Friday, November 21, 2008

Pennsylvania Natural Gas Rush is On!

By Steve McConnell
Wayne Independent
Wed Nov 19, 2008, 05:19 PM EST
Wayne County -

They were scouring through land deeds at the county courthouse today as they have been all year, trying to secure natural gas rights for a handful of major companies, who plan to drill here one day - it seems.
These landmen, landwomen, representatives of the natural gas companies, whoever they are, don’t say much or identify who they’re with, but they come and go all day, keeping their business to themselves, said Ginger Golden, of the county deed office.
The Marcellus Shale, a vast geologic area stretching throughout northern Appalachia and loaded with trillions of pounds of natural gas, has become the latest lovechild of the natural gas industry since it could suit the needs of U.S. natural gas consumption for at least 14 years, by itself.
A walk through this deed office, one of hundreds of county deed offices throughout the shale, affirms the fact.
Their not rude, just quiet, especially amongst themselves - a competitor may be nearby - as they sift through county land records, as observed by The Wayne Independent on Wednesday.
There were about 14 together in one room that day, tracing property ownership and plot lines through time.
While only a couple of permits have been issued in the county, all earlier this year, and only one well has been drilled, according to state Department of Environmental Protection figures, there are at least 1,800 leases signed in the county today - with landowners anxiously awaiting the day when royalties literally spew from the shale below.
It is difficult to determine an exact, total number of signed leases. Some leases signed with one company were later sold to a different company. Some of these reassignments are probably occurring now, said Golden.
A review by The Wayne Independent found most leases signed in areas north of Honesdale, covering a wide-swath of the county’s northern half, in the following townships and boroughs: Scott, Starrucca, Preston, Buckingham, Manchester, Mount Pleasant, Damascus, Lebanon, Dyberry, Clinton, Bethany, and Oregon.
There were also leases signed south of Honesdale, although much less, in the following townships and boroughs: Canaan, Cherry Ridge, Texas, Berlin, Palmyra, Hawley and Lake.
Chesapeake Appalachia, a subsidiary of Chesapeake Energy Corp., of Oklahoma, holds the lion’s share - nearly 1,500 leases. (A lease is an intent to drill.)
Exco-North Coast Energy, of Ohio, who has drilled extensively in western Pennsylvania, signed 124 leases here.
Cabot Oil & Gas Corp., of Texas, signed 67; Stone Energy Corp., of Louisiana, signed 74, according to county records.
Of note, Chesapeake, it seems, is holding onto their leases with only three rescinded, in August. The natural gas giant has also recently bought leases from Interstate Gas Marketing, of Indiana, Pennsylvania, and Black Cat Energy, of Texas.

From lease to drill
In a state senate committee hearing on Tuesday in Luzerne County regarding the economic and environmental impact of the Marcellus Shale play, gas company executives stated that they plan to move ahead with drilling, despite what they say is a cumbersome regulatory system, which is stymieing their progress. (The Wayne Independent will follow-up on this in another report.)
State Sen. Lisa Baker’s office provided the executives written testimony to the Wayne Independent.
Wendy Straatman, president of Exco-North Coast Energy, said the company’s focus this year has been land lease transactions.
“To date, we have invested significant sums toward that end, essentially providing us the right to drill on and under someone’s property,” according to her written testimony. “In total, during this calendar year, I believe that Marcellus producers, including Exco, have invested significantly more than $2 billion in land leases alone. ... Please understand that these land leases represent the “tip of the iceberg” in terms of what we as an industry are poised to invest in Pennsylvania.”
Scott Rotruck, vice president of corporate development for Chesapeake Energy, said the company will ramp up drilling operations next year.
“We currently have two drilling rigs operating in the Marcellus Shale, one of which is in Pennsylvania. Depending on the rate of permitting, we could drill 50-75 wells ... next year,” according to his written testimony.
Chesapeake is one of the largest leaseholders in the Marcellus Shale with approximately 1.8 million acres leased.
Testimony from the hearing will soon be available on the senator’s state website, said Brian Grove, chief of staff.

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