Posts Tagged ‘Ross Township’
EnCana is currently signing standard leases giving Luzerne County landowners $2,500-per-acre bonuses.
STEVE MOCARSKY firstname.lastname@example.org
The value of land leases with natural gas drilling companies has been climbing in counties to the north, but whether that happens in Luzerne County will depend on the results of exploratory drilling scheduled to begin this summer.
Natural gas exploration companies are now offering leases in Susquehanna and Bradford counties with up-front per-acre bonuses in the $5,000 to $6,000 range and royalties as high as 20 percent, said Garry Taroli, an attorney with Rosenn Jenkins & Greenwald representing area landowners.
Late last month, natural gas producer Williams Companies bought drilling rights to 42,000 net acres in Susquehanna County from Alta Resources for $501 million, placing the lease value on that land at nearly $12,000 per acre.
So people like Edward Buda, who owns land in Fairmount Township on which the first natural gas well in Luzerne County will be drilled in July, might be feeling some lessor’s remorse, given that they agreed to comparatively paltry up-front bonuses for the first two years of the lease term.
When Buda, 75, of Ross Township and his late brother and sister-in-law were in negotiations with WhitMar Exploration Co. early last year, they, like many others, agreed to bonus payments of $12.50 per acre each year for the first two years of the lease. The bonus increases to $2,500 for the third year.
However, if drilling begins on or under a landowner’s property before an anniversary date of the lease, any bonus payments for subsequent years become null and void and the royalty provision of the lease kicks in. So, if the drilling that is to begin next month on Buda’s property is successful, he likely won’t ever see that $2,500-per-acre bonus but will receive much larger royalty payments.
Since Buda’s lease was negotiated, WhitMar sold most of the company’s interest in the leases to EnCana Oil & Gas (USA) Inc.
EnCana is currently signing standard leases giving Luzerne County landowners $2,500-per-acre bonuses – $1,000 the first year of the lease and $1,500 the second year, according to EnCana’s Group Lead for Land (New Ventures) Kit Akers.
Some landowners who signed the same type of deal with WhitMar as Buda believe they’ve been treated fairly.
Michael Giamber, 57, of Fairmount Township, lives about 2 miles from the Buda drill pad. While the Budas negotiated their lease on their own, Giamber joined a consortium of landowners who negotiated a deal with WhitMar in 2008 for bonuses of $12.50 per acre each year for the first two years of the lease, $2,500 per acre for the third year, and a 20-percent royalty on all gas produced.
“It was in the middle of a recession and leasing had pretty much stopped except in Dimock. We essentially partnered with WhitMar,” Giamber said.
In exchange for landowners accepting the initially small incremental bonus payment arrangement, WhitMar promised to do seismic testing of the leased land and partner with a company that would handle the drilling and secure permits for one to three exploratory wells in the county within two years.
“I signed on not because of the bonus, but because of the 20-percent royalty and because if they did not drill one to three wells after two years, we’d be free agents again,” able to renegotiate for better terms, Giamber said. “Because we were in a recession, what did we have to lose?”
“A lot of older people would rather more up-front money, and I can appreciate their position,” Giamber said.
Jeffrey Nepa, an attorney with Nepa & McGraw in Carbondale and Clifford, believes people who signed leases early for smaller bonuses were either “more desperate and needed money or were misinformed about what the extent of (drilling in the Marcellus Shale) was. Some people have had buyer’s remorse, so to speak, regretful that they signed and wanting to get out,” Nepa said.
Nepa said he’s seen bonus money increase, dip back down, “and now it’s creeping back up again. And it appears that landowners “who held out, so to speak, are the ones that are rewarded with the largest contracts. In the Barnett Shale (in Texas), I’ve heard of property owners getting in excess of $20,000 per acre, and they were the ones who held out.”
Gas companies normally drill in 640-acre blocks of land. So people with a larger tract of land are better off holding out for better lease terms, Nepa said.
On the other hand, those who signed leases earlier are now the ones who will see royalty payments kick in much sooner than anyone else, because they will be the first to have wells drilled, said Robert Schneider, 39, of Fleetville, Lackawanna County.
