Posts Tagged ‘gas-laden rock’

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

The yearlong wait was worth it for Wyoming County landowners who didn’t get a chance to sign a gas lease last year.

In a deal with Chesapeake Energy announced on Tuesday, they’ll receive almost double the bonus offered previously and an additional bump in the royalties they keep. The five-year deal offers $5,750 per acre immediately as a sign-up bonus, 20 percent royalties and a multiyear extension option.

The Wyoming County landowners group represents about 37,000 acres that haven’t been leased yet, and if all property owners sign up, the deal, in bonus money alone, is worth about $212.75 million.

Chesapeake officials were hoping to have a lease signing this week, but the landowners don’t think that will be possible logistically, group secretary Chip Lines-Burgess said. “The one question that comes up is, ‘What happens if we’re on vacation next week when this comes about?’ ”

After months of relative silence on leasing in the Marcellus Shale, a layer of gas-laden rock about mile underground that centers on northern Pennsylvania, interest is again heating up.

The agreement is somewhat bittersweet for members of the group who leased last year before the financial crash with Colorado-based Citrus Energy.

Lines-Burgess’s 42 acres in Meshoppen were among those roughly 35,000 acres. They received a $2,850-per-acre bonus, minus consultant payments, for a five-year lease with 17-percent royalties. If the lands aren’t drilled within five years, there are two one-year extensions each for $1,000 per acre.

“Yes, sure, it’s a tough pill to swallow … but who knew?” she said. “If it goes a year down the road, it might go to God only knows what, or it may not. … You just have to make a decision that when you sign on the dotted line, (you’re) happy.”

She said her family was able to pay off their farm. She remained on as secretary, as did other members of the group’s core committee, because “we just felt it was our … duty to make sure this happened.”

“Our county consists of a lot of people in their golden years. … We have a lot of people who have a lot of acreage and needed something. If this wonderful lease brings those people more comfort in their golden years … that’s the ultimate,” she said. “Their grandchildren, with this, won’t have to worry about what’s in this lease.”

The deal comes as groups in Susquehanna County are signing similar leases and about a month after the Northern Wayne Property Owners Alliance signed perhaps the first lease in the state with 20-percent royalties.

The South West Ross Township Property Group held a members-only meeting on Tuesday night, and member Ken Long acknowledged that the group is “in negotiations with a major gas company” and that “the monetary offers are in the ballpark of what” the Wyoming County landowners received.

He declined to confirm or deny that the company is Chesapeake.

It’s unclear what caused offers to rise so much so fast, but there are theories. “There’s been a lot of discussion about that,” said Lines-Burgess, who speculated that it might be a reaction to potential legislation that would affect leasing rights.

“We just don’t know what they (gas companies) are seeing. … Obviously, they have a plan, and we’re part of it,” she said.

Long said he believed the education efforts of land groups helped. “I would say that a lot of the efforts of the groups that have formed … are kind of paying dividends now. I think we’ve raised the standards of the leases, and we’re starting to see the increases in the bonus payment and royalties,” he said, adding that companies might be scrambling to get a foothold in the shale as more and more of the land is leased.

Copyright: Times Leader

By Andrew M. Sederaseder@timesleader.com
Times Leader Staff Writer

The landscape of the state’s northern tier is changing as natural gas drillers set up shop from the Poconos west to Tioga County.

The burgeoning industry also is bringing change to the curricula at some local colleges hoping to capitalize on the need for a skilled and trained work force.

Lackawanna College in Scranton and Pennsylvania College of Technology in Williamsport have launched programs specifically catering to those interested in securing employment in the natural gas and ancillary fields. Other schools, including Johnson College and Keystone College, are investigating courses to prepare students for jobs in the industry.

When the industry made initial steps to move in to the region, Lackawanna College got in on the ground floor.

“Our goal was to try to find a niche where we could train people for jobs they could find here,” said Larry D. Milliken, director of energy programs at the college. The school, with input from the industry, created an applied science degree in Oil and Gas Production Technology program in December 2008.

