Gas Driller Opposes Pipeline Rules, Asks Landowners to Raise Concerns

- Gas Driller Opposes Pipeline Rules, Asks Landowners to Raise Concerns

Tuesday, August 09, 2011
Knight Ridder/Tribune Business News
by Laura Legere, The Times-Tribune, Scranton, Pa.

New permitting requirements affecting natural gas pipelines in Pennsylvania have raised the ire of Chesapeake Energy, which is encouraging natural gas leaseholders to join it in protesting the rules.

In a recent letter sent to landowners in the Northern Tier, Chesapeake's vice president for government relations, David J. Spigelmyer, called the updated requirements enacted by the U.S. Army Corps of Engineers on July 1 "unnecessary, time consuming and redundant."

Delays caused by the new permit reviews have stranded 128 of the company's drilled and completed Marcellus Shale wells without pipelines and are "costing Pennsylvanians royalty income," he wrote.

The new rules replace federal regulations that expired in June controlling pipeline construction and other surface-water impacts in Pennsylvania. A change in the regulations requires companies to detail all of the streams and wetlands to be crossed by a pipeline project -- some of which stretch for hundreds of miles -- rather than outlining only the impacts of each stream crossing individually.

The new permits allow regulators to consider the cumulative surface-water impacts of the projects, which are increasingly spiderwebbing the commonwealth to tie new Marcellus Shale wells to interstate pipelines that bring the gas to market.

Army Corps of Engineers spokeswoman Stacy A. Ouellette said the permit "streamlines the process for activities throughout the state of Pennsylvania" and within multiple Army Corps of Engineers boundaries. The permit also allows Pennsylvania "to issue permits for activities having minimal impact to waterways and wetlands, reducing redundancy between the corps and state," she said.

In a description of the regulations published in the Pennsylvania Bulletin in May, Pennsylvania Department of Environmental Protection Secretary Michael Krancer said that the revised permit incorporates federal and state standards in one process and "continues a streamlined process for permit applicants without compromising comprehensive environmental protection."

PennFuture president Jan Jarrett said the cumulative review offered with the new permit is "a good thing." The need for additional regulatory oversight of pipeline construction was highlighted in recent weeks when two failures at a pipeline project in Susquehanna County dumped drilling mud into a high-quality waterway, she said.

"It's unfortunate to see a company coming out opposing updated regulations that address natural gas pipelines," she said. "We would rather see them doubling down and working with the regulations that are clearly aimed at protecting Pennsylvania's water resources rather than stirring up and scaring the landowners who they work with."

Chesapeake said the potential review of all stream and wetland crossings increases the average review time for a project from 45 days to nearly 300 days and unfairly singles out Pennsylvania projects for extra layers of review.

Along with the letter written by Mr. Spigelmyer, Chesapeake provided landowners with a form letter to send to their senators and congressmen that says, "At a time of great economic uncertainty in this country, it seems unproductive that the federal government would take such a drastic step to limit the ability of landowners like me to benefit economically from natural gas production."

In a statement Monday, Mr. Spigelmyer said the Baltimore District of the Army Corps of Engineers began applying aspects of the permit change over the last year and "the delays are already evident."

"This is obviously of great concern to landowners who've had wells drilled on their land and who are wondering why their wells are not yet producing and marketing gas," he said. "It is of equal concern to Chesapeake as each of our wells represents the investment of millions of dollars in capital that can't begin to produce a recovery of investment, let alone a return on investment, if we cannot predictably plan for the development of pipelines necessary to get gas to market."

Copyright (c) 2011, The Times-Tribune, Scranton, Pa.

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Woodside Strikes Over A$1 Billion Deal With Landowners Over Browse

- Woodside Strikes Over A$1 Billion Deal With Landowners Over Browse

Thursday, June 30, 2011
Dow Jones Newswires
SYDNEY
by Ross Kelly

Woodside Petroleum Ltd. (WPL.AU) said Thursday that it has signed an agreement with landowners allowing it to develop the massive Browse gas export project in Western Australia state.

Woodside said the agreement with the Goolarabooloo Jabirr Jabirr native title claim group includes initiatives worth over A$1 billion, such as education, training and employment programs, support for indigenous businesses and payments when project milestones are met.

The Browse joint venture also includes Royal Dutch Shell PLC (RDSB.LN), Chevron Corp. (CVX), BHP Billiton Ltd. (BHP.AU) and BP PLC. (BP.LN).

