Natural gas meeting draws 600-plus
NEW BERLIN – What New York state’s natural gas pioneer William Hart started back in the 1820s in Chautauqua County is finally coming full circle, having arrived on the doorstep of unsuspecting landowners in the Southern Tier.
Hart’s first successful natural gas well was drilled in Fredonia and led to further interest in the rock formations underground elsewhere in the state. Later, Allegheny County witnessed the first successful oil boom in the town of Richburg. Called the “Glory Year,” in 1881, the boom gorged the town’s minuscule population of 100 to 7,000 in just nine months.
This history and more – including an extensive scientific description of the geology underground here and the ins and outs of negotiating leases – was described in a three and a half hour-long presentation last evening at the Unadilla Valley High School, sponsored by the Central New York Landowner’s Coalition.
Four speakers, a geologist, an energy research provider, environmental regulator and lawyer, were on hand to describe the reality of what has become a frenzy of natural gas interest in Chenango County.
Geologists have widely known and recorded New York’s rich store of mineral deposits and both natural gas and oil well production in the state has ebbed and flowed, with oil peaking in 1878. Today, there are 75,000 oil and gas wells in the state, with about 10 to 12,000 producing. There were significant natural gas production spikes in a two time periods in the mid-1900s, but nothing like what the region’s landowners have been experiencing: the newfound interest in the Marcellus Shale.
According to the experts, natural gas industry companies are planning to invest approximately $1 billion over the next two years in New York. “This is just getting going,” said John P. Martin, senior project manager for the New York State Energy Research and Development Authority. The public authority’s job is to transfer technology information to the public, conduct research and act on energy problems on behalf of the state.
All of the newfound interest in the Marcellus Shale began last September when geologist Richard Nyahay, who spent two years researching for the New York State Museum, calculated the potential quantity and quality of the formation.
“A lot of eyes in the nation are beginning to focus on your areas in upstate New York,” he told the more than 600 landowners in attendance last night.
Nyahay said he began his research by focusing on the Barnett Shale formation in Texas and comparing it to the Marcellus. The Barnett Shale, he said, has been the most successful shale play in the nation, but it took experts 17 years and 130 wells before finding that success.
However, what he found, he said, was “a much bigger system” in the Marcellus - an Appalachian Basin formation that spans from Ohio and West Virginia to Pennsylvania and Southern New York. His research indicated that the formation thickens to the east.
“I think you are right in the ball park,” he said. “It worked for the Barnett, it will it work here, but we have to drill. It will take time, lots of wells have to be drilled.”
But are there enough state environmental regulators on board to manage the natural gas exploration and drilling activity sweeping the Southern Tier?
So far Thomas E. Noll, a mineral resources specialist for the Department of Environmental Conservation’s Bureau of Oil and Gas regulation, said staffing is sufficient to handle the current level of work on what is expected to be 600 new well permits this year (There were 650 in 1997). Coupled with the nation’s shortage of available drill rigs, Noll said, “It’s too early to cry wolf.”
The DEC reviews well permit applications according to Mineral Laws that were amended in 2005. While Noll said the Marcellus and another rich deposit in the Utica formation “were not on the radar in 2005,” he said the DEC is committed to preventing waste; protecting property, health, safety and the environment; providing for the ultimate resources of oil and natural gas; and protecting correlating rights of all persons.
“We look at this very seriously,” he said. “If the area is archeologically sensitive we will talk to the state historical preservation office. Nothing is taken lightly. .. We are here to protect your water, your wells.”
The Central New York Landowner’s Coalition, according to its chairman, Richard Lasky, is 35,000 acres strong currently with the potential for another 5,000 to 10,000 acres. A steering committee of seven members representing 800 acres formed the group in May. There are 600 registered members today. All landowners in New York are invited to join.
The Central New York Landowners’ Coalition’s mission is to ‘educate, negotiate and conserve.’ By holding meetings – and attracting more members – it hopes to keep landowners in the area informed about the process of securing the most favorable lease while at the same time preserving the beauty and environment of Chenango County and surrounding areas.
Though Coalition membership is free, there will be fees involved for services, such as legal counsel. Christopher Denton of Elmira, who has spent the last nine years studying natural gas leases and has 30 years of experience in real property law, is the Coalition’s legal expert. He advised landowners to access why they own land before considering a lease and to do “the math.”
“There’s broad language in a lease that can get you into trouble,” he said. Landowners should be aware of signing bonuses and focus on long-term royalty payments.
“The seduction is the immediate cash. This is a complex business transaction masked as a lottery.”
Denton described the intricacies of compulsory integration, unit spacing and environmental hazards. He questioned whether the DEC was prepared to handle the new surge of activity coming to the region.
“If there’s nothing illegal about what they (gas companies) want to do, they are nt going to spend money on something for you unless you negotiate it,” he said.
Out of every 10 wells drilled in New York, Denton said eight are usually successful. Of the latter number, 1 in 5 becomes a great well.
Denton told the group that he had received a call on Wednesday from a client in Binghamton who said he had been offered 18 percent royalties for a five-year lease at $4,500 an acre.