Schneider joined a landowner consortium that negotiated leases with a $2,100 bonus and an 18-percent royalty in 2008 with Exco Resources, and he’s glad he didn’t hold out for more.
“Two years have gone by and I have three years left. … There’s a risk if you wait,” Schneider said, speculating that implementation of more rigorous and costly government permitting requirements, the establishment of a severance tax or finding insufficient or no gas in his area are all reasons that companies might pull out and stop leasing.
EnCana’s Akers backed up what Giamber and Schneider had to say. “People who leased earlier put themselves in a position to most likely have their land drilled earlier,” she said.
And Akers said, if WhitMar had not been able to secure leases at relatively low cost to the company, exploration in Luzerne County might not have begun as soon as it has.
“Because these people leased early to WhitMar, WhitMar was able to build a large position of leases that allowed for horizontal drilling. That’s what got a company like EnCana interested in coming to Luzerne County. If we had not seen a consolidated lease position, it’s unlikely WhitMar would have gotten a company like EnCana to come in … It was possible that the $12.50 offer was the only offer those people would ever get,” she said.
Akers also believes that the reason landowners in Susquehanna and Bradford counties are being offered much higher bonuses is because hundreds of wells have been drilled there and natural gas extraction has proven successful.
“Luzerne County, on the other hand, is really on the frontier. There’s no way to know if shale within a geographic region will produce any gas or enough gas to make drilling profitable without actually drilling wells. There have been no wells drilled in Luzerne County, so that’s the reason why there’s a difference in lease prices between Luzerne County and other counties,” Akers said.
If wells on Buda’s land and a site in Lake Township don’t produce any gas or at least enough of it to make drilling there worthwhile, land lease values in Luzerne County could drop to zero, Akers said.
If the wells do produce significant amounts of gas, however, competition for drilling rights will definitely heat up, Akers said, and with it the price.
Steve Mocarsky, a Times Leader staff writer, may be reached at 970-7311.
Copyright: Times Leader
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.”
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
People are wondering just what EnCana will bring to Marcellus Shale drilling.
Edward Buda had been dealing with representatives of Whitmar Exploration Co. for about two years since he, his late brother and sister-in-law negotiated a lease with the company for natural gas drilling on their Fairmount Township property.
• Based in Calgary, Alberta, EnCana was formed in 2002 through the business combination of Alberta Energy Co. Ltd. and PanCanadian Energy Corp. It is one of North America’s leading natural gas producers with a land base of 15.6 million acres in North America.
• The company produces 3 billion cubic feet of natural gas per day and operates about 8,700 wells.
• EnCana operates in the United States through its subsidiary Encana Gas & Oil (USA) Inc., with its U.S. headquarters in Denver, Colo., and field offices in Denver, Texas, Wyoming and Louisiana.
• In addition to the Marcellus Shale, EnCana is active in four key natural gas resource plays: Jonah in southwest Wyoming; Piceance in northwest Colorado; and the East Texas and Fort Worth, Texas basins. The USA Division is also focused on the development of the Haynesville Shale play in Louisiana and Texas.
• EnCana Corp. reported sales of $11 billion in 2009. Its stock trades under the symbol ECA. It has traded between $27.56 and $63.19 per share in the past 52 weeks and closed Friday at $30.28.
Many area properties are leased for drilling
The list of Luzerne County properties leased for natural gas drilling is long – more than 1,000 just with EnCana Oil & Gas. Chesapeake Energy holds dozens more leases, although the company so far has not begun any drilling operations.
Work began last week on the site of Encana’s first exploratory well in Luzerne County, off Route 118 in Lake Township.
The Times Leader obtained drilling leases filed with the Luzerne County Recorder of Deeds as of last week. They range from slivers of land – less than one-tenth of an acre – to huge spreads of hundreds of acres. Most are with individuals, others with well-known organizations, such as the Irem Temple Country Club.
All of them are in the Back Mountain or other areas in the north and west parts of the county. Most of the land will never host a gas well but may be needed for access roads, equipment storage and to buffer drilling pads from neighbors.
