Posts Tagged ‘Sullivan’

Chief to offer “substantial” cash, says solicitor, who wants to see land involved, right-of-way agreement.

By Steve Mocarskysmocarsky@timesleader.com
Staff Writer

and Rebecca Briarbria@timesleader.com
Staff Writer

DALLAS TWP. – An oil and natural gas company has asked township officials if it can lay pipeline underneath township property in return for money.

Two officials from Chief Oil and Gas attended the supervisors meeting Tuesday evening in search of an answer as to whether they can lay pipeline under a parcel of township-owned land.

Supervisor Glenn Howell said the land is along a gravel road off the Old Tunkhannock Highway. The gravel road leads to a Little League field and some other things, he said.

Township solicitor Thomas Brennan confirmed the company is offering “a substantial amount” of money to the township to lay the pipeline, though Brennan would not disclose the amount.

Brennan said there is no question about the legality of allowing the company to lay the pipe underneath township land. However, he said he first wants to take a look at the land to know what is involved.

The officials from the company also are wondering what they would have to do if they wanted to lay pipe under or along the township’s right-of-way. They said more than 20 miles of pipeline is planned coming from the north and terminating east of Dallas High School.

Brennan asked if the officials could provide a copy of the agreement they have with the Pennsylvania Department of Transportation regarding their right-of-way usage. Brennan told the officials that he would have more information for them at the next supervisors meeting on July 6.

Earlier on Tuesday, township Zoning Officer Len Kozick said he’s heard from property owners in the township that they are being offered right-of-way agreements as well. And at least one agreement has already been signed.

According to Luzerne County property records, Leonard DeLeur, who owns Back to Basics – a fireplace and stove shop in Dallas – leased a 50-foot right-of-way along the edge of his 24-acre property in the township.

DeLeur said Chief offered him $20 per foot of pipeline laid on his property.

Kristi Gittins, vice president, Chief Oil & Gas, said a definite path has not been chosen for a pipeline, and one won’t be chosen until wells are drilled. She said no imminent drilling is planned for Luzerne County; the company’s next two wells will be drilled in Sullivan and Wyoming counties.

Josh Longmore, director of the Luzerne Conservation District, confirmed that drilling is slated to begin on his father’s land in Monroe Township, Wyoming County, in mid-July. His father, Robert Longmore, has a lease allowing Chief to drill on his 97-acre farm near Noxen Township.

Chief, which has 75 wells drilled in 10 counties, has wells in Lycoming, Bradford and Susquehanna counties that are producing gas, but there’s currently no way to get it to market. Gittins said gas is going to market from only about half of Chief’s wells in the Northeast because it takes a while to build a pipeline infrastructure where none previously existed.

Gittins said it costs about $1 million a mile to lay pipeline. And lease holders don’t see any royalty money until the gas gets to market.

Gittins said that Chief is selectively seeking leases in Luzerne County, but only in the area of currently leased land, she said. The company has leased a few properties in Fairmount Township. The Dallas, Texas-based company has 650,000 acres leased in Pennsylvania and West Virginia, she said.

In other business, supervisors awarded a bid for a paving and drainage project on Main and Campground roads to Popple Construction, the lowest bidder, at $147,530 for Main Road and $56,642.33 for Campground Road.

Supervisors Vice Chairman Frank Wagner previously said the project will consist of paving Main Road from the Kingston Township line to Route 309, as well as all of Campground Road.

Also, George Stolarick, who said he has lived on Ridge Street for the past 45 years, asked the supervisors to consider paving his road. Stolarick said that although there are only three houses on his road, eight families use the road to access their homes.

But, Supervisors Chairman Phil Walter said “it’s not in the cards right now.”

Rebecca Bria, a Times Leader staff writer, may be reached at 970-7436. Steve Mocarsky, a Times Leader staff writer, may be reached at 970-7311.

Copyright: Times Leader

By Tom Veneskytvenesky@timesleader.com
Sports Reporter

The talk inside Giles Evans’ sporting goods shop has changed recently.

