Posts Tagged ‘Virginia’

But experts say that doesn’t mean drillers won’t eventually explore here.

None of the 73 permits the state Department of Environmental Protection issued Wednesday for natural gas wells in the Marcellus Shale was in Luzerne County.

That doesn’t necessarily mean drillers aren’t interested in looking for gas here, experts say. But a combination of factors may slow activity compared to other parts of the state.

“I’m sure it’s still in the mix,” said Stephen Rhoads, president of the Pennsylvania Oil & Gas Association. “The work in trying to explore and analyze for natural gas in the Marcellus Shale in the region … is only beginning in the northeast” region of Pennsylvania.

Energy companies and geologists have estimated for decades that billions of dollars worth of natural gas is locked in a layer of rock called Marcellus Shale that runs about a mile underground from upstate New York down to Virginia, including through the northern tier of Pennsylvania. Only recently have technological advances and higher energy prices made extracting the gas financially feasible.

Western Pennsylvania has much more drilling infrastructure, such as wastewater treatment facilities, than this region, Rhoads said, which explains why the majority of the permits issued on Wednesday were for western counties.

He also attributed the companies’ deliberate pace to budgetary constraints, a lack of drilling rigs and an incomplete grasp of the geology.

“It takes a lot of time and money to understand what lies more than a mile underground,” he said. “These companies are investing a lot … to make sure they get it right.”

While some properties have been leased in the northwestern section of Luzerne County, Mark Carmon, regional DEP spokesman, said there are no drilling permits in the county. He was unaware of any awaiting approval, either, but cautioned that doesn’t mean county landowners have missed the windfall.

All the assurances don’t make the waiting any more palatable for landowners.

“It’s pretty frustrating,” said Jack Zucosky, whose Luzerne County Landowners group is looking to get its more than 6,000 acres leased. “We’ve been close a few times with a few companies, but nothing definite yet.”

He’s confident Luzerne County property will get leased, but not until next year at the earliest.

“I really think what’s going on here is natural gas (prices) dropped a lot, and these companies are having cash flow problems,” he said. “It’s a waiting game right now.”

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

Copyright: Times Leader

Gas-drilling leases negotiated in Wyoming County, not coming as quickly here.

TUNKHANNOCK – While Wyoming County landowners are heavily involved in the regional natural-gas boom, almost all Luzerne County landowners are out of luck, at least for now.

“It’s not always fun. There’s going to be some angst, there’s going to be some anxiety,” said Jack Sordoni, who heads Wilkes-Barre-based Homeland Energy Ventures LLC.

Energy companies and geologists have estimated for decades that billions of dollars of natural gas is locked in a layer of rock called Marcellus Shale that runs about a mile underground from upstate New York down to Virginia, including the northern tier of Pennsylvania. Only recently have technological advances and higher energy prices made extracting the gas financially feasible.

Speaking during a meeting Wednesday evening at the Tunkhannock Area High School, the Harveys Lake native said oil companies aren’t yet interested in crossing the county border. He said his family’s land in Wyoming County has been leased, but companies have refused to consider contiguous land across the county line.

However, Chris Robinson, who is brokering leases in Wyoming County for nearly $3,000 per acre and 17 percent royalties, said he’s already leased the western edge of Fairmount Township in northwestern Luzerne County.

Sordoni added that Dallas, Lake and Franklin townships are areas “Chris and I are hearing (about) repeatedly” and are “still very much prospective and in play.”

Luzerne County landowners anxiously awaiting a lease offer probably won’t have to wait long for an answer. Robinson, who’s from Allegheny County, said he planned to continue negotiating leases in the area until the gas companies are no longer interested.

“I don’t think it’s going to take that long. It’s measured in months at most,” he said.

The wait might, however, offer local landowners examples to consider. Unlike other land groups, the Wyoming landowners rolled all their concerns into the lease instead of adding addendums.

“The difference is this is our lease. This is about us,” said Chip Lions, a member of the group who’s now doing lease work.

The meeting was sponsored by Stone House Wealth Management LLC, a Montrose-based financial planning firm that’s advising landowners and selling them investment portfolios. The company, which started the www.nepagas.com Web site, got involved a while ago “because we saw where this was going to go,” said John Burke, an investment adviser with the company.

The good news, Robinson said, is that he can get leases for any property within the companies’ interested regions, no matter the size.

“I can’t tell you how many I’ve signed for 1 acre or less,” he said.

Additionally, he said that while some gas companies might honestly stop leasing, other companies new to the area desperately want in on the drilling rights. And, he said, they can check for clear land titles within five days, contrary to the three months they tell most land groups.

