Posts Tagged ‘representative’

On WVIA show, members of industry admit not telling public about methods.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

PITTSTON TWP. – Members of the gas-drilling industry acknowledged on Thursday evening a failure to inform the public about their procedures, and the audience at the WVIA call-in show reminded them of that often.

Viewers of the “State of Pennsylvania” program repeatedly questioned – through the Internet, phone calls and in person – potentials for polluting, environmental justice issues and the industry’s willingness to abide by regulations.

There were even sporadic bursts of applause when in-house questions touched on contentious issues. “I don’t want it (Marcellus Shale drilling) in Luzerne County,” said Audrey Simpson of Shavertown “Take a trip up to Dimock (Township in Susquehanna County) and see what the hell is happening to those people up there.”

There, methane contamination in 13 wells is being attributed to gas-drilling activities. Those affected have brought a lawsuit against the local driller, Cabot Oil and Gas.

A Cabot representative was not among the panel.

In fact, the only driller there was Chesapeake Energy, represented by David Spigelmyer, the vice president of government relations for Chesapeake’s Eastern Division. The company has defended the industry by itself at several similar public-input meetings.

Early on during the hour-long program, the vehemence was foreshadowed by Gary Byron, a former state Department of Environmental Protection official and the president of Dux Head Environmental Services, a consulting firm for the drilling industry.

“The industry and the DEP don’t agree on a lot, but the one thing they do agree on,” he said, is that information has lagged behind drilling activity so much that “there are a lot of misconceptions about the industry.”

He added that many of the companies need to be educated about regulatory methods in Pennsylvania. “They want to comply,” he said.

Bruce Bonnice, who has worked for several resource-conservation groups but also leased his land to Carrizo Oil and Gas and now consults for them, likened the risks to everyday transportation. “I’m not sure I’m going to have a car accident every time I get in my car, but I still travel,” he said.

Spigelmyer noted plans for taxing the industry are premature because the Marcellus hasn’t yet shown it’s worth refocusing capital from other gas shales in southern states. He added that regulatory overhead would further stunt that process.

Copyright: Times Leader

Growing number of landowners hope to gain income by allowing gas drilling on their property.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

FAIRMOUNT TWP. – Scarring Michael Giamber’s 74-acre forested spread with gas wells and pipelines might seem like a nightmare to some, but that’s the fairytale ending for which he’s hoping.

Giamber is part of a growing number of landowners in Northeastern Pennsylvania who have leased their land for drilling in the Marcellus Shale, a gas-laden layer of rock about a mile underground that runs through the northern part of the state. They hope to collect not only lucrative bonuses paid upfront for signing a lease – one offered locally last week was $5,750 per acre – but long-term income from royalties on the gas pumped from their property and rent from hosting needed infrastructure.

Early estimates for some properties put earnings well into the millions of dollars over the life of their gas deposits.

Giamber isn’t necessarily expecting that, but he wants to give his property every chance to succeed. He signed a lease with Denver-based WhitMar Exploration Co., which has locked up more than 22,000 acres in, among other places, Fairmount, Ross, Lake, Lehman, Union, Hunlock, Huntington and Dallas townships. The company offers a relatively negligible sign-up bonus – $12.50 per acre – in exchange for 19.5-percent royalties, a short lease period and stipulations that require expedited permitting and drilling.

“As we all know, the real money is in the gas royalties, not the bonus money,” Giamber noted. “Getting a well with a 20-percent royalty is better than a high bonus and no well.”

Opponents of drilling, however, cite a slew of potential environmental indignities from overt destruction of bucolic rural lands to more insidious but less-proven threats, such as groundwater contamination, overuse of regional water supplies and geologic shifting that might cause earthquakes.

Giamber sees much of that as hypocritical moralizing, and he has but to look down his road for an example of it. Every time he drives from his yard to state Route 118, he passes what he calls a homemade scrap heap on a neighbor’s property that’s filled with abandoned cars, rusted appliances and other items long beyond their usefulness. “It blows my mind how they just abuse the land, and now we’re going to bring in some money, and they get all up in arms,” he said.

If people truly cared about the earth, he reasons, they’d be outraged by such overgrown trash piles. But it’s been there for years, and no one’s complained about it. There are no doubt more just like it, too, he says.

