Posts Tagged ‘Fort Worth’

VICKI SMITH Associated Press Writer
Published: June 7, 2010

MORGANTOWN, W.Va. (AP) — A crew drilling a natural gas well through an abandoned coal mine in West Virginia’s Northern Panhandle hit a pocket of methane gas that ignited, triggering an explosion that burned seven workers, state and company officials said Monday.

The blast created a column of flame that was initially at least 70 feet high, but the rig operator said the site was secure and the fire was about 40 feet high by late morning.

A team from Texas-based Wild Well Control, a company that specializes in rig fires, will decide whether to let the methane burn or try to extinguish the flames, said Kristi Gittins of Dallas,Texas-based Chief Oil and Natural Gas.

The explosion occurred about 1:30 a.m. in a rural area outside Moundsville, about 55 miles southwest of Pittsburgh, and presents no danger to any structures or people, said Bill Hendershot, an inspector with the state Department of Environmental Protection’s Office of Oil and Gas.

The operation was less than a week old: DEP records show a permit was issued June 2 to AB Resources PA LLC of Brecksville, Ohio.

Gittins said AB Resources is the operator of the well, while Chief has a “participation interest.” It is Chief’s responsibility to drill and complete the well, she said.

Chief’s site contractor, Union Drilling of Buckhannon, had drilled the first 1,000 feet of a second well on the property and was preparing to install surface casing when crews apparently hit and ignited the methane, she said.

Crews had drilled through the abandoned Consol Energy mine before without incident, she said.

Methane is a known risk when working near old mines, and the company typically takes a variety of precautions, including venting systems. Gittins could not immediately say what precautions were in place at this site.

“Luckily, our response team got there quickly, secured the area and evacuated the workers,” she said. “From all appearances, there weren’t any life-threatening injuries, so that’s a good thing.”

The seven workers were taken the West Penn Burn Center in Pittsburgh and were in fair condition, a hospital spokeswoman said.

Five were employed by Union and two worked for BJ Services Co. of Houston, Texas, said Jeff Funke, area director of the Occupational Safety and Health Administration’s Charleston office.

A spokesman for Union in Fort Worth, Texas, did not immediately return a telephone message.

The BJ Services workers were among four that had just arrived on site to place the casing, said Gary Flaharty, a spokesman for the parent company, Baker Hughes Inc. of Houston. The crew runs a safety check at the start of each shift and was just preparing to do that when the blast occurred.

Flaharty could not provide any details about the injured employees but said they’re being treated for burns and are expected to survive.

Funke said OSHA learned of the accident shortly after 8 a.m., and two investigators were being dispatched. However, they cannot enter the site and begin work until the fire is out, he said.

OSHA created a program to deal with gas drilling in the vast Marcellus shale fields about five years ago and has been proactively inspecting sites to ensure compliance with safety regulations, he said. The gas reserve is about the size of Greece and lies more than a mile beneath New York, Pennsylvania, West Virginia and Ohio.

OSHA knew there would be a lot of drilling in West Virginia and Pennsylvania, “and we did our best to get out in front of that curve,” Funke said. “So we’re well-equipped to respond to this.”

About 98 percent of the region’s drilling now involves Marcellus shale, he said.

Gittins, the spokeswoman for Chief, confirmed the company was tapping into the Marcellus reserves. The company has drilled about 75 Marcellus wells in West Virginia and Pennsylvania so far, she said, with about 15 of them in West Virginia.

This was the company’s first major accident, she said.

However, it’s the latest in a string of accidents related to the rapidly growing pursuit of Marcellus gas.

In Pennsylvania, environmental regulators are investigating what caused another well to spew explosive gas and polluted water for about 16 hours last week until it was brought under control.

A crew of eight was evacuated from the Clearfield County site Thursday, but no one was injured. That accident involved EOG Resources Inc. of Houston.

Copyright:  The Scranton Times-Tribune

People are wondering just what EnCana will bring to Marcellus Shale drilling.

By Steve Mocarskysmocarsky@timesleader.com
Staff Writer

Edward Buda had been dealing with representatives of Whitmar Exploration Co. for about two years since he, his late brother and sister-in-law negotiated a lease with the company for natural gas drilling on their Fairmount Township property.

Now, there’s a new player in the mix, since Whitmar announced a partnership with EnCana Oil & Gas (USA) Inc. in November for a joint venture in drilling and development of the Marcellus Shale in Luzerne and Columbia counties.