The school asked Milliken, a former gas company employee with a background as an economic geologist who lives in Dunmore, to help with the program.

He sees great potential for the field and the creation of jobs, as companies look to tap into the gas supplies within the Marcellus Shale, a layer of gas-laden rock about a mile underground across most of Pennsylvania.

“I’m not sure most people realize the magnitude of what the Marcellus can mean and do for the state. … It’s going to be a huge game changer in Pennsylvania.”

Milliken said he sees hundreds of immediate jobs and the potential for thousands more as a result of gas drilling.

As an example, he said one well tender will be needed for every 20 wells that come on line. This year alone, he said, more than 1,000 wells are anticipated to be drilled and that number should double next year. This will mean 50 to 100 new well-tender jobs will be created every year for the next 20 years, he projects.

To prepare potential employees for those jobs, Lackawanna College offers an associate’s degree in natural gas technology and is developing an operating and maintenance degree program in compression technology that could debut next fall.

In addition, the college will soon start giving accounting students at its Towanda Center the option of customizing their degree to prepare them to work in the accounting side of the natural gas industry, Milliken said.

Milliken said Lackawanna relied heavily on curricula and course work offered by established programs at Western Wyoming Community College in Rock Springs, Wyo.; North Central Texas College in Gainesville, Texas, and Navarro College in Corsicana, Texas. Using that material, Lackawanna created an outline for its own potential programs and sent it to 10 gas companies “for feedback and modifications before settling in on our own curriculum.”

At the moment, the Pennsylvania College of Technology in Williamsport is the only other place to get industry-specific training. The school has partnered with the Penn State Cooperative Extension to create The Marcellus Shale Education & Training Center.

Opened in 2008, the center will identify the industry’s work force needs and respond with education tracks that train people for those jobs. Careers include welders, construction workers, drivers and machine operators and fabricators.Tracy Brundage, the school’s managing director of the Workforce Development and Continuing Education programs, said that as the landscape of the Northern Tier changes, so too do course offerings at the college.

She said input from energy companies has been influential in the design of 21 new courses, including those through the Fit 4 Natural Gas program developed by work force development boards in more than a dozen Northern Tier counties using Pennsylvania Department of Labor and Industry funds.

Officials from Lackawanna College also lauded the affiliations and assistance offered by gas companies.

“They’ve been very active,” Milliken said.

Last week, Chesapeake Energy donated $50,000 to help Lackawanna College expand its Natural Gas Technology Program at its New Milford Center campus in Susquehanna County. The college plans to use the money for capital-equipment costs in fitting out their new facilities for the program that began last fall.

“We’ve been an eager partner in these efforts,” said Brian Grove, director of corporate development for Chesapeake Energy.

Milliken said that in the short time the program’s been up and running at Lackawanna, the partnership has seen tremendous interest from potential students and positive feedback from the industry.

The companies reflected praise for the two-way-street relationship it has with the local schools.

Grove said “crafting an effective educational infrastructure will benefit the community far beyond its borders by equipping locals with skills they can market within the industry. A highly skilled work force is critical to our success as a company and the community’s long-term economic success as well.”

Brundage said that while the program at Penn Tech is still “in its infancy,” she, too, feels confident that the college’s programs have progressed nicely in a short period of time. “I think we’ve positioned ourselves pretty well with the industry. We’re not going to be able to meet all of their needs but we can help with a lot of them,” Brundage said.

So far 65 students have taken a course, including 14 who have completed welding courses. One course was created specifically at the request of the gas industry.

“They told us what they need as far as some of the welding components, so we aligned some things internally to meet those needs,” Brundage said.

Wendy J. Wiedenbeck, a spokeswoman for Denver-based EnCana Oil and Gas, said it’s too early to discuss her company’s needs because it is still in the exploratory stages. The company is looking at drilling specifically in Luzerne County.

“If we are successful and determine we would like to develop additional wells in the area, an important first step will be to understand what work-force development programs already exist in the area and how the curriculum aligns with business needs,” she said.

