they’ll take a few more this week. This afternoon, the state Senate Republican’s Policy Committee will meet at Misericordia University to hear testimony from people familiar with dealings in the Barnett Shale on the potential effects awaiting Pennsylvania.

Several of the same speakers will be featured in discussions Wednesday morning at the Woodlands Inn & Resort in Plains Township, as the Joint Urban Studies Center holds a Marcellus Shale Symposium. The public is invited to either presentation, but the symposium has a registration fee.

“We are front and center to the development of this new industry,” said state Sen. Lisa Baker, R-Lehman Township, who requested the hearing. “I think having the hearing here demonstrates, in my judgment, that we’re doing all we can to ensure that our laws and regulations are appropriate and that if we need to make changes,” the legislature is ready to do so.

She said she hopes to get answers to questions she often hears from constituents, including potential downsides to drilling and whether current regulations are enough to curtail them.

According to several of the speakers, Pennsylvania might have a lot of ground to make up before it’s running even with the industry. “I just don’t understand the state’s set-up. Why wouldn’t that be a requirement to disclose how well the wells (are performing)?” asked John Baen, a University of North Texas professor and real-estate expert who has 250 wells on his property in the Barnett Shale. “If it’s all proprietary, then how do we know what the true wealth is?”

Rory Sweeney, a Times Leader staff writer, may be reached at 970-7418.

Copyright: Times Leader

Texans to share their experiences

HUGHESVILLE – As night falls over Beaver Lake Road, work lights gradually accentuate a towering structure visible between the rolling hills. In the middle of a roughly square-acre site, the drilling rig is about halfway through a four-week stay at this rural Lycoming County site.

Soon thereafter, the rig will leave, crews will arrive to tap the natural-gas well, gas will begin being pumped into regional transmission pipelines and Chief Oil & Gas LLC of Dallas, Texas, will begin reaping income.

So will Neil and Louise Barto, though hardly what they say they deserve. They signed over the mineral rights to their nearly 178 acres three years ago for $888.45 and the state-minimum 12.5-percent royalties on the production.

“Everybody made money except us,” Neil Barto said. “Hell yes, it irritates me. … Every time I see somebody from Chief, I tell them I’m not happy about it.”

That’s the sort of cautionary tale the Joint Urban Studies Center is hoping to keep to a minimum in the area by hosting the Marcellus Shale Symposium on Nov. 19 at the Woodlands Inn & Resort in Plains Township. Cost is $30. The symposium will feature experts from the Fort Worth area, which witnessed during the past two decades a historical revolution as the oil and gas industry figured out how to tap gas stores under urban centers.

“The energy companies are used to operating out in rural areas where there’s nothing to bother but some cows and horses and whatnot,” said Will Brackett, the managing editor of the weekly Powell Barnett Shale Newsletter. With people came environmental concerns, landowners organizing to leverage better offers and opposition from those left out of the Barnett Shale windfall.

John Baen, a real estate professor at the University of North Texas, said he’s in a unique position to comment on the Marcellus because he used to fish in the Susquehanna River growing up as a boy, but also watched 9,000 wells be drilled in five Texas counties within seven years. “We had a lot of people who said, ‘Not in my back yard,’ then we had a lot of people who said, ‘Well maybe,’ and people who said, ‘Drill every square foot,’” he said.

Brackett noted that people who hadn’t finished high school were landing $50,000-per-year jobs, making it difficult for other industries to keep workers. As the companies struck more and more hydrocarbon gold, they offered leases to ever more landowners, who began organizing and using the Internet to publicize offers. Bidding wars erupted, with offers at $25,000 per acre and 25-percent royalties on production. “It got to be, I’d have to say, surreal around here,” he said. “Last year, if you went to a party, everyone was talking about the Barnett Shale.”

One of the most important steps to expanding exploitation of the shale is placating objectors, Baen said.

“I have a theory that everyone should be a stakeholder, and everybody should win,” he said. “It might take some pretty big changes in some of your laws up there to have everybody benefit.”

He noted that Texas has no state income tax, but that every mineral-rights owner pays a severance tax that has left the state with an $11-billion overabundance.

