Posts Tagged ‘Texas’

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

With lucrative natural-gas lease offers coming to Luzerne County, landowners are beginning to pool their land, resources and knowledge to score the best deals possible.

Gas companies are rushing to secure the rights to a layer of rock called Marcellus Shale. The shale is deep underground, perhaps as far as 8,000 feet, and stretches from upstate New York to Virginia. Though solid, the rock holds natural gas under intense pressure. The resource has been known for decades, but technology only recently improved enough to extract it economically.

One issue landowners might not be able to control is determining who owns the rock and gas.

“That’s a tough question. Eventually what’s going to happen is when push comes to shove … they’re going to do title searches” back about 150 years, said John Zucosky, who is part of a Franklin Township landowners’ group. His research, he said, produced evidence that gas and oil might not be included in the mineral rights. He said he hasn’t heard anything about anyone claiming to own the rights.

Many Franklin Township residents have attended meetings at which Matthew Golden, a West Pittston lawyer who’s worked in the gas industry, has outlined the leasing, drilling and clean-up processes. He pointed out companies will attempt to exploit landowners’ ignorance to get them to sign unfavorable leases.

“There’s a great disparity in knowledge between the companies’ land men and the landowners. This could open them (landowners) up to some risk,” Golden said.

Zucosky’s group, which is accepting new members, owns 1,500 contiguous acres in Franklin Township.

Zucosky said he got involved nearly a year ago when a Texas company offered to buy the mineral rights on his 100 acres for $300 per acre. Initially, he suspected it was akin to an e-mail scam, but some Internet researching convinced him the offer was genuine and that he could probably get a better one.

“I saw that contract. You have to be pretty naive to sign something like that,” he said. If the situation is as experts suggest, Zucosky said, “there’s a whole bunch of money involved.”

He’s already witnessing the rush. An offer of $2,000 per acre increased by $500 within a few days without any prodding from owners, he said.

The group is ironing out which issues it wants addressed in contracts. Then it will consider offers, and once an offer is accepted, will hire a lawyer to finalize the contract, Zucosky said.

“We’re trying to put a package together to address all the things we want … to try to get the most we could,” he said. “This is a once-in-a-lifetime thing, I think, so what the heck.”

online

For more information on gas leasing or to join a leasing group, go to www.pagaslease.com.

“I saw that contract. You have to be pretty naive to sign something like that.”

Landowner John Zucosky

On offer for his mineral rights
Rory Sweeney, a Times Leader staff writer, may be reached at 970-7418.

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

Experts say leases are in-depth and a lawyer’s assistance is recommended.

By Sheena Delazio sdelazio@timesleader.com
Staff Writer

LEHMAN TWP.— The Penn State Cooperative Extension of Luzerne County and the Luzerne Conservation District want landowners to know what they are getting into before they sign a natural gas lease for their property.

The two organizations will host “Understanding and Negotiating Natural Gas Leases,” as part of a two-day informational discussion. The first session, held on Monday, was attended by more than 70 local landowners.

“It’s a hot topic right now,” said Tanya Dierolf, a conservation coordinator for the conservation district. “The price per acre has increased at a phenomenal rate.”

Typically, leasing companies offer property owners one-eighth of the money made on gas or oil extracted from beneath their properties. Depending on the company, owners can receive hundreds of dollars up front.

“(On Monday) presenters talked about the impact it could have on the land (if someone signed a lease), and there is potential there to make money, but we’re trying to present the facts,” Dierolf said. “These (leases) are very technical, and we highly recommend (landowners) consult an attorney before they make a decision.”

For example, in June, the Pennsylvania Mineral Group based in Port Lavaca, Texas, made up to 700 offers in Luzerne County to purchase gas rights at $300 an acre. Offers were based on geological surveys that pinpoint locations that may contain natural gas or oil.

The Pennsylvania Mineral Group did not return phone calls.

“These lease agreements are so in depth that landowners don’t understand the legality,” said Donna Grey, a Penn State Cooperative Extension educator. “We’re trying to explain what the landowner can expect to occur on their property so they can have an understanding, both visual and written.”

For next week’s session, Penn State Extension educators will be on hand, as well as a geologist and attorney, to talk about understanding gas leases, negotiating a lease, the economic impact of signing a lease and development of the Marcellus shale within the Earth.

Grey said landowners who attend will be able to make better decisions regarding their land. “This could be a good thing or a bad thing (for the landowner),” she said.

“It’s really confusing, and landowners need to use a consultant or attorney to help them. They can negotiate (if they decide to sign). And if they aren’t comfortable, they don’t have to settle on one gas company,” Grey said. “There is more than one company. They are just like any other sales person, they are out there to sell their product.”

If you go…
What: Understanding and Negotiating Natural Gas Leases

When: 7 p.m. Monday

Where: Technology Center, Penn State Wilkes-Barre Campus, Lehman Township

To register: Call 570-825-1701 or 570-674-7991. There is a $15 registration fee per person.

Copyright: Times Leader