For landowners concerned about environmental problems, he said state agencies are good at watching drillers, noting his own enforcement experiences.

He warned, however, to not go it alone.

“The mass of ground gets people the best deal, period,” he said. “People who break away, you may be penalized and you may be penalizing your neighbors.”

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

Copyright: Times Leader

In addition to anticipated jobs and profits from natural-gas drilling, water usage should increase as regional operations get under way.

That could mean more income for water haulers and sanitary authorities.

Drilling companies have been ramping up activities because an underground rock layer known as Marcellus Shale is expected to contain billions of dollars in natural gas deposits.

Each well-drilling operation could require up to 1 million gallons of water. While the water can be reused, it eventually must be disposed of at a treatment facility.

The Wyoming Valley Sanitary Authority hasn’t accepted any well-drilling wastewater, but it is interested.

“If it’s not hazardous to our plant, and if DEP approves us as a disposal site, we would consider it,” executive director Fred DeSanto said.

The state Department of Environmental Protection recently sent a letter to sanitary authorities advising them that wastewater from the drilling can be harmful to certain treatment systems and cause them to violate their discharge permits. The water must be tested and approved by DEP.

Such contracts could be lucrative, but have potential problems. WVSA, the major wastewater treatment facility in Luzerne County, charges 3.5 cents per gallon for treatment of up to 2 million gallons and 3 cents for quantities beyond that.

That could help offset the estimated $6 million in upgrades the authority said it needs to meet Chesapeake Bay watershed agreement discharge standards.

That quick influx, however, creates a problem.

Sandy Bartosiewicz, WVSA’s financial and budget officer, said the authority has never been in a situation where it accepted “that amount of volume at one time.”

It will also have an impact on wastewater haulers.

“The volume of the material is significant,” said Chris Ravenscroft, president of Honesdale-based Koberlein Environmental Services. “I don’t think there’s any one company out there that has the capacity for the volume. … So I think there’s a large volume of work that will be generated.”

He said his company is actively seeking energy companies that are looking for haulers and treatment facilities. Gas companies are investigating drilling possibilities through the Marcellus region, which stretches from upstate New York through northern and western Pennsylvania, including the upper fringe of Luzerne County, and down into Virginia. Several wells have been drilled in this region, according to DEP spokesman Mark Carmon.

Cabot Oil & Gas Co. announced recently a well in Susquehanna County became its first to generate income.

Copyright: Times Leader

DEP ordered partial shutdown of 2 drilling sites for not having permits.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

HARRISBURG – Reacting to regulation violations and some activities by companies exploring for natural gas in the Marcellus Shale, state environmental regulators on Friday held an unprecedented summit with gas drillers to define expectations for water and land protection.

The meeting came about a week after regulators took steps to rein in the burgeoning exploration industry and its increasing demand for water. The Susquehanna River Basin Commission warned drillers they needed water-withdrawal permits, and the state Department of Environmental Protection ordered the partial shutdown of two drilling sites for not having such permits.

Citing Pennsylvania’s coal and oil past and current commitment to renewable energies, DEP Secretary Kathleen McGinty assured the state “likes energy” and is “not allergic” to the effort required to extract it, but cautioned that her department will expend as much energy to protect the environment and natural resources.

“This is not about sending a signal that we don’t want to be a partner,” she said. “It’s just about some good rules for the road.”

Experts have known about the Marcellus Shale layer, which runs from upstate New York into Virginia and touches northern Luzerne County, for decades. They believe it contains enough recoverable gas to supply America’s natural gas demand for two years. However, technology has only recently advanced enough to tap the shale, which lies as much as 8,000 feet below the surface.

J. Scott Roberts, DEP deputy secretary in the Office of Mineral Resources Management, announced additions to the agency’s usual drilling permit specifically for Marcellus Shale that include detailed estimates of water use.

Paul Swartz, the river basin commission’s executive director, said companies need to make timely applications and factor the permitting process into their drilling timelines. Two permits were approved at the commission’s meeting on Thursday, he said, but another 84 – about a year’s worth of work – still await approval. Though there is a water-use threshold for requiring a permit, he said any work in the Marcellus would exceed that threshold and require a permit.

Exploration in the Marcellus is unlike gas exploration elsewhere in the state because deposits are vastly deeper, mostly unproven and necessary infrastructure, such as pipelines and water-treatment facilities, does not exist.

As energy prices continue to rise, drilling in the deep shale has become more enticing. DEP issued a record number of permits in 2004, 2005 and 2006. The rise leveled off in 2007 with 7,241 permits. So far in 2008, 2,510 have been issued.