In fact, in that context, Giamber sees his use of the land as beneficial. At least it has a positive purpose – providing a cleaner alternative to oil and coal, creating jobs and providing wealth – instead of just being a place to throw trash.

That said, Giamber has reservations. A few months ago, he visited a well site in Susquehanna County, where he found natural gas bubbling from the watery area at the base of a wellhead. He was told by a WhitMar representative that another company had made a mistake that wouldn’t happen in their work. “We’re all trying to rationalize it right now, and not get upset about it.”

While not necessarily an issue, recent lease agreements as close as Wyoming County make his deal look “anemic,” Giamber acknowledges. Chesapeake Energy, one of the largest companies in the industry, announced last week an agreement with the Wyoming County Landowners group for a 5-year, 20-percent royalty lease with a $5,750 sign-on bonus.

A landowners’ group near Giamber, the South West Ross Township Property Group, says it’s in talks with an undisclosed company whose offer is in the same “ballpark,” according to Ken Long, a member of the group’s executive committee. Long would neither confirm nor deny that it’s Chesapeake.

Still, Giamber believes the math of his deal could work better. “The fat lady hasn’t sung yet,” he said in an e-mail. “Let’s say I get a well three years before my neighbor that signed with Chesapeake at $5,500 (per-acre bonus). I’m still ahead. The variables are many and the future too hard to predict. I am just happy that WhitMar is moving forward by drilling the first wells in Luzerne County.”

Copyright: Times Leader

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

Company files documents to drill in Luzerne County, has leased 17,500 acres.

By Jennifer Learn-Andesjandes@timesleader.com
Luzerne County Reporter

Natural gas drilling may be about to boom in Luzerne County.

Denver-based WhitMar Exploration Co. recently submitted 200 lease documents to ensure that they have the correct property identification numbers, or PINS. Pin certification is required before the leases are officially recorded in the county recorder of deeds office.

The documents show the company has acquired drilling rights on 5,440 acres in Harveys Lake and the following townships: Ross, Lake, Lehman, Fairmount, Union, Huntington and Jackson.

WhitMar representative Brad Shepard said the company has leased 17,500 acres in Luzerne County to date, with more planned. Shepard said he was too busy with planning meetings Tuesday to explain how the drilling will be executed.

Beth Chocallo, a Lake Township property owner who agreed to lease her 3.29 acres to WhitMar, said she and her husband, Richard, were connected to WhitMar through a seminar.

The couple did not receive any upfront payment, she said. Instead, WhitMar will pay a lease rental after the first year or two and a percentage of the profits if natural gas is extracted, Chocallo said.

Chocallo she is optimistic that gas will be found because she doesn’t believe WhitMar would invest in the time and expense of preparing leases without a strong likelihood.

“Who knows where the gas pockets will be found? It’s not a definite,” she said.

WhitMar plans to grid out territories, paying a profit percentage to the owners of all leased property within that grid if gas is extracted, Chocallo said.

She does not believe a drilling rig will be installed on her property because the parcel is on the smaller side compared to others being leased, but she can’t rule out the possibility. Her main concern was that drilling would cut off or diminish her water supply, but she said WhitMar assured her that the company would replace the well and furnish water if that happens.

The lease documents filed in the county do not contain any details about what will be paid to the property owners.

Property owners are leasing WhitMar the exclusive right to explore for and develop oil and gas, the documents say.

That right includes use of the property for the drilling of oil and gas wells and installation of roads, pipes, pumps, compressors, separators, tanks, power stations and any other necessary equipment, the documents say.

Most, if not all, of the leases are for one year, with the option to extend for an additional 11 years or longer.

Of the 200 leases, Fairmount Township had the most property signed with WhitMar – 2,512 acres – followed by Ross Township with 1,205 acres.

Here’s a breakdown of the other leased acreages: Harveys Lake, 58; Jackson Township, 99; Union Township, 102; Huntington Township, 361; Lake Township, 463; and Lehman Township, 640.

Founded in 1979, WhitMar is a private energy operation actively engaged in drilling and developing natural gas and oil prospects in the United States, according to the company’s Web site.

Jennifer Learn-Andes, a Times Leader staff writer, may be reached at 831-7333.

Copyright: Times Leader