It's planning to give final approval to the development, estimated by analysts to cost more than $30 billion, by mid-2012.

Copyright (c) 2011 Dow Jones & Company, Inc.

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Landowners Lose Cash, Rights in Some Drilling Deals

- Landowners Lose Cash, Rights in Some Drilling Deals

Tuesday, June 21, 2011
Vindicator, Youngstown, Ohio
by Karl Henkel

Gas and oil drilling is a quickly growing industry, but Mahoning Valley landowners looking to capitalize should proceed with caution, according to a local lawyer and a nonprofit oil and gas leasing organization.

Many oil businesses, including Oklahoma City-based Chesapeake Energy Corp., one of the largest oil companies in the U.S., are using a newer tactic which, while perfectly legal, potentially could cost landowners thousands of dollars.

The most popular oil or gas drilling agreements -- the kind signed with Columbiana County residents -- are giving way to a new strategy: mineral-rights purchases.

Instead of lease agreements, which could net landowners thousands of dollars a month plus royalties, a mineral-rights purchase would forfeit land rights and any royalties, said Alan D. Wenger, an attorney for the Youngstown law firm of Harrington, Hoppe & Mitchell.

Wenger helped draft an April contract between Chesapeake and the Associated Landowners of the Ohio Valley, a nonprofit organization that seeks to educate and protect landowner rights.

Potential royalties are as high as 15 percent to 20 percent in the Mahoning Valley.

Wenger said the difference between signing leases, which under Chesapeake are often five-year deals with a potential three-year extension, and a mineral-rights purchase amounts to thousands of dollars per acre, per month.

The mineral-rights purchases are generally one-time payments of $2,500 an acre.

"Deciding how to benefit from potential mineral development is a personal decision," said Scott Rotruck, vice president of corporate development for Chesapeake. "Some risk-tolerant mineral owners prefer to lease their minerals, potentially receiving a bonus payment and then royalty payments over time, while others who are more risk-averse prefer to sell their mineral rights outright and receive their compensation up front."

Wenger said oftentimes it won't be a large oil company that tries to purchase mineral rights; a smaller company such as Oklahoma City-based MC Mineral Co. LLC, which is actually a subsidiary of Chesapeake, would be the purchaser.

By acquiring mineral rights, the oil company becomes the beneficiary of any royalties negotiated under a previously-signed lease, which equates to about 12.5 percent.

"Given the shale developments of the last year around here, the companies that are actively exploring for shale development or speculating and trying to get rights are trying to take advantage of existing leases," Wenger said.

MC Mineral, in a letter to a Mahoning County resident that was acquired by The Vindicator, clearly states it "is interested in purchasing, not leasing" oil and gas minerals.

One problem though, said Bob Rea, president of ALOV, is that landowners will lose control of their property.

"They can put a drill wherever they want and they have no recourse," Rea said. "If you sell mineral rights, they have full access to your property."

And selling mineral rights potentially could decrease land and property value.

Patti Mika, Real Living real-estate agent, says it may be too early to tell the true impact on values. Mika said she recently sold about 50 acres to owners who think the land will eventually net a large reward, but that normally homeowners aren't interested in owning mineral rights.

"People that want that house, it's an extra bonus if they have the mineral rights because they get a royalty," she said.

Landowners who know they have current leases with other oil companies have a couple of options.

They can try to get a dormant lease legally terminated. It's not easy and the process can vary depending on the terms of the lease. Some agreements state that if an oil well becomes dry, the lease terminates, but others state that as long as oil companies continue to pay the amount outlined in the agreement, the contract remains valid. A lease can even continue beyond its current term. It's called "held by production," Wenger said.

In the case of mineral-rights ownership, if it's been more than 20 years and a landowner gives a 30-day public notice, an affidavit can be filed to take back mineral rights. If the gas or oil company responds within 30 days, the next step is likely a lawsuit.

In either scenario, Wenger said most landowners don't understand the differences between leasing and selling, the latter of which is significantly more beneficial to the gas or oil company.

"They're really kind of playing into the greed or the need for cash," Wenger said. "Or they're trying to get the folks that have acreage around here to sell it for what looks like a nice piece of cash."

Copyright (c) 2011, Vindicator, Youngstown, Ohio

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