Like others in the Back Mountain, Sweet Valley and Red Rock areas, Buda is a bit wary of the Denver-based energy company.

“We did business with Whitmar. How (Encana is) going to be, I don’t know. How they honor the contract, that’s to be seen. I still don’t know much about them,” said Buda, 75, who lives in Ross Township.

Buda’s brother Walter and Walter’s wife Eleanor signed a fairly simple three-page lease with Whitmar in February 2009, a month before Walter died. Eleanor passed away in November, Edward said, and he became the new lease holder just as EnCana came into the picture.

Now, EnCana wants to lease Edward’s property in Ross Township, but he isn’t too impressed with the $1,000-per-acre offer. And the 16-page lease proposal that has undergone many revisions is written in legalese, he said.

“They wanted to put a drill pad on my property (in Ross Township). I said I want to wait and see what happens in Red Rock (section of Fairmount Township). Everybody’s waiting to see whether it’s going to be a gusher or a fiasco in Red Rock,” Edward said.

Wendy Wiedenbeck, a public and community relations adviser for EnCana, said the well on Buda’s property and a second well planned for a Lake Township property owned by township Supervisor Amy Salansky and her husband, Paul, are exploratory ventures.

If those wells produce an acceptable amount of natural gas, EnCana will develop a plan for expanded drilling operations in the area, Wiedenbeck said. Drilling is expected to begin in July on Buda’s property and gas production should start by October. Clearing of an access road to the site began last week.

Company has won honors

For the past few months, Wiedenbeck has been the face of EnCana locally, arranging and attending meetings with people who live or own property within a mile of the planned drilling sites as well as attending meetings with local groups concerned about drilling activity in their communities.

A self-described “Army wife” with two sons – one in first grade, the other a senior in college, Wiedenbeck has lived in Colorado since 1989 and has been working in community/public relations since the early 1990s. She’s been with EnCana for five years.

“They’re a cultural fit for me. I believe they truly believe in responsible development,” Wiedenbeck said of her employer.

To prove her point, Wiedenbeck provided a long list of awards EnCana has received over the past few years. Just a few include:

• The 2008 U.S. Environmental Protection Agency Natural Gas STAR award, recognizing outstanding efforts to measure, report and reduce methane emissions;

• Interstate Oil & Gas Conservation Commission Chairman’s Stewardship Awards, recognizing exemplary efforts in environmental stewardship by the oil and natural gas industry;

• The 2009 Colorado Oil & Gas Conservation Commission Award for Courtesy Matters program in the Denver-Julesburg Basin surrounding Erie, Colo.

“Courtesy Matters” is EnCana’s community engagement program that brings EnCana staff and third-party contractors together with the community to discuss the nuisance issues associated with company operations,” Wiedenbeck said.

“Courtesy Matters creates a working environment where open and ongoing dialog are paramount. Discussions generally include concerns with traffic, noise and dust associated with our operations,” she said.

Community investment vital

Marty Ostholthoff, community development director for Erie, Colo., said in a teleconference that EnCana is one of four major energy companies drilling in the Denver-Julesburg Basin, the others being Noble Energy Inc., Kerr-McGee Corp. and Anadarko Petroleum Corp.

Fred Diehl, assistant town administrator in Erie, said he would be remiss if he didn’t point out “how far ahead of the other operators EnCana is” when it comes to community investment.

Diehl said he mentioned to Wiedenbeck that officials wanted to install solar panels on a new community center being built, and EnCana donated $250,000 to make that happen. A month ago, the company donated $175,000 for eco-friendly lighting at community ball fields.

“It’s not a requirement that they make notifications to our residents (about drilling activities or problems), but they do. It’s not a requirement that they make financial investments into our community, but they do,” Ostholthoff said.

Of course, there’s a downside to the presence of the drilling companies in the suburban area, which lies in one of the largest natural gas fields in the country, Diehl said.

“These things are still loud,” he said of the drilling rigs. “People come into our offices complaining, ‘We can’t sleep.’ But we worked with the operators to put up hay bales and cargo trailers to minimize the noise. The only good thing is, (the drilling is) temporary.”

As far as addressing concerns of residents, Diehl said all of the companies seem willing and responsive. “If they’re not, one of them can give the whole industry a black eye,” Diehl said.

Wiedenbeck said EnCana will have a toll-free number posted at its drilling sites that people can call to report concerns. Callers who choose the Pennsylvania prompt will be automatically directed to her office or cell phone. An operations phone number also will be established, she said.

