Chesapeake to renegotiate 4,400 NY gas leases
ALBANY - A subsidiary of Chesapeake Energy Corp., the country's second-largest natural gas producer, has agreed to let more than 4,400 New York landowners renegotiate old gas leases for more favorable financial and environmental terms, said state Attorney General Eric Schneiderman late last week.
Chesapeake Appalachia will also pay $250,000 to cover the state’s investigation costs.
Chesapeake had tried to extend the leases in 2009, claiming the state's de facto moratorium on shale gas development since it started an environmental review in 2008 constituted an uncontrollable event that allows for a lease extension if an "act of God" or unforeseen circumstance prevents drilling.
The leases were signed long before the shale gas boom that began in Pennsylvania in 2007 boosted land prices from as low as $2-$3 an acre to more than $1,500 an acre. Schneiderman investigated after receiving complaints from landowners. Chesapeake began leasing in Chenango County back in 2006, but according to the Planning Department, there have been no complaints here.
In the settlement with the state, Chesapeake admits no wrongdoing.
"It is unfortunate that we have been in this situation in New York since 2008, where landowners and their mineral lessees have been unable to develop mineral rights in the Southern Tier despite a robust drilling program being undertaken in neighboring Pennsylvania," Chesapeake spokesman Brian Grove said in a prepared statement.
A spokesman for Norse Energy Corp., the dominate natural gas developer in Chenango County, said Friday that Norse is not a party to the lawsuits involving Chesapeake addressing force majeure. Norse declared force majeure over most of its leases in New York not held by production, effective December 2010, when Governor David Paterson issued an executive order prohibiting permitting for high volume hydraulic fracturing until issuance of the SGEIS.
Norse Chief Legal Officer Dennis Holbrook said Chesapeake’s settlement should be viewed in the context of lease issues specific to Chesapeake.
“Our company’s typical lease provides for an extension of the lease term under circumstances, which we believe have arisen, as a result of delays in the SGEIS,” said Holbrook.
Chesapeake Appalachia will also pay $250,000 to cover the state’s investigation costs.
Chesapeake had tried to extend the leases in 2009, claiming the state's de facto moratorium on shale gas development since it started an environmental review in 2008 constituted an uncontrollable event that allows for a lease extension if an "act of God" or unforeseen circumstance prevents drilling.
The leases were signed long before the shale gas boom that began in Pennsylvania in 2007 boosted land prices from as low as $2-$3 an acre to more than $1,500 an acre. Schneiderman investigated after receiving complaints from landowners. Chesapeake began leasing in Chenango County back in 2006, but according to the Planning Department, there have been no complaints here.
In the settlement with the state, Chesapeake admits no wrongdoing.
"It is unfortunate that we have been in this situation in New York since 2008, where landowners and their mineral lessees have been unable to develop mineral rights in the Southern Tier despite a robust drilling program being undertaken in neighboring Pennsylvania," Chesapeake spokesman Brian Grove said in a prepared statement.
A spokesman for Norse Energy Corp., the dominate natural gas developer in Chenango County, said Friday that Norse is not a party to the lawsuits involving Chesapeake addressing force majeure. Norse declared force majeure over most of its leases in New York not held by production, effective December 2010, when Governor David Paterson issued an executive order prohibiting permitting for high volume hydraulic fracturing until issuance of the SGEIS.
Norse Chief Legal Officer Dennis Holbrook said Chesapeake’s settlement should be viewed in the context of lease issues specific to Chesapeake.
“Our company’s typical lease provides for an extension of the lease term under circumstances, which we believe have arisen, as a result of delays in the SGEIS,” said Holbrook.
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