companies switching from acquistion to development mode?

Generally speaking, from the articles I have read online and in the papers throughout much of PA, it seems overall like the "leasing rush" has slowed considerably.  Is the consensus that many of the companies feel that have banked enough acreage for now and are switching from acquisition to development mode?

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Permalink Reply by Mat B on April 8, 2011 at 2:47am
I think it depends on what area you are in.
Permalink Reply by Mike Knapp on April 8, 2011 at 12:04pm
Not necessarily that they have banked enough acreage, but that they have more than they can drill before they all start to expire.   If they don't drill it, they lose it.
Permalink Reply by Frank Walker on April 8, 2011 at 1:13pm

Spot on.

 

Here in NEPA the leasing rush was over more than a year ago.  Any acquisition of land now is strategic.

 

Those with unleased land today, who wish they were leased, are going to become very rich . . . . . but not all that soon.  Years from now, when leasing is once again unleashed, the price of gas will be much higher than it is today.  For older landowners though, sadly, that's not going to be much help . . . except to their children.

 

One exception:

 

In the "wet gas" region of SWPA (and I think also a small portion of nearby WV), the above does not apply.  Those with "wet gas" remain in the catbird seat, even today.  It's not because of their natural gas, though . . . . it's because of their "wet".  While natural gas prices languish in the doldrums, prices for ethane, propane, butane, and the pentanes remain vigorous and strong.  And money talks!!

 

My own gas is desert dry . . . darn near pipeline ready.  So it's difficult not to be a little envious of the "wet gas" landowners.  They rule the world.

Permalink Reply by jb379 on April 11, 2011 at 2:12am

Frank,

 

The "wet gas" region of PA you speak of.  How confined to the southwest area of PA is it exactly?  I have read a couple articles on this, but they were not very informative.  Are there any negatives to "wet gas"?  Sounds like there are only positives and that those in the wet areas can almost sit back and wait for the offers to increase further.  Although, on the flip side, I guess if they wait too long they could miss the boat altogether as the big companies like chesapeake may take a pass if wet gas owners continue to hold out for higher offers.  Wonder if the wet gas area of PA/WV is worth holding out for higher offers?

 

JB

Permalink Reply by scott snow on April 9, 2011 at 3:01pm
When companies have the land to unitize they can sit on this land and bank on there reserves for years or produce limited quatities without paying those non-leased from gas from the unit without the fear of the acerage ever being attractive to another gas company.  It becomes a waiting game for those in drilling areas or units.  They know they are at that point the only company that can feasibly produce and bring the gas to market....If you are in one of these unit areas and choose not to lease and they start producing and bringing this gas to market ten years down the road you are never purvey to those royalties again that leased you otherwise would have been..
0jw0dsu4txfuvPermalink Reply by 0jw0dsu4txfuv on April 11, 2011 at 1:23pm

The wet gas that is mentioned can really become a problem. Altough the prices for the distillates are  high there are considerable problems associated with the production and tranfer of these liquids.These

liquids are volitable and flammable.

Permalink Reply by Buddy on April 11, 2011 at 2:27pm
So would you say WET gas exists in Western PA?  For example, in Clarion or Jefferson County? 
Permalink Reply by Ronald b. nicklow on April 12, 2011 at 10:01am
Not much leasing going on in Fayette county at this time.  We are about as south west as you can get in PA.  Do you have any specific info on your wet gas comments.  Thanks in advance for your reply.
Permalink Reply by James R. Daley, PMP on April 12, 2011 at 12:36pm

Most sources show wet gas being located west of a line starting at the NY border at the juncture of McKean and Potter Counties, proceeding in a SW direction, crossing into W. VA just east of the very southwestern corner of the State.  This line places all of Clarion County in the wet gas region and the NW portion of Jefferson County in the wet gas region.

Permalink Reply by Buddy on April 12, 2011 at 12:54pm
Thanks for your information, James.   Now, do you also know this information?  Where would the closest big pipeline from Clarion and NW Jefferson County be?  Thanks ahead of time.
Permalink Reply by James R. Daley, PMP on April 12, 2011 at 12:43pm
Jay - although these liquids do require special handling and precautions, they are far more valuable than the methane (what most people think of as natural gas).  So having wet gas is a good problem to have and why for instance Range Resources loves to drill in SW PA and why they have JVs with MarkWest for NGL processing.  Companies in the wet gas area make a higher ROI and can withstand lower natural gas sales prices than those in the dry gas areas.  The real issue is what to do with ethane because it too increases BTU value and prevents direct entry into the transmission system.  The best long-term solution is a cracking facility to convert ethane into ethylene for use in the plastics industry.
0jw0dsu4txfuvPermalink Reply by 0jw0dsu4txfuv on April 14, 2011 at 11:22am
I know this. I was trying to stay on a basic level. From my experience some of the information fuels the opponents of the resource.

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