This is getting a bit annoying.

So, I'm reading reports from the state, the news, etc. All very positive.  Reading assessments here--mostly bummed and/or in denial.  I'm thinking the news is overall good.  The numbers that were reported today were clearly stated as wells that are CHOKED BACK thanks to lack of infrastructure, with the caveat that numbers are expected to increase dramatically once production is in full speed.  The big companies are still moving in and investing $billions.  What is the bad story here?  Help me understand...I'm missing it.  Remember these folks hold their info VERY close, and are probably very strategic with their message.  We are nobody's fools here...right???  

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Permalink Reply by Graham on April 3, 2012 at 12:37pm

Follow the money. Follow the infrastructure.

0l1a6laz7smpfPermalink Reply by 0l1a6laz7smpf on April 3, 2012 at 1:31pm

what's not so fun though...is finding out that you didn't negotiate appropriately for the future and not knowing what the taxes will be and the hardship on the communities and environment..then all that has to do with just how happy one is with the oil companies as somewhat partner to live with and can't get away from that easily...and they are there to stay.

You know I think that they were so used to just leasing in the already developed Texas and Alaska and some other areas for oil...that this marcellus play was not properly planned via how the countryfolk in those high green mountains would be to meet, greet, and try to do a one time close!   Had they really got to know some of the people and the elected community leaders and business people first then they would have been able to plan their advance into the communities and utilized more skill in actually developing the area as they developed what they already knew.   There is much to learn for everyone...and if we all had known better...perhaps it would have been planned better but most were not oil and gas educated.   How do you educate someone with how wells look in a neighborhood or even in your back yard without showing them videos or taking the time to explain the process.   many back in 2007 and 2008 had yet to install home computers....so it would have been wise for the landagents to come more prepared with perhaps a laptop or vcr/dvd player that would walk someone thru the steps of what a drill pad looks like and the facilites that are needed.   i am very thankful that Chesapeake now has on youtube videos of each process....had they had those to begin with...it would have helped everyone.   Signing a contract with no knowledge of what the process is and trying to focus on the clauses without even knowing what the process and tools, equipment is....is signing a blank check actually regarding one's own property as it is really signed in darkness (lack of understanding).....not a used car deal...cause you can see the used car and even drive it.

 

Take a look at this...see what I mean...made and posted in 2010....not 2007.  Now if you landowners had seen this completely like using the youtube videos...wouldn't you have more of a complete idea of what they were/are doing and how much land it would use on your property and what you actually were granting the oil companies??

http://www.youtube.com/watch?v=AYQcSz27Xp8

or this one..

http://www.youtube.com/watch?v=CorAOpw8XLI&feature=related

How many of you know what a Cracker plant is?   do you know how many acres of your land that could use?   that is why we all should thoroughly understand the Granting Clause on the gas leases...cause they are asking for anything that they would need on your property...and you didn't really think past the well (the product coming up), the bonus, and the royalty amount.   Some had the money to move from their negotiations...some didn't and still have to look at the process as it grows even bigger.  Now one would hope that they didn't lease for 2300 upfront and a 12.5 royalty and end up with losing 25 acres or more to a Cracker plant or a retention pond...but this is what I mean about knowing what they are bringing/installing  on the land.

Permalink Reply by JR on April 3, 2012 at 2:37pm

I agree with everything you've said wholeheartedly.  Our land is under an old 1963 lease and I fear that the big guys we're with now (thanks to being sold--probably for a heck of a deal--years ago) can pretty much come onto our beautiful land and do anything they want.  I'd like to think they would be considerate, and at least compensate us out of goodwill, but I fully realize they are under no obligation to do so.  It is a very complicated reality.

Permalink Reply by Deborah Kittner Johnson on April 3, 2012 at 3:22pm

Very insightful and contemplative, VG, about O&G outside companies coming in. I like the observation about the companies becoming partners that you must live with. Interesting analogy. It reminds me of some things. First, I attended an EPA public hearing in Canonsburg two summers back in preparation of the fracing and drinking water study that is now going on. There were a number of Texans and Oklahomans there. In speaking with a few it became clear to me that Pennsylvania was a "different" place than expected. One Texan was sent in advance by his company to feel out the community, see what they wanted, and if their demands were too high they would not go there. A couple others mentioned the difficulty of dealing with the tough regulations. There were even condescending remarks made about PA regulations and culture. Second, a friend of mine who has a small O&G service in northwest PA (rainy, gray a lot) said that a Texas company he contracted with disregarded his recommendation not to use solar energy to run a computer and equipment at a well pad he serviced. He gave up trying to tell them something he knew, the local knowledge, that they didn't to help them. He said that in the end he did not care anymore because they would need him and he would be paid to do the work that would be created by them not listening.  

0l1a6laz7smpfPermalink Reply by 0l1a6laz7smpf on April 3, 2012 at 3:41pm

Thanks Deborah.   Fracking and making large unit sizes is not what the NE is used to.   There have been oil leases even early 1900's but primarily it was for a vertical well and many of the oil companies didn't continue leasing as there wasn't the equipment (so I am told) to do the drilling deep enough and because of the rock.  