“New curriculum and training programs often come into existence after we’ve been operating in an area for some time,” Wiedenbeck added. “They evolve from the relationships we build along the way and are very much the result of a collaborative approach. In areas where we have established operations, we’ve collaborated with local colleges to create or build upon programs that help community members build the skills needed to compete for industry jobs.”

Andrew M. Seder, a Times Leader staff writer, may be reached at 570-829-7269.

Copyright: Times Leader

EnCana Corp. will work with WhitMar Exploration Co. in seeking gas in the Marcellus Shale in the region.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

EnCana Corp., perhaps the largest natural-gas producer in North America, has chosen Luzerne County as its entry point into the Marcellus Shale, thanks to an exploratory agreement with WhitMar Exploration Co.

WhitMar, a Denver-based exploratory company, has already leased about 25,000 acres in Columbia and Luzerne counties, including in Fairmount, Ross, Lake, Dallas, Lehman, Jackson, Huntington, Union, Hunlock and the northwest corner of Plymouth townships.

However, it doesn’t have the resources to develop the entire leasehold, so it went looking for a partner. It found EnCana, a Calgary-based company with U.S. headquarters in Denver that produced 1.4 trillion cubic feet of natural gas in 2008, according to its Web site. For comparison, Chesapeake Energy, another industry leader with a local presence, produced 839.5 billion cubic feet that year, according to its 2008 annual report.

Spokesman Doug Hock said EnCana has no other interest in the Marcellus Shale, a ribbon of gas-laden rock about a mile underground that stretches from upstate New York into Virginia but centers on Pennsylvania.

The agreement, however, only commits EnCana to the two exploratory wells WhitMar has agreed in its leases to create, Hock said. “Further activity will really depend on the results of the first two wells,” he said. “The first couple wells that we’re drilling are really to prove it up and ensure that we have viable program there.”

Both wells, while exploratory, will also be put into production, he said, though it’s unclear where pipelines will be installed to connect the wells to regional gas lines.

The deal gives EnCana 75 percent interest in the leasehold and control as the operator, according to WhitMar spokesman Brad Shepard. “Being an exploration company, we’re a small company,” he said. “At least in the Marcellus, we get a partner to develop it with.”

He said there were several companies interested, but that EnCana was “the best fit” thanks to similar interests in testing, drilling and size of the project.

Both companies are also interested in increasing the acreage in the leasehold, he said. Within the area the current lease encompasses, there are perhaps 25,000 to 30,000 acres that aren’t leased, Shepard said. “What we’re trying to do now is basically trying to infill all the land that we have now,” he said.

According to Hock, EnCana, whose business is currently 80 percent gas production, is in the process of splitting the company into two “pure plays” to “enhance the value” of each: EnCana, which would focus entirely on gas, and Cenovus Energy Inc. to oversee its oil-sands operations in Canada.

“We’re in that process right now,” Hock said. “The deal is expected to close at the end of the month.”

EnCana slid on the New York Stock Exchange this week, from $59.40 per share on Monday to $56.11 on Friday.

Both companies are also interested in increasing the acreage in the leasehold.

Copyright: Times Leader

Economist from M&T Bank predicts gas drilling will give area “a huge shot in the arm” in next decade.

By Ron Bartizekrbartizek@timesleader.com
Business & Consumer / City Editor

WILKES-BARRE – The Marcellus Shale gas play will be “a game changer” for Northeastern Pennsylvania, bringing a “huge economic injection” and making life here very different a decade from now, an economist said Wednesday.

James E. Thorne, Ph.D., chief investment officer of equities for M&T Bank, told members of the Greater Wilkes-Barre Chamber of Business and Industry during a luncheon talk at the Westmoreland Club that the region will get “a huge shot in the arm” from natural gas drilling. “The economic forecast is very bright.”

Gas drilling has boomed in the Northern Tier of Pennsylvania since horizontal drilling technologies using pressurized liquids have made it financially feasible for companies to drill into the Marcellus Shale, a layer of gas-laden rock that runs about a mile underground from New York into Virginia.

Many landowners in Luzerne County have entered into leases with drillers, but no wells are yet operating in the county.