And while EnCana will hire someone locally to help with community relations efforts, Wiedenbeck said she will continue to be “that face” for the community. She has spent about half her time in Pennsylvania since EnCana partnered with Whitmar, sometimes bringing her youngest son, Sammy, on trips here.

“He loves Pennsylvania,” she said.

Steve Mocarsky, a Times Leader staff writer, may be reached at 970-7311.

Copyright: Times Leader

Mauri Rapp Abington Journal Correspondent

Sir Francis Bacon once said “Knowledge is power.” To that famous quote, Calvin Tillman adds “Once you know, you can’t not know.”

Tillman, the mayor of DISH, Texas, was one of four panelists in attendance at “Impacts of Gas Drilling and Your Community,” a Marcellus Shale drilling information seminar held April 29 at the Clark Summit fire hall. DISH, a town of fewer than 200 residents located approximately 25 miles from the Dallas/Fort Worth metroplex, garnered national attention after changing its name from Clark in exchange for free cable television service for ten years from DISH Network.

DISH has also attracted another kind of attention: the eye of natural gas companies drilling in the Barnett Shale region, a natural gas field which stretches approximately 5,000 square miles across the state of Texas. Tillman called DISH the “Grand Central Station” of the Barnett Shale play, with 11 compressor stations, three metering stations and more than 20 natural gas pipelines located within less than two square miles.

Tillman described to the 150-plus people in attendance April 29 the impact natural gas drilling has had on his town. To date, the Barnett Shale play has added approximately $8 to $10 billion and 100,000 jobs to the Texas economy, Tillman said. The industry has also added toxic chemicals to DISH’s air, he said. A study performed in August 2009 by Wolf Eagle Environmental showed that the air contained high concentrations of carcinogens and neurotoxins. Tillman continues to advocate for the town’s population, and on April 22 the Texas Commission on Environmental Quality installed a continuous air monitor in DISH. “I believe more testing should be done,” he said.

The mayor has relayed his story to audiences in the Marcellus Shale region during the past several months. Tillman said he is not against the industry and believes in working with it to get things done, but feels that citizens and communities should go into leases with their eyes open. He said that certain measures, such as green technologies, declaration of areas such as schools and parks off limits to drilling, and a separation between the DEP regulating and permitting bodies could help make the industry safer. Tillman also spoke in favor of a severance tax for Pennsylvania. “I hate to break it to you, but the oil and gas industry came into Pennsylvania and picked your pockets,” Tillman said. “You need to have a severance tax to pay for roads, to pay for environmental issues, to pay for more DEP workers.”

Putting a personal face on the Marcellus Shale play was Victoria Switzer, a natural gas lessor from Dimock Township who said she wished she knew when she signed her lease what she knows now. “We’ve all heard the glories of the natural gas industry,” Switzer said. “I’m not going to dispute some of those things, but I’m going to show you what comes with the package deal.”

Switzer said that for the past couple of years, she has been living in a gas field with 63 wells located within nine square miles, the closest one 710 feet from her own home. Twenty-four of those wells have had violations, said Switzer. She now conducts what she calls “Victoria’s Toxic Tours” for citizens, journalists and public officials interested in seeing the impact natural gas drilling has had in her township. “You need to know what is coming your way,” she told the audience.

Panelist Paul Lumia, executive director of North Branch Land Trust, provided tips for those who decide to lease to natural gas drillers, including getting to know one’s gas man and remaining vigilant in reporting suspected violations to DEP. Lumia also encourages the crowd to pressure policymakers into decisions that preserve the environment. “Don’t just assume that your neighbors will do it,” Lumia said. “Protecting our land is up to us.”

Also on hand was George E. Turner, a professional geologist with more than 20 years of experience with groundwater and water testing. Turner advised those considering natural gas leasing to get their water tested beforehand. “This gives you legal proof in case your water is contaminated,” he said.

Scott Perry, deputy director of the DEP Bureau of Oil and Gas Management, was on hand to answer questions from the audience.

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

Some landowners holding back, banking on economic improvement to bring better offers from drillers.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

The offer is somewhat unconventional, but a natural gas company that’s leasing land in Luzerne County says its deal is a successful compromise for both parties, and leaseholders agree.

Denver-based WhitMar has locked up more than 22,000 acres in, among other places, Fairmount, Ross, Lake, Lehman, Union, Hunlock, Huntington and Dallas townships, according to company representative Brad Shepard.

