Shell is making the rounds in Cherry Twp and northern Butler County. I have seen there lease and to me it looks like they are offering $1,500  and 15%. The lease was  boilerplate!  Does anyone have any more details? I know they have an office in Butler now.  Is there any other Drillers that have been active as of late in this area?

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Add to that 5 year with 5 year extension. Also includes all oil/gas, etc, from top to

bottom.

They will not budge.....

No business for them in Northern Butler county.

sounds like the same lease offer circulating in venango county up till 2 weeks ago.

FYI

Shell’s Marcellus Shale Exploration & Drilling Strategy in PA – Drill the Edges First

An article about Shell’s activity in the Pennsylvania Marcellus Shale, particularly along the western fringes of the Marcellus in Butler and Lawrence Counties (PA), reveals interesting insights about their strategy:

 

Shell plans to bring in a drill rig dedicated to the region next year. If things go well, it could add nine more. The company will spend two to four years determining how rich the land is with gas, and whether to drill here before tapping other oil and gas fields around the world, [Bill] Langin said.

Langin [a geologist] is in charge of Appalachian exploration for Royal Dutch Shell plc, which holds the mineral rights to about 100,000 acres in the two counties and more land in northern Pennsylvania.

Langin, 34, of Moon is not a wildcatter looking to drill in the sweetest spots he can find. His job is to drill in outlying areas, looking for data, zoning in on targets he cannot see. He asks: Where can Shell drill in its Appalachian holdings and profit?

Shell continues to lease land in Butler and Lawrence counties, adding about 30,000 acres to the 70,000 it bought from East last year, Langin said. Its big-picture exploration methods not only help the company gauge and manage holdings, but help its officials to decide where to lease land, said Badie Morsi, director of the University of Pittsburgh’s Petroleum Engineering Program.

It’s difficult to determine how much gas the Marcellus shale will produce in a given location. Pressure and natural fractures vary, Morsi said, meaning drillers can only approximate reserves.

"It’s very difficult to make generalizations," Morsi said. "It depends upon your luck. You’re shooting in the dark at 10,000 feet. It’s not a known thing where you go in and grab it."*

So why drill along the edges first, instead of in the middle of the “fairway”?

It’s common for multinational corporations such as Shell to take the time for advance work, Morsi said. If they drill edge areas first, the production there can indicate how much gas is inside the circle, he said.

That helps companies to plan efficiently for infrastructure costs, such as pipelines and compressor and processing stations, Langin said. They know the gas is there, but they must figure out how much is there and how hard it is to extract — then they can determine how high gas prices must be before drilling would be profitable.*

The article also mentions that Shell is targeting the Utica Shale layer as well

a 5 yr extension is not such a bad thing as long as the dollar amount for the extension is paid up front. 

 

For example if you have 50 acres and lease at 3000 per acre you would receive $150k .  Now if they have not held you land by production within 5 yrs they have the option for a 5 yr extension again at 3000 per acre for another $150k.   Thats 300k in slightly over 5 years time.    The extension is not that bad as long as they are paying the money to extend the lease up front.  

 

This is just an example, I do agree 3k per is low.

 

 Shell has recently opened another office in the city of Butler, in addition to having one already in Warrendale. They have been contacting landowners in Northern Butler County:  cherry twp., venango twp., marion twp., etc.  Many of the landowners I have spoken with did sign-up recently, and had their attorneys make changes to the lease, and included a list of addendums. I will be contacting a landman next week. I was told that they will be in this area for a few more months getting leases, and then will begin production.
Shell is trying to sign up all they can using boiler plate levels until they have to start upping the price. Anyone signing for $1500 will be kicking themselves once they find out how much $ they left on the table. Look for Atlas to step back into the Butler area big time once they get reorganized by Chevron. Also now that Xto/Exxon bought Phillips they are moving in from the south, they just announced a new plant permitted in Penn Twp for XTO/Mountain gathering off of Hicks road.

What Shale gases are being included in the leases for Butler County?

Ground and below, Marcellus only, Marcellus and Utica!!

Just curious for what may come along.

 

Tomcat, your absolutely on the money!  $1500 is a bargain for the gas company and they are on a run and grab mission to get this deal.  The landowners who agree to these terms will most definitely be kicking themselves in 12 to 18 months  when they see their neighbors sign for much more with better terms.

The other companies will create competion, just as we have seen in other areas and consequently the numbers will rise.  Landowners need to be patient and join a landowner group to work together.  The landmen love taking advantage of individual landowners by telling them "well you better sign now or we will just suck it our from under you" or even though they don't have a permit in the area yet, they will say "this is your last chance because we are drilling on your neighbors land".

Can you update us on the meeting Thursday.  We are planning on driving out from Bradford County.  Also just a thought, maybe we should open up to letting folks from some of the other townships join the group.  I've read the posts here and I see some people are looking for groups.  If they have no where to turn they are bound to signe eventually.  I think the more acreage we hold the more bargaining power we have.   Just a thought....

 

Thanks.

thanks for the update...I am still undecided...but when I am ready, I will work with an attorney or join a group. The people I spoke with that recently signed up with Shell have all worked different attorneys from Butler county. As far as the bonus money/ %, my research is telling me that not all areas of butler county are the same ...some areas are more desirable than others and THEREFORE will bring more money. Even some counties are more desirable than others and are bringing in $3500+.  Also I am not sure that the longer you hold out, the more money you will get, and that gas companies need every landowner to go foward with production....I think that may depend on your location/how desirable the area is.  But, yes, landowner groups do have alot to offer. It s just that the more I learn, the more questions I have.
...Just when I though I had some knowledge of how the gas industry works or as I stated earlier, that the more I find out, the more questions I have....the landscape has changed.  I just spoke with an land agent from Shell and he said that he will now pay $3000 a acre for northern butler county effective 7/11/11, and will work with you and your attorney on the lease and the addendums.  Will the bonuses keep going up, or is this 3k just for a few months, or after the gas companies get x amount of acres, they will stop wanting leases for the next 1,5,20, 50, 100  years, I do not know. Or when they get all the acres they want , will they stop giving out bonuses?  or..If you wait, will you get a higher, or will you never have that opportunity again? I do not know. I can not predict the future, Talk to someone who can. The more I find out, the more questions I have.
Can you please give the land agents name.  It would be greatly appreciated.

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