“That’s crossing a threshold,” he said. The local going rate less than two years ago was 12 1/2 percent royalties at $200 an acre.
Hart’s first successful natural gas well was drilled in Fredonia and led to further interest in the rock formations underground elsewhere in the state. Later, Allegheny County witnessed the first successful oil boom in the town of Richburg. Called the “Glory Year,” in 1881, the boom gorged the town’s minuscule population of 100 to 7,000 in just nine months.
This history and more – including an extensive scientific description of the geology underground here and the ins and outs of negotiating leases – was described in a three and a half hour-long presentation last evening at the Unadilla Valley High School, sponsored by the Central New York Landowner’s Coalition.
Four speakers, a geologist, an energy research provider, environmental regulator and lawyer, were on hand to describe the reality of what has become a frenzy of natural gas interest in Chenango County.
Geologists have widely known and recorded New York’s rich store of mineral deposits and both natural gas and oil well production in the state has ebbed and flowed, with oil peaking in 1878. Today, there are 75,000 oil and gas wells in the state, with about 10 to 12,000 producing. There were significant natural gas production spikes in a two time periods in the mid-1900s, but nothing like what the region’s landowners have been experiencing: the newfound interest in the Marcellus Shale.
According to the experts, natural gas industry companies are planning to invest approximately $1 billion over the next two years in New York. “This is just getting going,” said John P. Martin, senior project manager for the New York State Energy Research and Development Authority. The public authority’s job is to transfer technology information to the public, conduct research and act on energy problems on behalf of the state.
All of the newfound interest in the Marcellus Shale began last September when geologist Richard Nyahay, who spent two years researching for the New York State Museum, calculated the potential quantity and quality of the formation.
“A lot of eyes in the nation are beginning to focus on your areas in upstate New York,” he told the more than 600 landowners in attendance last night.
Nyahay said he began his research by focusing on the Barnett Shale formation in Texas and comparing it to the Marcellus. The Barnett Shale, he said, has been the most successful shale play in the nation, but it took experts 17 years and 130 wells before finding that success.
However, what he found, he said, was “a much bigger system” in the Marcellus - an Appalachian Basin formation that spans from Ohio and West Virginia to Pennsylvania and Southern New York. His research indicated that the formation thickens to the east.
“I think you are right in the ball park,” he said. “It worked for the Barnett, it will it work here, but we have to drill. It will take time, lots of wells have to be drilled.”
But are there enough state environmental regulators on board to manage the natural gas exploration and drilling activity sweeping the Southern Tier?
So far Thomas E. Noll, a mineral resources specialist for the Department of Environmental Conservation’s Bureau of Oil and Gas regulation, said staffing is sufficient to handle the current level of work on what is expected to be 600 new well permits this year (There were 650 in 1997). Coupled with the nation’s shortage of available drill rigs, Noll said, “It’s too early to cry wolf.”
The DEC reviews well permit applications according to Mineral Laws that were amended in 2005. While Noll said the Marcellus and another rich deposit in the Utica formation “were not on the radar in 2005,” he said the DEC is committed to preventing waste; protecting property, health, safety and the environment; providing for the ultimate resources of oil and natural gas; and protecting correlating rights of all persons.
“We look at this very seriously,” he said. “If the area is archeologically sensitive we will talk to the state historical preservation office. Nothing is taken lightly. .. We are here to protect your water, your wells.”
The Central New York Landowner’s Coalition, according to its chairman, Richard Lasky, is 35,000 acres strong currently with the potential for another 5,000 to 10,000 acres. A steering committee of seven members representing 800 acres formed the group in May. There are 600 registered members today. All landowners in New York are invited to join.
The Central New York Landowners’ Coalition’s mission is to ‘educate, negotiate and conserve.’ By holding meetings – and attracting more members – it hopes to keep landowners in the area informed about the process of securing the most favorable lease while at the same time preserving the beauty and environment of Chenango County and surrounding areas.
Though Coalition membership is free, there will be fees involved for services, such as legal counsel. Christopher Denton of Elmira, who has spent the last nine years studying natural gas leases and has 30 years of experience in real property law, is the Coalition’s legal expert. He advised landowners to access why they own land before considering a lease and to do “the math.”
“There’s broad language in a lease that can get you into trouble,” he said. Landowners should be aware of signing bonuses and focus on long-term royalty payments.
“The seduction is the immediate cash. This is a complex business transaction masked as a lottery.”
Denton described the intricacies of compulsory integration, unit spacing and environmental hazards. He questioned whether the DEC was prepared to handle the new surge of activity coming to the region.
“If there’s nothing illegal about what they (gas companies) want to do, they are nt going to spend money on something for you unless you negotiate it,” he said.
Out of every 10 wells drilled in New York, Denton said eight are usually successful. Of the latter number, 1 in 5 becomes a great well.
Denton told the group that he had received a call on Wednesday from a client in Binghamton who said he had been offered 18 percent royalties for a five-year lease at $4,500 an acre.
“That’s crossing a threshold,” he said. The local going rate less than two years ago was 12 1/2 percent royalties at $200 an acre.
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