For years hunters and anglers have come into Brady and Cavany Sporting Goods, in the heart of Tunkhannock, to swap stories about where the fish are biting and the big bucks are roaming. And every day, Evans leans on the counter and takes it all in.

But recently, in addition to hunting and fishing, a new topic has sprung to the forefront: gas drilling.

Evans said he hears more and more hunters and anglers expressing concerns about how the drilling boom will affect the streams they fish and the woods they hunt. It’s a concern that continues to grow as quickly as the well pads dotting the ground in Northeastern Pennsylvania.

“This is a big event up here,” Evans said. “A lot of people are making money, but a lot of people are concerned about the land and the water.”

Anglers, Evans said, are worried about the pristine trout streams in the area – Tunkhannock, Meshoppen, Mehoopany and Bowman’s creeks to name a few. They wonder if the streams can withstand the water withdrawals needed for the drilling process or, worse yet, what happens if they become contaminated.

“Anglers consider these places as pristine and they’re really concerned for the creeks,” Evans said. “The gas drillers are putting a lot of pads in around Meshoppen, near Whites Creek. That is a fantastic little trout stream. God forbid something happens there.”

Or anywhere else for that matter, according to Joe Ackourey, an avid fly fisherman and member of the Stanley Cooper Sr. Chapter of Trout Unlimited.

Ackourey said the area of Wyoming County and northern Luzerne County that is targeted for drilling is home to numerous high-quality wild trout streams. The majority of those streams, he said, flow through remote mountainous areas and could be easily damaged.

The disturbance created by gas drilling – clear-cutting for pads, erosion, increased water temperatures and water withdrawals – can be fatal to the wild trout and other aquatic life that inhabits the streams.

“I just don’t like the major changes that are going to take place to these ecosystems all for the sake of the mighty dollar,” Ackourey said. “I fear for those streams and the wild trout that inhabit them.”

Lease helps hunting club

Dallas resident Russ Bigus has hunted the mountains and farmlands of Sullivan and Wyoming counties for decades. He enjoys the abundant wildlife in the area and the pristine landscape.

Bigus also supports the gas drilling boom and the economic benefit that comes with it.

If done properly, Bigus feels, gas drilling can actually enhance the region’s natural areas.

The money paid to farmers and landowners who enter into leases with gas companies will make it easier for them to keep their land as open space, Bigus said.

While he admits there is reason to be concerned about environmental degradation, the revenue generated from drilling could prevent open space from becoming something else.

It has happened in other parts of the state, Bigus said.

“In Juniata County it used to be all farms with great habitat for wild pheasants,” he said. “That’s all gone now. Those farms have been sold for development.

“That doesn’t have to happen any more with the income generated from natural gas drilling. Hunting opportunities will remain the same or get better with our open space here remaining open.”

Bigus said his hunting club, the White Ash Landowners Association located in Cherry Township, Sullivan County, currently has a gas lease agreement for its 5,000 acres.

Much of the club’s land has been degraded by strip mining in the past, he said, and the impact from gas drilling is minimal in comparison.

“It’s a very short-lived impact from what I’ve seen,” he said. “And our land is even more financially stable now.”

Still, Bigus cautioned that drilling can be an environmental disaster if not regulated properly.

According to Luzerne County property records, private hunting and fishing clubs that have leased land for drilling include North Mountain Club in Fairmount Township, Mayflower Rod & Gun Club in Ross Township and Rattlesnake Gulch Hunting Club in Ross Township.

“Scary what could happen”

Dr. Tom Jiunta, who resides in Lehman Township, hikes and fishes around the Ricketts Glen area and near his cabin in Laporte, Sullivan County.

Both areas are potential hotspots for gas drilling activity, and Jiunta fears what could happen to the streams and trails, such as the Loyalsock Trail, that he and countless others enjoy.

Aside from the major disruption of clearing land and the potential for pollution, Jiunta said other effects could be devastating, such as noise from drilling, air pollution and the introduction of invasive species as equipment from other states is moved into the remote locations of Northeastern Pennsylvania.

“There’s a lot of subtle impacts that may not be noticed until a few years from now,” Jiunta said.