Thorne said the future direction of the national economy is less clear while emphasizing that the United States has a history of adapting to changing times. He cited the push into science and technology in the late 1950s after the Soviet Union launched the Sputnik satellite as an example.

As at that time, “there’s got to be a new industry created” that the U.S. can lead the world in, Thorne said, suggesting “green” technology may be the logical successor to space exploration and the Internet. The current economic problems, he said, were made worse by a diversion of resources to consumption and housing, which do not increase productivity.

Export-led, resources and infrastructure industries need to be the immediate focus, Thorne said, adding that additional government spending to rebuild and repair aging domestic

The present weakness of the dollar is necessary, Thorne said, to give American exporters the opportunity to expand their markets. But in the long run “the solution is to create inflation.

“The dollar is a reflection of economic growth; we benefit from a weak dollar.”

“We’re going to enter an adjustment period,” Thorne said, that could be several years long. But he said there’s reason to be optimistic about the outcome.

“We’ve done this before. I’m hugely bullish on the American economy,” he said.

Copyright: Times Leader

Authorities allowed the company to resume work after corrective actions.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

The state Department of Environmental Protection announced on Thursday that it has fined Cabot Oil and Gas $56,000 for three polluting spills at one of its natural gas drilling sites in Susquehanna County.

The fine comes a little more than a month after the spills, which all occurred within a week of each other at the Heitsman well in Dimock Township and totaled about 8,400 gallons of fluids. Some of the liquid, which was a mix of mostly water and a gel that facilitates the drilling process, drained into an adjacent wetlands and Stevens Creek.

“The department presented a number to us and we thought under the circumstances that it was appropriate and not something that we wanted to fight about,” said Ken Komoroski, Cabot spokesman. “We’re just going to move forward.”

Within a few days of the spill, DEP ordered Cabot to halt hydraulic fracturing – the process that caused the spills – and submit an engineering analysis about what went wrong and how it will be avoided in the future.

Cabot’s report said the failure was caused by pressure surges and that significant elevation differences between where the liquid was stored and where it was being pumped to contributed to the problem.

The report includes a list of corrective actions that Cabot has agreed to take, among them providing better containment and pressure-regulating valves for sites where elevation is a factor.

DEP approved the report on Oct. 16 and allowed Cabot to resume “fracking.” The process forces water, sand and a mix of chemicals into the rock layer that contains the gas, causing fractures that release the gas up the well.

Gas drilling has boomed in the Northern Tier since fracking and horizontal drilling technologies have made it financially feasible for companies to drill into the Marcellus Shale, a layer of gas-laden rock that runs about a mile underground from New York into Virginia.

Copyright: Times Leader

Law will restrict gas wells to specific areas

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

There’s no natural-gas drilling in Dallas, but that’s not stopping the borough from deciding where it will allow drilling.

As part of the revision of its zoning ordinance, Dallas is adding provisions that would restrict sitting gas wells to areas zoned industrial, highway or business. It would also designate distance setbacks from residences, waterways, streets and wetlands.

The proactive stance is putting Dallas at the forefront of what could become a major issue as drilling in the Marcellus Shale increases.

“You’re talking about a very fundamental conflict between the municipal regulation of land use and the ability of landowner to access land rights,” said Stephen Rhoads, the president of the Pennsylvania Oil & Gas Association. “You could think of this in terms of taking.”

“Taking” is illegally blocking someone’s access to the point of essentially denying their rights. Eventually, it will find its way to court, Rhoads said, though he wouldn’t speculate on who would win.

At its meeting on Thursday, the borough’s planning commission recommended the borough council vote on the revisions.

“The main point is that we were already going through a revision … so we thought it would be proactive to include something that reflects what’s going on in the Back Mountain these days,” Borough Manager Tracey Carr said.

The ordinance would also require drillers to identify roads they plan to use, pay for an engineer to document the roads’ conditions and be responsible for maintenance and repair.

With a flurry of lease signings lately, gas drilling has become a hot topic in the county. Drillers are flocking to the area to tap the Marcellus Shale, a layer of gas-laden rock about a mile underground that stretches from New York to Virginia. Its huge size – and economic potential – has been known for years, but technology only recently caught up to access it.