The lists are in pdf format, sorted by municipality. Duplicate filing numbers were removed, but most properties show up twice because leases originally signed with Whitmar Exploration Co. have been assigned to EnCana. The lists can be searched by name using later versions of Adobe Reader, a free computer program.
Find the lists accompanying the main story under “Related Documents” at www.timesleader.com.
Now, there’s a new player in the mix, since Whitmar announced a partnership with EnCana Oil & Gas (USA) Inc. in November for a joint venture in drilling and development of the Marcellus Shale in Luzerne and Columbia counties.
Like others in the Back Mountain, Sweet Valley and Red Rock areas, Buda is a bit wary of the Denver-based energy company.
“We did business with Whitmar. How (Encana is) going to be, I don’t know. How they honor the contract, that’s to be seen. I still don’t know much about them,” said Buda, 75, who lives in Ross Township.
Buda’s brother Walter and Walter’s wife Eleanor signed a fairly simple three-page lease with Whitmar in February 2009, a month before Walter died. Eleanor passed away in November, Edward said, and he became the new lease holder just as EnCana came into the picture.
Now, EnCana wants to lease Edward’s property in Ross Township, but he isn’t too impressed with the $1,000-per-acre offer. And the 16-page lease proposal that has undergone many revisions is written in legalese, he said.
“They wanted to put a drill pad on my property (in Ross Township). I said I want to wait and see what happens in Red Rock (section of Fairmount Township). Everybody’s waiting to see whether it’s going to be a gusher or a fiasco in Red Rock,” Edward said.
Wendy Wiedenbeck, a public and community relations adviser for EnCana, said the well on Buda’s property and a second well planned for a Lake Township property owned by township Supervisor Amy Salansky and her husband, Paul, are exploratory ventures.
If those wells produce an acceptable amount of natural gas, EnCana will develop a plan for expanded drilling operations in the area, Wiedenbeck said. Drilling is expected to begin in July on Buda’s property and gas production should start by October. Clearing of an access road to the site began last week.
Company has won honors
For the past few months, Wiedenbeck has been the face of EnCana locally, arranging and attending meetings with people who live or own property within a mile of the planned drilling sites as well as attending meetings with local groups concerned about drilling activity in their communities.
A self-described “Army wife” with two sons – one in first grade, the other a senior in college, Wiedenbeck has lived in Colorado since 1989 and has been working in community/public relations since the early 1990s. She’s been with EnCana for five years.
“They’re a cultural fit for me. I believe they truly believe in responsible development,” Wiedenbeck said of her employer.
To prove her point, Wiedenbeck provided a long list of awards EnCana has received over the past few years. Just a few include:
• The 2008 U.S. Environmental Protection Agency Natural Gas STAR award, recognizing outstanding efforts to measure, report and reduce methane emissions;
• Interstate Oil & Gas Conservation Commission Chairman’s Stewardship Awards, recognizing exemplary efforts in environmental stewardship by the oil and natural gas industry;
• The 2009 Colorado Oil & Gas Conservation Commission Award for Courtesy Matters program in the Denver-Julesburg Basin surrounding Erie, Colo.
“Courtesy Matters” is EnCana’s community engagement program that brings EnCana staff and third-party contractors together with the community to discuss the nuisance issues associated with company operations,” Wiedenbeck said.
“Courtesy Matters creates a working environment where open and ongoing dialog are paramount. Discussions generally include concerns with traffic, noise and dust associated with our operations,” she said.
Community investment vital
Marty Ostholthoff, community development director for Erie, Colo., said in a teleconference that EnCana is one of four major energy companies drilling in the Denver-Julesburg Basin, the others being Noble Energy Inc., Kerr-McGee Corp. and Anadarko Petroleum Corp.
Fred Diehl, assistant town administrator in Erie, said he would be remiss if he didn’t point out “how far ahead of the other operators EnCana is” when it comes to community investment.
Diehl said he mentioned to Wiedenbeck that officials wanted to install solar panels on a new community center being built, and EnCana donated $250,000 to make that happen. A month ago, the company donated $175,000 for eco-friendly lighting at community ball fields.
“It’s not a requirement that they make notifications to our residents (about drilling activities or problems), but they do. It’s not a requirement that they make financial investments into our community, but they do,” Ostholthoff said.
