Posts Tagged ‘oil and gas leases’

Governor’s office announced this week a plan to allow Anadarko Petroleum to access 32,896 acres.

By Steve Mocarskysmocarsky@timesleader.com
Staff Writer

Some state representatives are concerned about Gov. Ed Rendell’s decision to lease nearly 33,000 acres of state forest land to an energy company for natural gas exploration.

Rendell’s office on Tuesday announced that Anadarko Petroleum Corp. has paid the commonwealth $120 million to access 32,896 acres of state forest through a natural gas lease agreement with the state Department of Conservation and Natural Resources.

Prior to a presentation on the state Department of Environmental Protection’s role in regulating natural gas drilling that she attended Tuesday at Misericordia University, state Rep. Phyllis Mundy said she was disappointed to learn of the lease transaction.

“The areas that could responsibly be leased in state forests are already under lease. Why don’t they go ahead and drill there? We don’t need additional drilling, certainly not until we look into whether this is the really sensitive habitat that DCNR said it was when we discussed it,” Mundy, D-Kingston, said.

But Mundy later qualified her comments, saying they were dependent on whether leasing that acreage was previously factored as revenue in this year’s state budget. “I’m really not clear on what 32,000 acres that was,” she said.

Rendell’s press release on Tuesday did not clearly specify whether revenue from this most recent lease agreement had previously been factored into the state budget. DCNR had leased about 32,000 acres of state forest land to Anadarko in January for $128 million.

Mundy co-sponsored legislation to impose a moratorium on leasing state forest land for natural gas exploration. House Bill 2235 passed in the House and is before the state Senate.

State Rep. Karen Boback, R-Harveys Lake, who also attended the presentation at Misericordia and voted in favor of the moratorium, said she too had a problem with the lease if the revenue had not been previously included in the state budget.

Both representatives have been outspoken in their concern about potentially harmful effects of natural gas drilling on the environment and have been advocating for stronger laws and regulations to protect public heath and safety and drinking water supplies from potential contamination from gas drilling accidents.

DCNR Press Secretary Chris Novak said Wednesday the specific amount of acreage wasn’t included in this year’s budget or specified in Rendell’s 2010-11 proposal, but legislators had agreed during negotiations for this year’s budget that $180 million for the 2010-11 budget would come from oil and gas leases.

Novak said Rendell had a target of $60 million in revenue from leasing out the 32,000 acres of forest in January, but realized $128 million. That extra $68 million would be applied to the 2010-11 budget, she said.

DCNR also leased 74,000 acres of forest for natural gas exploration in September 2008. A total of 725,000 acres of the state’s 2.2 million acres of forest land has been leased for gas drilling, Novak said.

In addition to the up-front lease payments, which are considered rent for the first year of the leases, the state will receive 18 percent royalties on all natural gas produced on the land for the leases signed this month and in January. The royalty for the September 2008 lease is 16 percent.

Rent for the second through fifth years drops to $20 per acre and then increases to $35 per acre for year six and beyond, Novak said.

Novak said DCNR looked at whether important habitat for rare or endangered species and recreational use would be impacted when designing the leases. She said leases for each of the 11 tracts specify areas that cannot be disturbed by drilling.

She estimated that because of new horizontal drilling techniques and the fact that the newly leased land is surrounded by land that had been leased previously, only a minimal amount of newly leased land – probably about 300 acres total – will be impacted by drilling activities.

Anadarko spokesman Matt Carmichael would not estimate how much land would be disturbed because it was too early in the development phase.

“It’s our hope and desire to disturb as little surface area as possible,” Carmichael said.

Anadarko has drilled about 15 wells on state forest land to date, he said.

Novak said that prior to drilling activities and after the drilling is complete and wellheads are installed, the public will have full access to the leased land.

Mundy and Boback were not available for comment Wednesday after Novak responded to questions related to state budget revenue and the disturbance of sensitive state forest habitat.

Copyright: Times Leader

Area group advises residents to be patient, don’t agree to low rates offered by drillers.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

ROSS TWP. – Gas-lease offers might be low, thanks to a lagging economy, but that’s not stopping drillers from proposing them.