Despite his concerns, Jiunta said he isn’t totally opposed to drilling if it’s done properly “in the right places with the right regulations in place.” Pennsylvania is lacking as far with the latter, he said. “You can’t depend on the industry to police itself and we don’t have enough DEP (state Department of Environmental Protection) staff to keep on top of this.

“It’s really scary what could happen.”

As far as hunters go, some already have been affected by gas drilling. Evans, the sporting goods store owner, said hunters have told him that they lost their traditional hunting spots in Susquehanna County last deer season when the areas were deemed off limits due to gas drilling activity.

Even in areas where gas companies halted operations for the first week of deer season, Evans said, hunters were affected.

“Customers told me that in the Hop Bottom and Springville areas, the gas companies were out before the season with helicopters laying cables for seismic testing,” Evans said. “It was a noisy process and that scared a lot of deer out of the area and changed their patterns.”

Compromise needed

Bigus agreed that some hunting area will be lost while drilling commences, but believes conflicts can be reduced by an open line of communication between landowners and gas companies.

“For example, make sure they agree that there will be no activity for the first week of deer season, and have them do most of the work in the summer,” he said. “It’s important to establish a good relationship.”

And for all the concerns expressed daily by his customers, Evans said there is at least one example of how drilling can be done with little impact.

A well drilled near Nicholson, he said, was located next to a road and didn’t venture into the woods, lessening the impact on hunters and the environment, according to Evans.

But for that one positive, a looming negative experience continues to leave a sour taste with hunters and anglers.

In 2009, the Cabot Oil & Gas Corp. was fined $120,000 by DEP after methane gas infiltrated into private water wells in Dimock Township. In addition, between 6,000 and 8,000 gallons of fracking fluid leaked from a pipe at a drill site in the area and contaminated a nearby wetland.

This year Cabot was fined an additional $240,000 and ordered to shut down three wells because of methane contamination of water wells.

While DEP has prohibited Cabot from drilling in the area for one year, the damage was already done when it came to the views of hunters and anglers.

“That business in Dimock really has hunters and anglers concerned,” Evans said. “Everybody’s worried about it because there’s so much unknown, and the Cabot incident didn’t help.

“A lot of people that talk about it in the store just hope that they get done, get out and nothing gets harmed. In the meantime, they’re scared to death about what could happen.”

Copyright: Times Leader

Bill would have rollback taxes assessed only on land impacted by wellhead permanently.

By Steve Mocarskysmocarsky@timesleader.com
Staff Writer

Luzerne County Assessor’s Office Director Tony Alu still doesn’t know how Marcellus Shale development on land with “Clean and Green” designation will affect the land’s tax status.

“We don’t have a clear-cut plan yet. … I’m turning over every stone to get as much information as possible. We won’t be doing anything until I’m sure what our options are,” Alu said Monday.

Clean and Green is a program authorized by state law that allows land devoted to agricultural or forest use to be assessed at a value for that use rather than at fair market value.

The intent of the program, which is administered through county government, is to encourage property owners to retain their land in agricultural, open-space or forest-land use by providing real estate tax relief.

Property owners benefit through lower taxes as long as their land isn’t used for housing developments or other uses inconsistent with agricultural production, open-space or forest-land use.

If a property owner decided to use the land for a purpose inconsistent with the program, the landowner would have to pay “rollback taxes” – the difference between fair market value and use value of the land – for as many years as the property had been designated Clean and Green, up to a maximum of seven years.

Although it’s a state-authorized program, with maximum use values set annually for each county by the Department of Agriculture’s Bureau of Farmland Preservation, the bureau offers no guidance on how drilling for natural gas on a Clean and Green parcel would affect the tax status.

“The (state Farmland and Forest Land Assessment) Act is silent in that regard, so it’s left up to each individual county how to address it,” said bureau director Doug Wolfgang.

However, Wolfgang said, in March 2009, state Sen. Gene Yaw, R-Loyalsock Township, introduced a bill that would amend the act, allowing for natural gas drilling on Clean and Green land, with rollback taxes being assessed only on the portion of land that would be permanently impacted by a wellhead. State Sen. Lisa Baker, R-Lehman Township, was a co-sponsor of that bill.

