October 14, 2008

Drill Now, Drill Here?

By Rutter, Jon

[email protected] Natural gas developers and speculators are raising a joyful shout over the Marcellus Shale formation in western and northern Pennsylvania.

Now, the volume is rising here.

Many county residents have hunting camps and other land interests in upstate Pennsylvania.

Pressure to drill on those parcels is surging, said Brian Kelly, a Penn State Cooperative Extension educator who will speak about the issue during an Oct. 21 informational meeting at Ephrata Middle School, 957 Hammon Ave.

The program will run from 7 to 9:30 p.m.; tickets are $15 at the door.

The session includes a talk by Kelly on Marcellus Shale geology. Lester Greevy, an oil and gas attorney, will speak on gas-lease negotiation. Tom Murphy, also from Penn State, will provide an overview of what happens to a property during exploration and production.

Call 394-6851 to register for the program, sponsored by the extension service in partnership with Ephrata Area Young Farmers.

Leasing land for gas drilling in Pennsylvania is nothing new.

But Kelly, of Blair County, said rising energy demands and technological advances have ignited sudden interest in the shale formation, buried 5,000 to 9,000 feet beneath much of the northern Appalachians.

"The gas is actually trapped inside the stone," he explained. Horizontal drilling techniques are expected to open up more layers of rock at deeper levels.

A geologist at Penn State has estimated that recovering just 10 percent of the field's potential would meet American natural gas needs for two years.

It will take longer than that to develop the Marcellus Shale, according to Kelly, who said a well typically pumps for 20 years.

The situation promises rewards and pitfalls alike for landowners, who may or may not own the subsurface mineral rights to their property.

Lease offers in Lycoming County zoomed from $300 an acre early this year to $2,500 or more now, Kelly said. The royalties, too, are potentially lucrative.

But not all the impacts of ramping up natural gas extraction are known.

Some farmers are questioning whether a new pipeline will be built through Lancaster County, disrupting their operations, said Peggy Fogarty-Harnish, an agricultural economic development educator with the Penn State Extension here.

Large-scale drilling is certain to alter the landscape to some degree, Kelly said.

Drillers typically install a well in the middle of a 300- or 400- acre tract, he added, and a drill pad occupies three to five acres.

The process requires building roads and pipelines and injecting large quantities of water into the ground and then drawing some of it back out.

Energy companies are responsible for obeying environmental regulations and returning the terrain to "somewhat" its previous condition after they leave, Kelly said.

But he added that it's up to landowners to negotiate suitable terms with would-be drillers.

People should not necessarily lock themselves into current lease rates, according to Kelly, who said that the typical mineral rights agreement expires after five years.

"What happens if the lease market changes significantly?

"You can put addendums in the lease to protect yourself," he said.

(Copyright 2008 Lancaster Newspapers. All rights reserved.)

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