The company is offering an unusual deal that has garnered both accolades from landowners for navigating the money squeeze caused by the recession and criticism for its lack of a long-term commitment. WhitMar, which Shepard said is involved in similarly complicated and expensive drilling operations in Oklahoma, Arkansas, Louisiana, Utah and the Dakotas, is offering a four-phase lease.

Landowners receive $12.50 per acre for the first year, after which the company decides whether it will continue the lease for a second year at the same payment rate. The lease also requires that within the first year the company begin the permit process for drilling at least one well and within the second year begin drilling at least one well.

For the third year, the company will offer a $2,500-per-acre, five-year lease on the properties it wants to keep, and landowners whose land gets drilled also will receive 19.5-percent royalties. Conservation Services, the company that amassed most of the territory, receives .5 percent of the royalties.

“As far as I know, that’s the highest royalty that’s been signed in Pennsylvania or New York,” Shepard said. “The reason we offered that royalty is literally because the landowners were willing to let us come in and test it up for $12.50” per acre.

The company then retains an option for a second five-year, $2,500-per-acre lease. “All together, it could be a 12-year lease,” Shepard said, but noted that the leases dissolve if the landowners aren’t paid. “So if they don’t receive a $2,500 payment or a $12.50 payment, the lease has expired because we didn’t pay them like we said we would.”

The offer has aroused reactions on both sides among affected landowners. Some urge restraint, predicting that better offers will crop up when the economy rebounds. “Right now, (gas companies) are picking all this low-hanging fruit,” said Ken Long, an executive committee member of the South West Ross Township Property Group that declined to recommend WhitMar’s offer to their group. “People are panicking to sign leases … because they want to get this monkey off their back.”

Landowners who signed leases note the generous royalties and the commitment to quickly begin exploration drilling. “I firmly believe that a sweeter, more lucrative deal can not be found in Luzerne County,” leaseholder Michael Giamber noted in an e-mail. “By comparison, the folks in Dimock (a truly proven area) can only get 18 percent. Over 30 years, a 2-percent difference in royalties can literally add millions of dollars in a landowner’s pocket.”

Shepard added that forced drilling likely means additional drilling will occur. “For the most part, once the drill rig’s brought in, it’s not brought in to drill one well,” he said. “As long as they hit, we have every intention of drilling as quickly as we can and our partner wants us.”

The company is still working out important specifics, though. First, it needs to find a larger partner to help drill, Shepard said, and it also must secure the rights to millions of gallons of water for the process that cracks the underground shale and releases gas.

In nearby counties, the company is working with Houston-based Carrizo Oil & Gas, Fort Worth-based XTO Energy, Inc., Louisiana-based Stone Energy Corp. and others, Shepard said.

He added that the company has received many offers from landowners to sell surface water on their properties, but said the company is not yet at the stage where it’s investigating water-acquisition options.

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

Copyright: Times Leader

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

Real-estate pros say chance of lucrative deals causing less land to be available for sale.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

Listings for land are virtually nonexistent in northern Luzerne and Wyoming counties, thanks to landowners hoping to cash in on natural-gas leasing rights.

“If people want to come up to buy land, there’s really not much to show them, if anything. And that’s a factor of the gas situation,” said Donna LaBar, who owns Century 21 Sherlock Homes Inc. offices in Clarks Summit and Tunkhannock.

It’s an unfavorable situation for anyone hoping to join in on the profits from gas exploration in the area. Companies are banking that a vast, but deep, layer of rock called Marcellus Shale contains natural gas deposits.

Landowners in Wyoming County and other northern counties have been offered $2,500 per acre to sign away the gas rights. Those offers have skyrocketed with recent drilling success.

In January, some landowners signed for just hundreds of dollars per acre.

Early estimates hold that the amount of gas that potentially could be extracted from the entire layer, which stretches from upstate New York to Virginia, including parts of Luzerne County, could fulfill the country’s natural gas consumption for two years.

The deposits have been known for decades, but technology only recently has improved enough to make extraction economically feasible.

LaBar, a real-estate broker since 1984, said prices in the residential market are holding steady and properties are available.

“The normal market, which would just be the residential sales market, is still pretty much normal. Average market for this time of year,” she said.

However, the number of available tracts larger than 5 acres drops off significantly, she said. “People just aren’t really selling their land right now because they’re looking forward to royalties for the gas leases,” LaBar said.