Yaw represents Union and Sullivan counties and parts of Susquehanna, Bradford and Lycoming counties, which together boasted a total of about 200 natural gas wells by the end of last year.

The bill won Senate approval in February and is before the House for consideration.

Yaw has said the bill would provide counties across the state with “a consistent interpretation” to follow and would “help to prevent differing opinions on how many acres of roll-back taxes should be levied on landowners who have leased for natural gas development.”

He has said farmers and landowners need the bill to become law “so that there isn’t any confusion on how the Clean and Green Program operates.”

The bill also would exempt land with underground transmission or gathering lines from roll-back taxes and would allow for one lease for temporary pipe storage facilities for two years. Each property would have to be restored to its original use.

Regardless of whether the bill becomes law, Lake Township Supervisor Amy Salansky said neither she nor her husband, Paul, will have to pay rollback taxes on their Clean and Green land, on which EnCana Oil and Gas USA intends to drill a natural gas well in August. If county officials decide to assess rollback taxes, the lease with EnCana makes the energy company responsible for paying them.

Salansky noted neither she nor her husband own the mineral or gas rights to the land.

The couple bought the land after the owner died so they could farm it, but the owner had willed the mineral and gas rights to his nephew, who retained them in the sale.

The Salanskys are crop farmers, growing oats, corn and hay. They own and work more farmland nearby, Amy Salansky said.

Even if the entire 50-acre parcel is kicked out of the Clean and Green program, Salansky said she would reapply to have the parcel accepted back into the program, minus the 6 acres that would be used for the gas-drilling operations.

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

Copyright: Times Leader

75 percent of gas production workforce composed of unskilled, semi-skilled jobs.

By Steve Mocarskysmocarsky@timesleader.com
Staff Writer

If natural gas production from the Marcellus Shale is as successful as energy companies and landowners hope, the companies likely will need to hire more employees to man wells, perform testing for and oversee the drilling of new ones and monitor their operations.

“The jobs associated with natural gas drilling are well-paying jobs,” said Doug Hock, spokesman for Calgary-based Encana Energy, which has its U.S. headquarters in Denver, Colo.

Salaries even for less-skilled positions generally range between $60,000 and $70,000, Hock said.

The types of company jobs that usually become available when drilling operations are successful include drilling engineers, geologists and geophysicists and permitting experts. Pumpers, employees who check wells on a regular basis for proper operation, will be needed after more wells are drilled, Hock said.

Other positions with energy companies include experts in land negotiations and in community relations, he said.

Rory Sweeney, spokesman for Chesapeake Energy, said the Oklahoma City, Okla.-based company currently has 1,032 employees working in Pennsylvania, up from 215 in January 2009.

Local employment

As far as local employment, Sweeney said 168 employees report to local offices, “but we have more than 1,000 statewide and most of them are working rigs in NEPA.”

Types of workers expected to be hired include welders, rig hands, production workers, engineers, drilling and land technicians, pipeline field staff, construction field staff, administrative support and dozens of other occupations.

Last summer, the Marcellus Shale Education and Training Center at the Pennsylvania College of Technology conducted a Marcellus Shale Workforce Needs Assessment study that looked at potential workforce needs in two tiers of Pennsylvania counties – the northern tier, which borders Luzerne County to the north, and the central tier, which borders Luzerne County to the west.

The northern tier includes Wyoming, Sullivan, Susquehanna, Bradford and Tioga counties; the central tier includes Clinton, Centre, Columbia, Montour, Northumberland, Union, Snyder, Lycoming and Mifflin counties.

The study found that the direct workforce needed to drill a single well in the Marcellus Shale region is comprised of more than 410 individuals working in nearly 150 different occupations. The total hours worked by these individuals are the equivalent of 11.53 full-time, direct jobs over the course of a year.

The study notes that nearly all of these jobs are required only while wells are being drilled.

By comparison, 0.17 long-term, full-time jobs associated with the production phase of development are created for each well drilled in a given field. While comprising a very small percentage of the overall workforce, these long-term jobs compound every year as more wells are drilled. For example, if 100 wells were drilled each year for 10 years, 17 production jobs would be created each year, according to the study.

