Early renewal of 5 year lease with Shell

4 years ago I signed a lease with East Resources. Recently I was contacted by Shell with a request to renew the lease a year early for half the amount I was paid in 2010. There was also a business card in my door from another landman (no company listed). I am thinking I probably need to have a lawyer look at both leases to see what is different in the second lease that they are so anxious to renew. The amount of money won't make me rich but it does help with home maintenance. I noticed one difference in the leases - the second one says in and under the land...Anyone have words of wisdom?

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Permalink Reply by Jack Young on October 9, 2014 at 3:13am

Nice map - thanks. It's also important for Peggy to remember that each storage field has a buffer zone around it where the operator can essentially prevent anyone from drilling. The net effect of these buffer zones is to make it very hard to develop nearby properties that aren't even in the storage field. So if you are close to a field, you really need to do your homework before leasing. It's unfortunate, but Tioga County has the fields noted on this map plus the Sabinsville Field to the west, and they are all in areas that would otherwise be promising for Utica testing.

Permalink Reply by Janice L. Hancharick on October 9, 2014 at 6:16am

 I'm aware of Dominion's plan to expand it's storage field buffer zone in Steuben County, NY, and Tioga and Potter counties in PA.  I have a copy of its application to FERC ... also the Agreement the company is wanting affected landowners to sign.  I have  O&G att'ys currently weighing in on this for the following reason:

A few 4-County members received written approval from Dominion  allowing them to enter a lease agreements because the storage field line intersected their parcels.  Of course the language was specific ... spelling out that horizontal drilling could not occur until the wellbore was below the storage field's depth. That was deemed reasonable by members involved because it still allows them to lease Marcellus and Utica shales.  The latter being the most promising.

These storage areas are shallow when compared to those in southern Potter.  Also,due to geology they also cannot withstand the high storage  pressure of those in southern Potter.  Since geology doesn't recognize political borders, the same may be true in Tioga.

Anyone considering signing the Dominion agreement needs to hold off until more is known.  Lease offer $$$ from various companies are jumping around ... up and down ... though not so-o much w/royalties and that's where the long term income comes into play.

Glad you weighed in on this Jack.  As a major OGM landowner across this region and beyond, you've proven you know what's important and how to play the game.

Dominion has recently put out a pamphlet "An Interstate Natural Gas Facility On My Land? What Do I Need To Know?"  I'd feel better if the publication came from Penn State's Marcellus Center for Outreach and Research (MCOR).  Penn State isn't trying to get folks to sign an agreement.

Permalink Reply by Gringo on October 9, 2014 at 12:59pm

Janice,

It would be appreciated if you would post the FERC application.

Permalink Reply by Janice L. Hancharick on October 9, 2014 at 1:45pm

The filing can be viewed on the web @ http://www.ferc.gov using the "eLibrary" link.  Enter the docket number excluding the last 3 digits in the docket # field to access the document.  The name of the project is Harrison Storage Pool Boundary Project and the docket number is CP14-549-000.  

If this is unsuccessful, email me directly @ jlhanch@nc.rr.com and I can forward you the full APP and also the document landowners are being asked to sign.  Both are good reading, but I surely am opposed to signing anything without further info.  I've located 2 highly regarded O&G att'ys and requested their opinions just yesterday.

Dominion (DTI) is providing landowners currently in storage fields affected w/a pamphlet " An Interstate Natural Gas Facility On My Land?  What Do I Need to Know?"  Since the Harrison Project does take in the 3 counties named earlier, I wonder how detailed the publication will be.  I haven't seen it yet.

If anyone reading this already has the pamphlet please share!

Permalink Reply by Janice L. Hancharick on October 9, 2014 at 2:00pm

Based on what you  posted above Peggy, you ARE in the Dominion/Tennessee storage areas vicinity.  They want to grow.  Don't sign anything until more is known.

Permalink Reply by Gringo on October 9, 2014 at 2:33pm

90% of Tioga Twp is clear. The expansion for Harrison field is a request only, the buffer zone is a given based on the Sabinsville decision in Swepi v Dominoin.

Permalink Reply by Peggy A Murray on October 19, 2014 at 3:26pm

I just started comparing my old lease to the new one and highlighting differences. The old lease was a 5 year lease - the new one is a TEN year lease so that would mean instead of half what I was offered before it is a quarter of what I was offered before! Still gathering info but certainly not going to sign right away! I will be meeting with the landman next week and will be asking him some questions. I have a couple of neighbors asking around for me also.

Permalink Reply by Jack Straw on October 19, 2014 at 7:21pm

Tioga County has become the 'fruit of the month'; Shell's recent well appears to have Shell out there trolling for any low hanging fruit.

The fact that they have approached you for an early ... and exceedingly long (10 year) lease extension suggests to me that they wish to tie up any and all 'rubes' that they can.

By the simple act that you have found and sought out the wisdom of this site suggests that you are not to be counted as one of the 'rubes'.

You doubtless have come to the conclusion that there is no urgency in extending your lease for ten years.

You will be fortunate if you can work with neighbors in developing a strategy of mutual benefit.

I will offer an opinion, take it as that ... just an opinion from someone you have never met.

My opinion is that were you to sign a 10 year extension, there is a probability that nothing would happen for 9 years ... from Shell's prospective your property would be money in THEIR bank (hog tied until the term of the lease ends).

You have been given the rare opportunity for a 'do over' .... this time more on your terms than upon Shell's.

If I might suggest .... there is no reason for a rush .... think of the mule, the harder you pull on their bit, the more they dig in their hooves (and who says a mule isn't smart?).

and if you can come to terms with Shell; I would suggest that you work for an extension of perhaps three years. If Shell really wants your acreage, and you want a well; this should be accomplished in much less that ten years.

Please ask any questions which come to mind, someone on this site may well provide answers that you might find of value.

Regardless,

                     Wishing you the best of luck.

JS 

Permalink Reply by Janice L. Hancharick on October 20, 2014 at 10:08am

Wonderful and wise advice!  Shell isn't the only company out there striving to tie up resources and/or surface AC  ... all related to the growing presence of O&G industries.

Everyone needs to THINK before any type of document is signed.  The company version of what one's holdings are worth benefits the company most of all.

Companies certainly need what we have before they can proceed. They aren't keen on compoetition but we are!

Permalink Reply by Peggy A Murray on October 20, 2014 at 1:05pm

Thank you Janice and Jack. I feel like I am getting a better picture of what is going on as I search the site more and with the responses I am getting. I just saw a term "outliving the lease" which would be a good possibility with a 10 year lease as I will soon be 77. I am keeping my kids updated with what is going on. Also thinking about if I downsize which is another real possibility ..my head is spinning a little bit tonight though.

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