Of course, there’s a downside to the presence of the drilling companies in the suburban area, which lies in one of the largest natural gas fields in the country, Diehl said.
“These things are still loud,” he said of the drilling rigs. “People come into our offices complaining, ‘We can’t sleep.’ But we worked with the operators to put up hay bales and cargo trailers to minimize the noise. The only good thing is, (the drilling is) temporary.”
As far as addressing concerns of residents, Diehl said all of the companies seem willing and responsive. “If they’re not, one of them can give the whole industry a black eye,” Diehl said.
Wiedenbeck said EnCana will have a toll-free number posted at its drilling sites that people can call to report concerns. Callers who choose the Pennsylvania prompt will be automatically directed to her office or cell phone. An operations phone number also will be established, she said.
And while EnCana will hire someone locally to help with community relations efforts, Wiedenbeck said she will continue to be “that face” for the community. She has spent about half her time in Pennsylvania since EnCana partnered with Whitmar, sometimes bringing her youngest son, Sammy, on trips here.
“He loves Pennsylvania,” she said.
Steve Mocarsky, a Times Leader staff writer, may be reached at 970-7311.
Copyright: Times Leader
Feedback sought on impact on communities and environment as industry explores Marcellus Shale.
With questions, concerns and accusations increasing with the rise of drilling for natural gas in Pennsylvania, state legislators and officials have been on the road to hear from voters and explain what they’re doing in Harrisburg.
If you go
The informational meetings are being held today at the Benton Area High School, 400 Park St., Benton. Issues involving Luzerne County municipalities, including Fairmount and Lehman townships, will be discussed at 6 p.m., Ross Township and Columbia County north of Routes 254 and 239, at 7:15 p.m. and the county below those roads, at 8:30 p.m.
A Senate Urban Affairs and Housing Committee public hearing last week in Bradford County heard about renters being priced out of their apartments by rig workers.
Later that day at a League of Women Voters forum in Scranton, a state Department of Environmental Protection official addressed concerns about a lack of oversight.
State Sen. Lisa Baker, R-Lehman Township, was involved in a Senate Environmental Resources and Energy Committee hearing on drilling wastewater treatment issues on Wednesday in Harrisburg.
State Rep. Karen Boback, R-Harveys Lake, joins the road warriors tonight in Benton, where the Columbia County Land Owners Coalition is hosting informational meetings. Along with Boback will be state Reps. Garth Everett, R-Lycoming and David Millard, R-Columbia, for the three meetings, which are organized geographically.
Boback is “just going to be there to let homeowners know what’s being done in Harrisburg to address their concerns,” spokeswoman Nicole Wamsley said.
Depending on the crowd, the legislators could face either support or hostility about the issue. Anti-drilling groups have coalesced in the region and have organized attempts to voice their concerns at everything from rallies to zoning board hearings.
While drilling for gas in the Marcellus Shale holds the tantalizing promise of economic benefits and jobs for decades, it also raises a variety of environmental issues, most notably the quality and availability of water.
Add to that concerns such as the practice of “forced pooling.” In theory, it’s designed to minimize surface disturbances by evenly spacing well pads over an entire drilling area and protect landowners from having their gas siphoned off without compensation.
In practice, it forces landowners into leases whether they want one or not.
Legal in New York, it’s being addressed in Harrisburg. Boback had supported a bill based on the land-conservation premise, but recently retracted it “when the questions arose … based on discussions with research staff” regarding its practical application, Wamsley said.
Copyright: Times Leader
Luzerne County property owners hope to have their own deal by year’s end.
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
Area group advises residents to be patient, don’t agree to low rates offered by drillers.
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.
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
Company files documents to drill in Luzerne County, has leased 17,500 acres.
Natural gas drilling may be about to boom in Luzerne County.
Denver-based WhitMar Exploration Co. recently submitted 200 lease documents to ensure that they have the correct property identification numbers, or PINS. Pin certification is required before the leases are officially recorded in the county recorder of deeds office.