Despite industry innovations such as horizontal drilling that allow wells to access gas pockets up to a mile away, Rhoads said having versatility in well sites makes “a difference because it depends how much surface area is put off limits. You can’t just put a well site on the edge of town and drill from one well site and get every possible molecule of gas.”

Carr said the provisions aren’t meant to keep drilling out of any areas, “just where would be most appropriate if it was to take place.”

Rhoads said such actions can harm landowners. “The geology will dictate where the well (should be) located – not zoning – and if there’s a conflict between zoning and geology, the geology loses,” he said. “You’re effectively telling me that my oil and gas property is worthless if you zone my surface property in such a way that I can’t gain access to it.”

On the scale of issues facing the industry – including access to water for gas extraction, disposal options for waste and a proposed state severance tax – Rhoads called zoning “a major issue.”

But for Carr and the borough she manages, it’s just being efficient and responsible. “This is actually a very small part of what we’re doing,” she said, noting that the borough’s consultant on the revision suggested adding the drilling provisions.

The proposed ordinance must go through a public hearing and likely won’t be addressed by the council until November or December, she said. There have been no complaints so far, she said, “but we haven’t had the public hearing yet, either.”

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

Copyright: Times Leader

After ’08 deal dies, Wyoming County Landowners expect Chesapeake Energy deal.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

A year after the financial meltdown sank a lucrative gas-lease offer, the Wyoming County Landowners group has come to terms with another company, Chesapeake Energy, for what is expected to be a record deal.

Neither side has released details yet, but Chip Lines-Burgess, secretary of the landowners’ group, expected an announcement late Tuesday evening.

“No one in the region has seen this amount of money,” she said. “We’re excited about the offer we have received, and it’s going to be a huge impact for our entire region financially. … Hopefully, it comes to fruition. … This is what we’ve been striving for the last year and a half.”

She added that lease signings could come as soon as a facility is secured that is large enough to hold the expected 600 to 800 landowners involved.

The group is composed of roughly 37,000 acres in Wyoming, Bradford, Susquehanna, Sullivan and Lackawanna counties. A minimal amount of Luzerne County acreage is also involved, Lines-Burgess said.

Only those who have recently re-signed are currently members, she said, though other members can re-join by filling out paperwork on the group’s Web site. New members also might be considered, though Lines-Burgess was unsure what the demarcations will be. She also noted that while current Lackawanna County members will remain in, it’s unclear if new landowners from that county will be accepted.

In August 2008, the group made headlines by signing a lease with Colorado-based Citrus Energy, but the worldwide financial crisis caused the deal to fall through quickly. Ironically, Citrus was chosen after it beat an original offer from Chesapeake.

The landowners regrouped quickly and began aggressively courting companies, creating a solicitous Web site and attending two industry expos. Most members chipped in $30 to cover various expenses, including creating their own roughly 40-page lease with items worked in that are usually left for individual landowners to add or subtract as addendums.

“We knew that we wanted a company that could afford to buy 37,000 acres … that could not only buy us, but drill us,” Lines-Burgess said. “In order to do that, we knew we had to go for the cream of the crop. … Within the last month, it has just heated up tremendously.”

Chesapeake is one of the largest natural-gas producers in the country and the largest leaseholder in the Marcellus Shale, a layer of gas-laden rock about a mile underground that’s centered on northern Pennsylvania.

Lines-Burgess said Marty L. Byrd, the vice president for land in Chesapeake’s Eastern Division, flew into the region Monday evening to meet with members of the landowners’ group Tuesday morning. He is expected to meet with the group’s core membership today, and leases could be signed by the end of the month, she said.

“There was a little give and take all the way around,” she said, citing the company’s requirement of an increased drilling-unit size. The group estimates about 100 well pads will be created throughout the entire acreage.

TO LEARN MORE

To join the landowners’ group, read its lease and find other information about the group, go to its Web site at: www.pamarcellusshale.com

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

Copyright: Times Leader