The study found the majority of occupations in the direct workforce were unskilled or semi-skilled jobs including heavy equipment operation, CDL truck operation, general labor, pipefitters and a variety of office-related occupations. These occupations account for about 75 percent of the workforce.

Learn on the job

Industry representatives, survey respondents and additional research indicated that most of these occupations require no formal post-secondary education, and only a few, such as CDL, welding and X-ray, require a specialized license or trade certification.

However, nearly all of them require the skills and knowledge unique to the natural gas industry, which are best learned through experience. Workers within all occupations of the natural gas industry are additionally prized for their hard work ethic and willingness to work very long hours in unfavorable conditions, the study found.

The majority of the remaining 25 percent of workers are in occupations that are white collar in nature, including foremen, supervisors, paralegals, Realtors, engineers and geological scientists.

Larry Milliken, director of Energy Programs at Lackawanna College, said that industry wide, jobs in the gas and oil drilling industry pay about 20 percent better than the same types of jobs in other industries.

“Around here, there are an awful lot of jobs in the $9- to $14-per-hour range. Jobs in the oil and gas industry tend to start in the $18-per-hour range and go up from there,” Milliken said.

A petroleum engineer might earn $40,000 to $45,000 teaching at a college or university, but working in the field for a gas or oil company, the engineer could make close to $90,000, he said.

The average technician in the natural gas industry can expect to earn about $30 per hour, which equates to an annual salary of about $60,000. A starting technician with a two-year degree can expect to earn $18 to $20 to start, amounting to a salary near $40,000, Milliken said.

In gas production growth areas, employees with at least associate’s degrees would tend to progress up the employment ladder “faster than someone off the street,” Milliken said.

Sweeney said Chesapeake has a variety of recruiting events, such as a drill-rig worker recruiting event this week through PA CareerLink, and a job fair in Towanda in October that attracted more than 1,000 applicants.

Chesapeake also employs a Scranton-based professional recruiting firm to recruit local employees for NOMAC, Chesapeake’s wholly owned drilling subsidiary.

Company officials plan to build a residential and training facility in Bradford County this year to serve as quarters for out-of-town employees and as NOMAC’s Eastern U.S. Training Facility, which will help the company train workers, Sweeney said.

Coming tomorrow: Schools gear up to train Marcellus Shale workers.

Copyright: Times Leader

Luzerne County property owners hope to have their own deal by year’s end.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

Lease signing begins today for members of the Wyoming County Landowners group who have accepted a gas-drilling offer from Chesapeake Energy.

The signings could foreshadow what other local landowners are hoping comes to them soon. The South West Ross Township Property Group and Columbia County Land Owners Coalition confirmed on Friday that they, too, are in talks with Chesapeake.

The Columbia group, which represents roughly 80,000 acres in Columbia, Luzerne, Sullivan and Lycoming counties, hopes to complete a deal before the end of the year, according to an e-mail sent out to its membership.

The Ross Township group, which includes roughly 10,000 acres around Ross Township, is affiliated with the Columbia group, but also making its own discussions with Chesapeake, said Ken Long, a member of the group’s executive committee.

Group leaders expect monetary terms to be similar to the one Chesapeake offered to the Wyoming group: a five-year lease at 20-percent royalties, plus a $5,750-per-acre sign-up bonus. It includes a five-year option Chesapeake could exercise for another $5,750 per acre.

But other recent events with drillers locally could foreshadow what landowner hope to never see. The state Department of Environmental Protection issued a notice of violation to Cabot Oil and Gas Corp. for a gas spill earlier this week and ordered the company to cease hydraulic fracturing in Susquehanna County until it had completed a comprehensive engineering assessment and updated its pollution-prevention plans.

The company is currently drilling seven new wells in the county that will require fracking, which forces water, sand and chemicals into the gas-laden Marcellus Shale to fracture the rock and release the gas.

The company has 21 days to complete the assessment and 14 days to update the plan. Once it’s approved, the company will have 21 days to implement the plan.