Copyright: Times Leader

Real-estate pros say chance of lucrative deals causing less land to be available for sale.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

Listings for land are virtually nonexistent in northern Luzerne and Wyoming counties, thanks to landowners hoping to cash in on natural-gas leasing rights.

“If people want to come up to buy land, there’s really not much to show them, if anything. And that’s a factor of the gas situation,” said Donna LaBar, who owns Century 21 Sherlock Homes Inc. offices in Clarks Summit and Tunkhannock.

It’s an unfavorable situation for anyone hoping to join in on the profits from gas exploration in the area. Companies are banking that a vast, but deep, layer of rock called Marcellus Shale contains natural gas deposits.

Landowners in Wyoming County and other northern counties have been offered $2,500 per acre to sign away the gas rights. Those offers have skyrocketed with recent drilling success.

In January, some landowners signed for just hundreds of dollars per acre.

Early estimates hold that the amount of gas that potentially could be extracted from the entire layer, which stretches from upstate New York to Virginia, including parts of Luzerne County, could fulfill the country’s natural gas consumption for two years.

The deposits have been known for decades, but technology only recently has improved enough to make extraction economically feasible.

LaBar, a real-estate broker since 1984, said prices in the residential market are holding steady and properties are available.

“The normal market, which would just be the residential sales market, is still pretty much normal. Average market for this time of year,” she said.

However, the number of available tracts larger than 5 acres drops off significantly, she said. “People just aren’t really selling their land right now because they’re looking forward to royalties for the gas leases,” LaBar said.

The effect is more pronounced at her Tunkhannock office, she said. “It’s mostly the northern tier,” she said.

Several Luzerne County real-estate agents said land is still available in northern townships, such as Franklin and Lake, where shale deposits are predicted.

The industry is in its infancy, and few landowners who’ve signed up have actually seen royalty checks. However, if the deposit is anything like the Barnett Shale in Texas that it’s being compared to, drilling could become lucrative. Barnett has proven results, and The Dallas Morning News recently reported that leases are being signed near Fort Worth for $25,000 per acre.

LaBar said local landowners are now viewing their land differently. Before, it was simply an investment that had a tax liability.

Now, she said, “it could be actually an income asset for them, and it’s all yet to be seen.”

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

Copyright: Times Leader

School districts that sign a lease will receive money per acre, royalty checks on a regular basis.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

There are school superintendents who would drool over the windfall Bill Bush received around January. But Bush, the superintendent at Elk Lake School District, is looking for an even bigger payday.

The district essentially made $127,500 for nothing when it signed a gas lease earlier this year for its 170 acres in Susquehanna County. The district received $750 per acre and royalties of 12.5 percent.

With lease offers hovering around $2,500 per acre in some areas, the deal doesn’t seem as equitable as it once did.

“We were excited at the time, but not now,” Bush said. “I think anybody who signed a lease prior to today probably wishes they had waited.”

Still, the district jumped on the offer, he said, because the company assured it would drill a well on district property, guaranteeing the district a handsome royalty check on a regular basis.

With a furor building over the potential of the natural gas reserves locked in a rock layer that stretches from New York to Virginia, the decision is one that many school districts in the area might have to soon consider. Bush said he believes Elk Lake is the first district to sign, but others aren’t far behind.

Tunkhannock Area School District recently agreed to join a group of Wyoming County landowners who are negotiating a gas lease. Dallas School District is also discussing lease options.Bush said Cabot Oil and Gas Corp. is planning to have a well online by the 2009-2010 school year. It’s unclear how much the district stands to gain from royalties, but surrounding areas “indicate strong reserves,” Bush said. “If we’re consistent with what the project is locally, it would certainly be beneficial to the district,” he said.

So far, Elk Lake is attempting to ignore its financial good fortune, Bush said. The money it already received went to the general fund and disappeared in the district’s almost $17 million annual budget. Instead of counting down the days until royalties start rolling in, people in the district are looking at them as an unexpected bonus if they come.

“I think everybody’s kind of reserving judgment to see how it comes out,” Bush said. “I think they’ve remained grounded.”

Bush has modest plans for the funds, such as building and grounds maintenance and upgrading technology.

Beyond the royalties it would receive from drilling, the district retained the rights to 200,000 cubic feet of gas each year, which it could use or sell at market price. At prices calculated by the federal Energy Information Administration, the district would make about $1,500 from its yearly allotment. The district is considering switching from its oil-fired heating system to a natural gas one, Bush said.

The district also reserved other land rights in about two dozen addendums to the lease.

“Environmental concerns were first and foremost,” Bush said, but safety and other issues were included.

Beyond the royalties, the district retained the rights to 200,000 cubic feet of gas each year, which it could use or sell at market price.

Copyright: Times Leader

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