Both Brackett and Baen agree Pennsylvania and its citizens stand to benefit extensively from the advances made in Fort Worth in recent years, but only if the state refocuses its mineral-rights policies from coal to gas and oil.

“I’m calling it the Jewel of the Northeast,” Baen said, but “will it be allowed to be developed? And it may not.”

If the state legislature doesn’t act quickly, he predicted the economic benefit could be delayed up to five years.

Copyright: Times Leader

Expert says leases signed for $18,000 per acre in productive areas of Texas.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

TUNKHANNOCK – Around January, Cal Otten’s parents signed a lease at $125 per acre to allow natural-gas exploration on their Forkston Township property in Wyoming County. Had they waited until now, they probably could have received $2,500 per acre.

That’s what Otten was offered a week ago.

“I thought $125 was a lot, actually, at the time,” said Otten, who owns 140 acres near his parents’ property.

Do a little math and you’ll see Otten’s parents made about $34,375 on their 275 acres. Not a bad haul for anyone, much less a couple in their golden years.

Cal Otten is holding out, even though he stood to gain $350,000. He wants a higher stake in the royalties if gas is ever extracted from his land, which means, yes, companies are giving away money on the speculation that they might find gas.

But that speculation is grounded in science, testing and history. Experts believe the thick Marcellus Shale that stretches deep underground from Kentucky to New York, including parts of Luzerne County, has the potential to produce as much natural gas as similar shale deposits in northern Texas.

Kenneth L. Balliet, a forestry and business management educator with the Penn State Cooperative Extension, recently took a trip to Fort Worth to see the economic impacts of those deposits. He said leases are being signed for $18,000 per acre in areas where production has proven strong.

Though there are only about 20 wells in Pennsylvania so far, Balliet expects local production to eventually rival Texas’ Barnett Shale. He said a gas company confided it plans to spend $1 billion this year in leasing agreements in Pennsylvania.

The Marcellus deposit is probably about four times as big as the Texas shale, he said, and a Penn State geologist has estimated that if just a tenth of the gas is recovered, it could fulfill America’s natural gas demand for two years.

“We’re talking lots of changes going on in the communities in terms of jobs: welders, pipe fitters, mechanics, construction,” he said.

Rod McGuirk, a Franklin Township landowner, believes the rush hasn’t yet hit Luzerne County, but it’s coming.

“A lot’s going to happen in the next few months if this keeps going as it’s going. We’re just in the forefront of this,” he said.

He received an offer of $300 per acre on his 56 acres about eight months ago, but hasn’t received another one since. He’s used that time to attend information meetings around Towanda so that he’s savvier when the offers start increasing rapidly.

“We’re where they were eight or nine months ago,” he said. “We want to do this on our terms. We don’t want an environmental disaster in 10 years.”

He’s waiting for a certain offer on his land, but wants to cash in before companies start drilling too much.

“It’s a double-edged sword,” he said. “All they have to do is drill three dry wells, and you don’t get squat.”

Matthew Golden, a West Pittston lawyer who’s offered to negotiate for some Franklin Township landowners, said the trick is straddling the line between getting top dollar and retaining enough rights to protect the land.

“That’s the $10,000 question: When’s the right time to sign and at what price? There are more variables than just the price,” he said, such as lease length, royalties, retaining the right to approve where wells go and securing separate payments for pipeline rights of way.

He suggested landowners have a lawyer look over proposed contracts.

“The standard company lease without any changes to it is bad. It gives away basically all the rights. They can pretty much put a well wherever they want. They’re limited to the barebones the state will allow, which is a lot. Pennsylvania is a pretty pro-drilling state,” he said.

But if sited correctly, Balliet said, wells can be environmentally benign.

“It just takes a little bit of planning,” he said. “Does that mean nothing can happen? No, that’s not true. It can and sometimes it does.”

He recommended landowners get their groundwater tested for oil and gas contaminants now to create a benchmark. Then, they have “something to stand on” if there is a problem, he said.

In the end, landowners must choose a number to accept and make peace with the decision.

“You have to do it with the knowledge that three months from now, the price could be 10 percent of what it is now or 1,000 percent of what it is now,” Golden said.

Rory Sweeney, a Times Leader staff writer, may be reached at 970-7418.

Copyright: Times Leader