Posts Tagged ‘Pennsylvania’

MOST CONSUMERS HAVE heard the cautionary phrase, “caveat emptor,” or “let the buyer beware.”

Turns out, for Pennsylvania landowners who are mulling natural gas lease offers, the seller better be careful too.

Deals are being sealed throughout Northeastern Pennsylvania as a result of a natural gas rush. The flurry began months ago, in part, because a Penn State University researcher and colleague in New York suggested that there might be a treasure trove of natural gas trapped within a rock formation known as the Marcellus shale.

This formation – which extends over parts of Pennsylvania and three bordering states – might contain more than 500 trillion cubic feet of natural gas, much of it previously inaccessible. Using updated drilling technology, however, industry watchers speculate that at least 10 percent of it could be recovered. Taking into account projected fuel prices, that makes the Marcellus worth about $1 trillion.

Consequently, drilling company representatives and other dealmakers have fanned out across Northeastern Pennsylvania, knocking on doors and making what might, at first, seem to be lucrative offers. But property owners would be wise to wait and get the facts, not quickly jump at an apparent windfall.

Experts advise that landowners don’t sign companies’ standard agreements, which tend to favor the drilling operators. Instead, negotiate.

People who had been offered $15 per acre two years ago have, in some cases, reaped new offers of as much as $2,500 per acre, according to one report.

Other equally important issues should be examined in the lease agreements.

Among the questions to consider: What percentage of royalties will be paid to the landowner? How might potential environmental impacts be addressed? Does the contract provide provisions releasing the landowner from liabilities, including failure of the drilling company to follow applicable laws?

In short, draft the best possible deal before signing on the dotted line. This unforeseen opportunity shouldn’t leave you feeling cheated.

LEARN BEFORE LEASING

For information on natural gas leases, television viewers can tune into an hour-long, call-in program at 7 tonight on the Pennsylvania Cable Network. The program also will be available on the Web at http://wpsu.org/gasrush.

A workshop on understanding gas leases is set for 7 to 9:30 p.m. June 23 at Lake-Lehman High School. Fee: $15. To register, call the Penn State Cooperative Extension office in Luzerne County at 825-1701.

Separately, gas-leasing information is available at Web sites such as

www.naturalgas.extension.psu.edu and www.pagaslease.com.

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