Land leased for natural gas in Broome breathes new life into potential for area
NORWICH – Though not all of the particulars have been determined, the news last week that 19,000 acres in Broome County was leased for natural gas development breathes new life into what has been a quiet period for Chenango County landowners.
A coalition of 700 property owners in Binghamton and Conklin signed a preliminary deal June 19 with Hess Corporation and Seneca Resources Corporation for $3,500 per acre and 20 percent royalties.
The amount compares to a deal signed 14 months ago where XTO Energy agreed to pay to lease 37,000 acres in Deposit at $2,400 per acre for mineral rights and 15 percent royalties.
The development is a good sign that the industry “appears to be heating back up,” said Brian Conover, a member of the Central New York Landowners Coalition based in New Berlin.
Bryant LaTourette of the Oxford Land Group said the development is “a good start for our area.”
New York Governor David Paterson placed a moratorium on all permitting and drilling into shale formations last fall in order to give the New York State Department of Environmental Conservation time to catch up with new horizontal drilling and hydrofraking technologies. That action has put New York behind Pennsylvania and other Appalachian Basin states where record-breaking reserves of natural gas are being produced from the Marcellus Shale formation.
The Broome County coalition agreed to accept the companies’ offer, but the contracts have yet to be completed. The corporate partners would pay in a tiered system, with a total of $1,500 per acre for an exploratory phase through 2012, and a total of $1,500 an acre from 2013 to 2015.
At the end of 2012, the companies have the option of deciding whether to continue into full scale development through 2017.
Norse Energy Inc. spokesman Dennis Holbrook said he was “encouraged” to see interest in the region again and hopes exploration in New York proves to be as successful if not more so than in Pennsylvania.
“It’s encouraging to see some interest ... but we have to couch that in terms of that the development is concentrated around the Pennsylvania border where they’ve had the opportunity to make discoveries in the Marcellus. People need to keep in mind that there are tendencies to get caught up in the speculation of values that have been indicated to points further south ... We have not seen that level of speculation on acreage positions as you move further north,” he said.
Norse has been actively drilling and producing natural gas from the Herkimer sandstone strata in Chenango and Madison counties and pumping it north to the Dominion via its new pipelines. The company has invested $12 million in real property over the past two years in addition to drilling activity. Holbrook estimates Norse’s real property tax contributions in Chenango and Madison counties is approaching a quarter of a million dollars.
Last October, Norse retained a leading advisor to the global oil and gas energy industry to help develop its extensive Marcellus and Utica shale positions as well. Holbrook said Norse continues to explore to see if there are entities that are interested in participating with them in development, but the state’s regulatory delays and resulting lack of exploration and discovery with the Marcellus “has dampened interest.”
The Central New York coalition, formed last summer, represents 160,000 acres in Chenango, Otsego and Madison counties. Its members have attended several educational forums, information session and finally - in April - a lease presentation.
Conover said the coalition’s lease is now complete and prospective natural gas developers have been solicited.
“After the meeting of coalition members, a couple more environmentally- friendly additions were included in the lease,” he said.
The Marcellus Shale becomes thicker and the natural gas within more pressurized, as it moves south from where it outcrops in Marcellus, New York. Holbrook said Norse is “very optimistic” about the potential for the Marcellus in Chenango and Madison, but there hasn’t been “the opportunity to prove it.”
Conover said New York needs “to get the show on the road.”
“They would be getting more tax revenue that they badly need very rapidly from these deals.”
A coalition of 700 property owners in Binghamton and Conklin signed a preliminary deal June 19 with Hess Corporation and Seneca Resources Corporation for $3,500 per acre and 20 percent royalties.
The amount compares to a deal signed 14 months ago where XTO Energy agreed to pay to lease 37,000 acres in Deposit at $2,400 per acre for mineral rights and 15 percent royalties.
The development is a good sign that the industry “appears to be heating back up,” said Brian Conover, a member of the Central New York Landowners Coalition based in New Berlin.
Bryant LaTourette of the Oxford Land Group said the development is “a good start for our area.”
New York Governor David Paterson placed a moratorium on all permitting and drilling into shale formations last fall in order to give the New York State Department of Environmental Conservation time to catch up with new horizontal drilling and hydrofraking technologies. That action has put New York behind Pennsylvania and other Appalachian Basin states where record-breaking reserves of natural gas are being produced from the Marcellus Shale formation.
The Broome County coalition agreed to accept the companies’ offer, but the contracts have yet to be completed. The corporate partners would pay in a tiered system, with a total of $1,500 per acre for an exploratory phase through 2012, and a total of $1,500 an acre from 2013 to 2015.
At the end of 2012, the companies have the option of deciding whether to continue into full scale development through 2017.
Norse Energy Inc. spokesman Dennis Holbrook said he was “encouraged” to see interest in the region again and hopes exploration in New York proves to be as successful if not more so than in Pennsylvania.
“It’s encouraging to see some interest ... but we have to couch that in terms of that the development is concentrated around the Pennsylvania border where they’ve had the opportunity to make discoveries in the Marcellus. People need to keep in mind that there are tendencies to get caught up in the speculation of values that have been indicated to points further south ... We have not seen that level of speculation on acreage positions as you move further north,” he said.
Norse has been actively drilling and producing natural gas from the Herkimer sandstone strata in Chenango and Madison counties and pumping it north to the Dominion via its new pipelines. The company has invested $12 million in real property over the past two years in addition to drilling activity. Holbrook estimates Norse’s real property tax contributions in Chenango and Madison counties is approaching a quarter of a million dollars.
Last October, Norse retained a leading advisor to the global oil and gas energy industry to help develop its extensive Marcellus and Utica shale positions as well. Holbrook said Norse continues to explore to see if there are entities that are interested in participating with them in development, but the state’s regulatory delays and resulting lack of exploration and discovery with the Marcellus “has dampened interest.”
The Central New York coalition, formed last summer, represents 160,000 acres in Chenango, Otsego and Madison counties. Its members have attended several educational forums, information session and finally - in April - a lease presentation.
Conover said the coalition’s lease is now complete and prospective natural gas developers have been solicited.
“After the meeting of coalition members, a couple more environmentally- friendly additions were included in the lease,” he said.
The Marcellus Shale becomes thicker and the natural gas within more pressurized, as it moves south from where it outcrops in Marcellus, New York. Holbrook said Norse is “very optimistic” about the potential for the Marcellus in Chenango and Madison, but there hasn’t been “the opportunity to prove it.”
Conover said New York needs “to get the show on the road.”
“They would be getting more tax revenue that they badly need very rapidly from these deals.”
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