The effect is more pronounced at her Tunkhannock office, she said. “It’s mostly the northern tier,” she said.

Several Luzerne County real-estate agents said land is still available in northern townships, such as Franklin and Lake, where shale deposits are predicted.

The industry is in its infancy, and few landowners who’ve signed up have actually seen royalty checks. However, if the deposit is anything like the Barnett Shale in Texas that it’s being compared to, drilling could become lucrative. Barnett has proven results, and The Dallas Morning News recently reported that leases are being signed near Fort Worth for $25,000 per acre.

LaBar said local landowners are now viewing their land differently. Before, it was simply an investment that had a tax liability.

Now, she said, “it could be actually an income asset for them, and it’s all yet to be seen.”

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

Copyright: Times Leader

Energy resource below Appalachia in four states seen as possible boon.

GENARO C. ARMAS Associated Press Writer
STATE COLLEGE — More than a mile beneath an area of Appalachia covering parts of four states lies a mostly untapped reservoir of natural gas that could swell U.S. reserves.

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

Like prospectors mining for gold, energy executives must decide whether the prize is worth the huge investment.

“This is a very real prospect, very real,” said Stephen Rhoads, president of the Pennsylvania Oil and Gas Association. “This could be a very significant year for this.”

The shale holding the best prospects covers an area of 54,000 square miles, from upstate New York, across Pennsylvania into eastern Ohio and across most of West Virginia – a total area bigger than the state of Pennsylvania.

It could contain as much as 50 trillion cubic feet of recoverable natural gas, according to a recent study by researchers at Penn State University and the State University of New York at Fredonia.

The United States produces about 19 trillion cubic feet of gas a year, so the Marcellus field would be a boon if new drilling technology works, Penn State geoscientist Terry Engelder said.

“The value of this science could increment the net worth of U.S. energy resources by a trillion dollars, plus or minus billions,” he said.

The average consumer price for natural gas in the United States is forecast to rise 78 percent between the 2001-2002 and 2007-2008 winter heating seasons, which last from October to March. Prices will go from $7.45 to $13.32 per thousand cubic feet this season, according to the federal Energy Information Administration.

That translates into the average season bill nearly doubling during the same period from $465 to $884.

One of the main players in Pennsylvania, Range Resources Corp., of Fort Worth, Texas, has roughly 4,700 wells statewide – though it’s the results from five new horizontal wells in southwestern Pennsylvania that have company executives especially hopeful.

The company, in a December financial report, estimated that two horizontal wells are producing roughly 4.6 million cubic feet of gas per day. Tests on an additional three recently completed horizontal wells showed potential for a total of 12.7 million cubic feet of gas per day.

“We’re extremely encouraged. We see many viable parts of the Marcellus that will be commercial,” said Range Senior Vice President Rodney Waller.

Yet he cautioned it was still too early to determine how successful the venture could be because of limited data.

The upfront money may give some pause to prospectors. A typical well that drills straight down to a depth of about 2,000 to 3,000 feet costs roughly $800,000.

But in the Marcellus Shale, Range and other companies hope a different kind of drilling might yield better results – one in which a well is dug straight down to depths of about 6,000 feet or more, before making a right angle to drill horizontally into the shale. That kind of well could cost a company $3 million to build, not counting the cost of leasing the land, Engelder said.

So the multimillion-dollar question is whether that technology can consistently release the gas from the layer of rock hundreds of millions of years old.

Scientists had long thought the Marcellus served as a source perhaps for shallower wells dug by conventional drills. Previous attempts to extract gas conventionally from the Marcellus haven’t led to much success.

According to Engelder, a series of seams, or fractures, in the rock could hold the key.

Drilling horizontally into this matrix could help give the gas an outlet to escape, said Engelder, a principal owner in Appalachian Fracturing Systems Inc., a consulting firm to gas companies.

Homeowners are intrigued, too. About 80 people packed into a lecture hall at Penn State Wilkes-Barre for a gas drilling information seminar sponsored by the university’s cooperative extension.

People such as Carl Penedos, who owns 150 acres of Wyoming County, relayed stories of gas company representatives knocking on the doors of neighbors seeking to lease land. A couple of neighbors recently signed leases for $50 per acre per year, while others have been offered $500 per acre, he said.

The homebuilder said he was also concerned about the potential environmental impact of drilling.

Copyright: Times Leader