Posts Tagged ‘USD’

The Associated Press

DIMOCK — State regulators are fining a Houston-based company because its natural-gas drilling operations polluted residents’ water wells in northeastern Pennsylvania.

Department of Environmental Protection officials said Wednesday that Cabot Oil & Gas Corp. is paying $120,000 in connection with its finding that gas seeped underground into 13 water wells in Susquehanna County.

Cabot has drilled numerous gas wells into the Marcellus Shale rock formation in the rural county, about 15 miles south of the New York State border.

On Jan. 1, a water well exploded at a home nearby Cabot’s operations, prompting an investigation.

The department says its approval of Cabot’s well casing and cementing plans is now required before Cabot can drill.

It also says Cabot must develop a plan to permanently restore or replace the affected water supplies.

Copyright: Times Leader

Authorities allowed the company to resume work after corrective actions.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

The state Department of Environmental Protection announced on Thursday that it has fined Cabot Oil and Gas $56,000 for three polluting spills at one of its natural gas drilling sites in Susquehanna County.

The fine comes a little more than a month after the spills, which all occurred within a week of each other at the Heitsman well in Dimock Township and totaled about 8,400 gallons of fluids. Some of the liquid, which was a mix of mostly water and a gel that facilitates the drilling process, drained into an adjacent wetlands and Stevens Creek.

“The department presented a number to us and we thought under the circumstances that it was appropriate and not something that we wanted to fight about,” said Ken Komoroski, Cabot spokesman. “We’re just going to move forward.”

Within a few days of the spill, DEP ordered Cabot to halt hydraulic fracturing – the process that caused the spills – and submit an engineering analysis about what went wrong and how it will be avoided in the future.

Cabot’s report said the failure was caused by pressure surges and that significant elevation differences between where the liquid was stored and where it was being pumped to contributed to the problem.

The report includes a list of corrective actions that Cabot has agreed to take, among them providing better containment and pressure-regulating valves for sites where elevation is a factor.

DEP approved the report on Oct. 16 and allowed Cabot to resume “fracking.” The process forces water, sand and a mix of chemicals into the rock layer that contains the gas, causing fractures that release the gas up the well.

Gas drilling has boomed in the Northern Tier since fracking and horizontal drilling technologies have made it financially feasible for companies to drill into the Marcellus Shale, a layer of gas-laden rock that runs about a mile underground from New York into Virginia.

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

Landowners in Wyoming County get some good protections, attorney says.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

The lease that Chesapeake Energy is offering to Wyoming County Landowners group members is clearly a compromise between landowners and the company, according to an experienced gas-law attorney, but includes “many of the protections that we like to see for landowners are built into this lease.”

Dale Tice, an attorney with Williamsport-based Greevy and Associates who has clients in the Wyoming group, characterized the wording in the lease offer as “very competitive with the leases we’ve seen.”

Tice, whose office has gained somewhat of an expertise in gas law since companies began descending on Lycoming County a few years ago, said he usually disapproves of a five-year re-leasing option being available to companies, but noted that it’s “understandable” why Chesapeake would want that because it’s leasing so much land that it will take years to explore the whole area.

He also said that the $20-per-year fee paid if a well is shut off to eliminate production during a bad market “is as good as they’re going to do.”

While Tice declined to identify negatives in the lease and cautioned that his comments shouldn’t be construed as legal advice, he noted several positives: including in-depth wording to limit production-unit sizes, termination of the lease on land that isn’t part of a production unit, the company’s responsibility to pay property-tax rollbacks on Clean and Green properties and mutual written agreement on placement for wells, pipelines and other infrastructure. Additionally, he said, the lease requires that all infrastructure sited on a property must be tied into gas production at the property.

“There’s always somewhat of a question there because, although the gas company and the landowner must mutually agree in writing as to the location, the gas companies always add some language that says lessors can’t be unreasonable” about siting infrastructure, he said.

Though there is no specific reference to siting waste-deposit wells on the properties, “sometimes,” he said, “if they (landowners) don’t give them (drilling companies) the right, they don’t need to take it out, so to speak.”

The lease is “clearly the product of extensive dialogue between the parties,” Tice said. “I think this does a good job of striking a compromise where the landowner has a lot of good protections worked into it.”