The documents show the company has acquired drilling rights on 5,440 acres in Harveys Lake and the following townships: Ross, Lake, Lehman, Fairmount, Union, Huntington and Jackson.
WhitMar representative Brad Shepard said the company has leased 17,500 acres in Luzerne County to date, with more planned. Shepard said he was too busy with planning meetings Tuesday to explain how the drilling will be executed.
Beth Chocallo, a Lake Township property owner who agreed to lease her 3.29 acres to WhitMar, said she and her husband, Richard, were connected to WhitMar through a seminar.
The couple did not receive any upfront payment, she said. Instead, WhitMar will pay a lease rental after the first year or two and a percentage of the profits if natural gas is extracted, Chocallo said.
Chocallo she is optimistic that gas will be found because she doesn’t believe WhitMar would invest in the time and expense of preparing leases without a strong likelihood.
“Who knows where the gas pockets will be found? It’s not a definite,” she said.
WhitMar plans to grid out territories, paying a profit percentage to the owners of all leased property within that grid if gas is extracted, Chocallo said.
She does not believe a drilling rig will be installed on her property because the parcel is on the smaller side compared to others being leased, but she can’t rule out the possibility. Her main concern was that drilling would cut off or diminish her water supply, but she said WhitMar assured her that the company would replace the well and furnish water if that happens.
The lease documents filed in the county do not contain any details about what will be paid to the property owners.
Property owners are leasing WhitMar the exclusive right to explore for and develop oil and gas, the documents say.
That right includes use of the property for the drilling of oil and gas wells and installation of roads, pipes, pumps, compressors, separators, tanks, power stations and any other necessary equipment, the documents say.
Most, if not all, of the leases are for one year, with the option to extend for an additional 11 years or longer.
Of the 200 leases, Fairmount Township had the most property signed with WhitMar – 2,512 acres – followed by Ross Township with 1,205 acres.
Here’s a breakdown of the other leased acreages: Harveys Lake, 58; Jackson Township, 99; Union Township, 102; Huntington Township, 361; Lake Township, 463; and Lehman Township, 640.
Founded in 1979, WhitMar is a private energy operation actively engaged in drilling and developing natural gas and oil prospects in the United States, according to the company’s Web site.
Jennifer Learn-Andes, a Times Leader staff writer, may be reached at 831-7333.
Copyright: Times Leader
Offer extended to interested landowners in Ross and Fairmount townships.
ROSS TWP. – For a limited time, landowners looking for a natural-gas drilling lease have a commitment-free offer to get a low-cost lease negotiator.
The Columbia County Landowners Coalition has a secured a consultant from Texas to negotiate a deal, but he’s starting soon and only doing it once.
The consultant, who has experience with fossil-fuel wells in the Midwest, is charging $1 per acre and expects to begin negotiations at $2,900 per acre for sign-on bonuses and extraction royalties of 18.75 percent, the executive committee of the Southwest Ross Township Property Group announced at a meeting on Tuesday evening.
Those figures exceed the usual for contracts inked in this region.
The Ross group, led by the committee of eight volunteers actively researching the situation, has been holding meetings to explain issues regarding gas leases and sign up landowners within its borders. It’s focusing on a roughly 10,000-acre region and hopes to amass a no-commitment membership of at least 4,000 acres within there.
The Columbia County offer is extended to interested landowners in the vicinity, including the Ross Township group and one in Fairmount Township. Landowners can sign up at the coalition’s Web site, but they must act soon.
According to the Ross group, the coalition expects to begin negotiating in a matter of weeks and hopes to have a contract to sign by the fall. And the consultant, who is doing a favor for a friend, plans to return to retirement after completing the deal.
If it sounds too good to be true, the suspicion might be warranted. The Ross committee acknowledged that the timetable is more rushed than they’d prefer, but they argue that there’s no commitment and people can opt out if they dislike the negotiated deal.
According to the committee, the Columbia County group is moving quickly because sign-on bonuses are considered regular income, and the group fears the changing political climate next year will mean tax increases for upper tax brackets.
The Southwest Ross Township Property Group is holding its next informational meeting at 7 p.m. July 29 at the Sweet Valley fire hall on Main Road.
Copyright: Times Leader