The situation is one that landowners like the Wyoming group hope to avert with their in-depth leases. The group has been split alphabetically for this weekend’s signing. Those with surnames beginning with “A” through “L” should show up between 9 a.m. and 7 p.m. on Saturday at the American Legion Post 510 in the village of Black Walnut on U.S. Route 6 between Laceyville and Meshoppen. Everyone else is assigned to between 10 a.m. and 4 p.m. on Sunday. Those who can’t make their assigned day may show up on the other one.

Landowners who can’t make either day should be receiving an e-mail with documents that need to be signed and mailed to Chesapeake. The $1,000-per-acre initial payment will be sent by mail.

On the Web

To sign up property for a gas lease: http://forms.askchesapeake.com/landowner

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

Property owners claim in lawsuit agent offered lower royalty than allowed by law.

MARC LEVY Associated Press Writer

HARRISBURG — Scores of people who own land above a potentially lucrative natural gas reservoir are seeking to void the drilling leases they signed and accused a land agent of guaranteeing a lower royalty than the amount allowed by state law.

The property owners filed a lawsuit in federal court in Williamsport last week against The Keeton Group LLC, of Lexington, Ky.

The lawsuit stems from a rush of activity by exploration companies to capitalize on the largely untapped Marcellus Shale gas reservoir while natural gas prices are high. Property owners from West Virginia to New York have complained of aggressive “landmen” pushing them to sign leases that allow an exploration company to drill down to the Marcellus Shale, a layer of thick black rock that holds a vast reservoir of gas.

The law cited by the plaintiffs guarantees a property owner at least one-eighth of the royalties from the recovery of oil and gas on their land. However, the suit said the leases violate state law because they give the exploration company the right to subtract taxes, assessments and adjustments on production from the 12.5 percent royalty.

The suit, filed Thursday, said the approximately 130 plaintiffs own more than 18,000 acres in Sullivan and Lycoming counties in northern Pennsylvania. The contracts were signed with Keeton between April 2005 and March 2006, the suit said.

A telephone message left Tuesday with The Keeton Group was not immediately returned. On an outdated version of its Web site, Keeton touts its record as an early arrival on the Marcellus Shale.

“Our group was among the first to acquire lease rights for the current Marcellus Shale drilling activities — not only in Pennsylvania but also in 7 other states under which this vast geological formation lies,” the Keeton site said.

The gas reservoir beneath the Marcellus Shale was long known to exist, but only recently has drilling technology improved enough to cost-effectively tap into it. According to state officials, drilling activity on the formation is taking place at about 275 well sites, and less than 20 sites are producing gas.

To date, exploration companies have spent about $2 billion on leasing land, performing seismic studies and other activities in pursuit of Marcellus Shale gas in Pennsylvania, according to Stephen Rhoads, the president of the Pennsylvania Oil and Gas Association.

Companies as large as ExxonMobil Corp. have shown interest in Pennsylvania, which is one of four states that sit atop 54,000 square miles that analysts say hold the best exploration prospects.

Copyright: Times Leader

By Tom Veneskytvenesky@timesleader.com
Sports Reporter

Private landowners aren’t the only group being eyed by natural gas companies as potential lease partners.

Companies are also targeting two of the largest landowners in the region – the Pennsylvania Game Commission and state Department of Conservation and Natural Resources, hoping to develop the vast gas deposits they suspect sit below the surface.

Officials with both agencies say interest in their property – which totals thousands of acres in the region — is extremely high. Royalties and payments that companies are willing to offer to lease the land are also high, but that doesn’t mean the agencies are ready to sign on the dotted line.

Both agencies control their own destinies on those properties where they own the surface and subsurface mineral rights. When some of the properties were purchased years ago, the seller held onto the mineral rights. But on those state game lands where the Pennsylvania Game Commission owns the gas rights, numerous drilling companies have contacted the agency about its property in the northeast. The attempts have been aggressive, according to Mike DiMatteo, a geologist with the Game Commission’s oil, gas and mineral recovery program.

“Some of them came in and drew a circle from Tioga County down to Centre and over to Wayne and Pike,” DiMatteo said. “They are interested in leasing large areas.”

And the Game Commission is interested in what they have to offer … with conditions.