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

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

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

Saying plan likely will be revived in 2010, Rendell adds that he wants industry to get off to a good start.

AMY WORDEN and MARIO F. CATTABIANI The Philadelphia Inquirer

HARRISBURG – Gov. Rendell said Monday after meeting with industry officials that he would agree to delay his push to impose a tax on natural gas extracted from the Marcellus Shale.

“It won’t be in the mix this year,” he said, adding that he would likely revive the proposal next year. “We felt we should let the industry get off to a good start, and that surpasses our need for money.”

For months, Rendell had lobbied for the tax on the gas-rich Marcellus Shale reserve. At one point, the administration estimated it could produce $100 million in revenue in the first year.

But the Democratic governor said on Monday that he reconsidered the idea after watching natural gas prices plummet to near-record lows and meeting with industry representatives who have invested millions to explore the natural gas reserve hundreds of feet beneath the ground.

The Marcellus Shale is a vein of rock containing vast reserves, running hundreds of feet below ground from New York to Virginia. Its exploration and extraction – estimated to be worth billions – has been made possible in recent years by advances in technology.

Senate Majority Leader Dominic Pileggi, R- Delaware County, said it was no surprise that Rendell had abandoned the effort, noting that taxing an industry in its infancy was an unpopular move even among some members of Rendell’s own party.

“The governor has recognized the realities of the situation,” Pileggi said.

Although Rendell said he was no longer interested in the tax this year, Democrats who control the state House said it remained among the mix of possible revenue sources.

“It is definitely not off the table,” said Johnna A. Pro, press secretary to House Appropriations Chairman Dwight Evans, D-Philadelphia.

Other so-called niche taxes still on the table include higher cigarette taxes and a new levy on smokeless tobacco. Also under consideration is the elimination of a slew of long-standing sales-tax exemptions on such items as candy and gum, land-based phones, and basic cable. Rendell has said the removal of exemptions on all items except food and clothing and certain services could generate $1 billion.

Copyright: Times Leader

Tuesday’s program will include presentation on Marcellus Shale and questions from audience.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

The Pennsylvania Council of Professional Geologists will hold a seminar Tuesday on gas drilling in the Marcellus Shale, and it’s prepared to take on even the most technical of questions, from the science of the drilling itself to the legal issues surrounding it.

“We’re going to try to answer those questions,” said Rhonda Hakundy-Jones, the council’s executive director. “We’ve certainly heard those questions before. Some of them don’t have definitive answers; they have, shall we say, a range of answers.”

The deadline to register for the Tuesday event, set at the Quality Inn on Kidder Street across from the Wyoming Valley Mall, has been extended to today and applicants can contact the council to make arrangements if they won’t be able to get the entry fee in on time, Hakundy-Jones said.

The council has a subcommittee that’s been tracking shale-gas issues, she said, and “this was just the next logical step … to provide some of that educational material that we have collected, and our geologic knowledge, and present it to the public. … We are trying to make it a rather broad overview, and it’s geared more to professionals … people with some understanding of regulations in general and science in general.”

The panelists, who include two geologists, an attorney, a laboratory technician and representative of an environmental management company, plan to tackle the issues from an in-depth, technical perspective, Hakundy-Jones said, to explain “what those things are, how they work,” particularly hydraulic fracturing.

Additionally, after a 45-minute presentation and more than an hour for questioning, the event will host an hour-long session for informal discussion during which food will be available.

Hakundy-Jones expects, however, there will be interaction with the audience during the formal sessions as well. “We find that’s a great way to get additional information,” she said.

So far, about 20 people have registered, and she expects that may double.

“There should be plenty of opportunity for people to ask their questions,” she said. “Of course, how often, for example, can you get an attorney’s advice for $50?”

If you go

What: “A Rock ’n Rules Review” of issues concerning gas-drilling in the Marcellus Shale

When: 2:30 to 6 p.m. Tuesday

Where: The Quality Inn on Kidder Street, Wilkes-Barre

Cost: $50

Who: Experts in the various fields involved in drilling will speak on technical topics, then take questions.

For information: Go to: www.pcpg.org/Marcellus_intro.asp for a registration form or call 717-730-9745.

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

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

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