Three gas companies are speaking with landowners in Luzerne County, and a fourth – Denver-based Whitmar Exploration Company – is covering leases, according to members of the South West Ross Township Property Group.

“Right now, they’re picking all this low-hanging fruit,” said Ken Long, a member of the group’s executive committee. “People are panicking to sign leases … because they want to get this monkey off their back.”

The in-depth, confusing and potentially disastrous decisions involved with signing a lease weigh on people, he said, and with offers crashing from one-time highs in the thousands of dollars per acre to Whitmar’s current $12.50 per acre, some landowners are eager to get whatever benefit they can and move on.

That, the committee warns, would be a mistake. “It’s not just going to be for today,” said Marge Bogdon, a member of the committee. “If you’re going to hurt your children or your grandchildren by signing a lease today, that’s bad.”

That’s why the committee has decided not to recommend Whitmar’s offer to their members and crafted 10 questions it says will combat “gas-rush fever.”

A large part of the rush is created, they say, by owners afraid they’ll miss out on everything if they don’t sign for peanuts now. Add to that pressure sales tactics levied by the companies, and the committee members foresee an ominous formula for rash, uninformed decision-making. They cite as example a recent missive from Conservation Services, the land-acquisition company employed by Whitmar. Announcing two meetings during which leases could be signed, the letter gave landowners six days to join before the offer was closed. Committee members said they received the notices with only about four days to decide. “If you only have two days to sign a lease, you can’t get a lawyer to look it over,” Bogdon warned.

Mark Stransky, another member of the committee, said he stopped by one of the signing meetings and found it “lightly but steadily attended.” Whitmar’s offer, as presented to the committee, was $12.50 per acre for the first two years, and the company would have the option to drop the lease after each year. In the third year, the company would pay a one-time bonus of $2,500 per acre to lease the land for the next four years.

“People are wondering if this is the only game in town,” Stransky said.

But the truth, the committee contends, is that lease offers will increase, not dry up, as the economy re-emerges, and that companies are likely cashing in on economic fears to score discounted leases. “You can lease with just about anybody,” Long said. “They’re taking everything they can at a really cheap price.”

“They’re coming out of the woodwork now with the Marcellus gas being proven,” Stransky said.

Near the beginning of the year, the group represented roughly 10,000 acres around Ross Township, but the committee members figured they’ve added on several thousand since then. They stress membership is nonbinding, and that landowners can opt out by writing a letter and waiting 10 days.

Though they receive no compensation for their efforts, they’re rewarded, the committee members say, by preventing their community from being spoiled. “If we weren’t part of this community, we wouldn’t be so concerned,” Bogdon said. “This is our home.”

And while they bear no animosity toward the drillers and landmen for their pushiness – “They’re salesmen; that’s their job,” Bogdon acknowledged – the committee members’ local ties, they say, are the best arguments for why their fellow landowners should hear them out. “Who’s going to tell you the truth, the people who are trying to help out the community, or the ones who are trying to make money off you?” Long asked.

10 Questions

If you go

The South West Ross Township Property Group’s executive committee has crafted these questions to help landowners scrutinize lease offers:

Has an attorney versed in oil and gas leases reviewed the lease?

Do I understand in detail exactly what I’m signing?

Are the terms and financial aspects of the lease acceptable, or will I regret signing it later?

Am I signing this lease just because a neighbor did or a landman claims a neighbor did?

Would waiting be more beneficial?

Can I afford to wait?

Does the lease protect everything I want protected?

What does my property owner group think about this lease?

What would my dad say?

Am I being pressured to sign this lease, forcing me to skip over things on this list?

What: South West Ross Township Property Group’s next meeting

When: 7 p.m., Tuesday

Where: Sweet Valley Church of Christ

Why: Dale Tice, an attorney with gas-lease experts Greevy & Associates, will speak.

More info: Call 570-256-4488 for an informative phone message or go to: www.rosstwpgas.com

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

Copyright: Times Leader