DiMatteo said the presence of the Marcellus shale layer under the surface of Northeastern Pennsylvania is believed to hold significant deposits of natural gas. The companies want the gas, which is at a record high price, but they need the land to access the layer of shale thousands of feet below the surface.

State Department of Environmental Protection spokesman Mark Carmon said his office has issued less than a half dozen permits for gas drilling in the Northeast and most of the interest is in Susquehanna, Wayne and Wyoming counties.

Despite the high interest, the Game Commission has so far entered into one lease agreement in the Northeast (State Game Lands 123 in Bradford County). DiMatteo said two more agreements are in the works and they are looking at more.

He added it’s too early to tell how much revenue natural gas wells would generate for the agency because the process is in the exploratory stage.

Game Commission spokesman Jerry Feaser said the agency receives an average of $2 million to $3 million a year, up significantly from an annual average of $300,000 a couple years ago. Most of that revenue is generated from active wells in the southwest and north central parts of the state.

“There hasn’t been enough development in the Marcellus formation yet to know what a typical well will produce. The companies are pretty tight-lipped about what’s there, so it’s hard to put a dollar value on the potential reserve,” DiMatteo said.

Based on the agency’s experience with wells drilled on game lands in other areas, they know what to include in a lease to protect wildlife and habitat. The agency prefers companies utilize existing timber and maintenance roads to access their wells, and areas such as wetlands, unique habitats and places holding threatened or endangered species are avoided.

Before a lease is signed, the agency conducts a resource recovery questionnaire of the game lands to assess the pros and cons. Leases typically last for five years or as long as the well is producing.

“In some areas we find we can’t take a risk with the habitat, so we won’t have any activity there,” DiMatteo said.

When the well is taken out of production, it must be capped and the area and access road must be seeded as a wildlife food plot or used as forest cover.

Like the Game Commission, the DCNR is open to the prospect of natural gas drilling on its property – just not right now. According to Teddy Borawski, minerals section chief with the Bureau of Forestry, the agency isn’t entering into any lease agreements until it completes an internal study on the matter.

The agency has wells operating from past lease agreements, and when it determines which properties it wants to make available for additional leases they will be put out for bids.

“There’s a very large amount of interest in state forest and state park land in the northeast,” Borawski said.

State park lands are off limits to gas drilling because the practice would conflict with the recreational use of the property, he added.

Borawski said leases entered into with his agency carry the strongest environmental stipulations in the state. They include a stringent environmental review, an exceedance of DEP regulations, safeguards against surface and groundwater contamination and significant setbacks from streams.

State forest and state game lands are attractive to gas companies because it is more efficient to lease large, contiguous blocks of land. Stephen Rhoads, president of the Pennsylvania Oil and Gas Association, said drilling goes as deep as 8,000 feet and extends horizontally several thousand feet, which can cover a few acres. Companies also conduct seismic exploration before they drill, and a large area is needed for the research.

Rhoads criticized DCNR’s move to wait to enter into lease agreements, because it benefited financially from the practice in the past.

“The impact of oil and gas development on the surface is trivial. There is no chronic environmental impact,” he said. “There is a more significant impact to DCNR putting wind turbines on their ridge tops.”

While DCNCR continues to study the matter, DiMatteo said the Game Commission may be ready to seek more bids in the next few months. To wait for the price of gas to increase, he said, is too much of a risk because the Marcellus formation may prove not to be profitable once drilling commences.

“These wells could be a boom or a bust. We’re willing to listen and explore, but we’ll approach it with caution,” Feaser said.

Properties breakdown

Mike DiMatteo said most of the interest in gas drilling has been for Game Lands located in Bradford, Pike, Sullivan, Susquehanna, Wayne and Wyoming counties. Here is a breakdown of how much property the Game Commission owns in those counties:

Bradford County: 53,429 acres

Columbia County: 21,532 acres

Pike County: 24,467 acres

Sullivan County: 57,752 acres

Susquehanna County: 14,358 acres

Wayne County: 20,637 acres

Tom Venesky, a Times Leader outdoors writer, can be reached at 829-7230

Copyright: Times Leader