Also many places of the Marcellus...actually the entire area...are known for fresh waters, green beautiful mountains, heavy forested....and a road system that is not like the big cities (except in the large cities of the Marcellus).  In fact one county in Pa. has only one traffic light in the whole county and has been that way for many many years.    So this has been like an invasion...and quickly did the oil companies grab the natural resource holdings.   As soon as people started realizing that there was much more than the bonus and royalty involved...that's when the bonus and royalties got higher.   Much more to learn...the oil companies could make up for the times that they did wrong towards people in the initial leasing....and they could still make up for some of the things that were not well thought out in the intial plan.  

My greatest concern as an American is that many of the leases now are in the hands of foreign investors and will be maybe forever.   Chevron and the Saudis are very united ..so there really is no getting away from dependance on foreign oil even if now it is our oil and gas....

interesting to read about the forming of Chevron and Standard Oil and the affiliation with the Saudi's.

http://en.wikipedia.org/wiki/Chevron_Corporation

 actually who really owns who...look at this link:

http://hillnholler.net/2011/10/21/major-oil-companies-banks-control...

a little education on this topic is good for all of us wealthy marcellus owners...

Permalink Reply by Deborah Kittner Johnson on April 3, 2012 at 3:57pm

I grew up 'in the woods' of northwest PA hiking, camping, and x-country skiing in those green beautiful mountains (hills) and fishing, swimming, and boating on the fresh clean waters. Oil, gas, and timber were/are a large part of the economy. So too is agriculture, and formerly manufacturing.

Halliburton frac trucks were part of the landscape. And they were somewhat scary looking, but a part of life. The smell of oil while hiking, or coming across pump jacks and power houses was the norm. We did not question it.

It seems that the definition of 'fracing' or 'fracking' as it has become known with the 'k' is thought of differently today. That it is not just about the process of hydraulic fracturing. I think you have discovered one thing that is different. Fracing is taking place within landscapes that are other than that of pump jacks, condensation tanks, and tanker trucks on the roads. Oil and gas is now accessible in landscapes typical of farmland, for example.

I think you touched upon another important aspect of what is different today regarding fracing. Today the public expects more from outside companies than in the past. Residents and municipalities expect social and environmental respect, not just financial. So as you suggested, the ones who come in advance to meet the local leaders and show an interest may be more successful in the long run. It would be interesting to hear about which companies one would want for their long-term neighbor, let's say 30-40 years.

0l1a6laz7smpfPermalink Reply by 0l1a6laz7smpf on April 3, 2012 at 4:22pm

thanks Deborah..pleasure greeting you here.   That is interesting what you posted...as in the area I own land there hasn't really been  a focus on oil/gas exploration until now. 

Permalink Reply by Deborah Kittner Johnson on April 4, 2012 at 12:44am

P.S. A really interesting book about the U.S. - Saudi relationship is called "Sleeping with the Devil: How Washington Sold Our Soul for Saudi Crude" by Robert Baer a former FBI agent. This is a book that cannot be put down and one that explains why the U.S. today makes some questionable decisions regarding the Saudis compared to other countries in the region.

0l1a6laz7smpfPermalink Reply by 0l1a6laz7smpf on April 4, 2012 at 11:23am

Hi Drill Baby Drill....

It was just my way of saying...know what the granting lease clause is asking of you the landowner...

as i did not realize that they could use as much acreage of the land as they want to as long as they stay away from the buildings so many feet.    it is not just about a drill pad .....it is about using up the surface land as much as they need or want if it is not negotiated seperately.   A cracker plant at 2300 an acre is not that unrealistic (and quite a deal for the oil company)...if they leased an appropriate piece of real estate and did not inform the owner that in the future that they may put such...or even if their plans did not include such at first.   but if they are holding that lease indefinitely then if the granting clause includes as much as the typical granting clause includes then that homeowner could be looking at a cracker plant if their acreage could merit such.   all the oil company would have to do is apply for new zoning, and yes it would be a challenge...but they already paid the owner of the land to erect any structure they want in that granting clause except any laws that would prohibit it.     

In fact for some that have future plans to erect barns, etc. on their land...do you have the right to do such without asking the oil company if they plan on using that acreage for anything on their lease contract with you?   Or is it squatters rights on your own property?   I mean if you all of sudden decide to add that 20 acres for grazing horses and a horse barn and you didn't have it there when you first leased with the oil company...and meanwhile the oil company has engineers and architects designing a road system to a drill  pad and a plan for storage and a pond...who has the right first to that surface acreage?   Or is it that you the owner needs to erect that plan first...would you need to pull your barn down if they wanted to use that area for the pipeline?   I mean who has the jurisdiction over the granting clause for the landowner to use his land for now and future?

 sounds to me that when negotiating that clause that the oil company has to establish just how much acreage is to be used for above ground facilities or areas of pipeline at the time of lease....so you the owner knows what they can or cannot do.  and  for those of you that do have such unlimited use of your surface ground because of ignorantly signing that clause....pls do make plans now of what you want to do with your land and if it doesn't matter...then fine...but clearly how would you know what the oil company is doing in planning your land surface and below surface unless you ask?

http://www.nytimes.com/2011/12/02/us/drilling-down-fighting-over-oi...

be sure to click on the link at that article and see all the leases per state online.

oh..here it is anyway.

http://www.nytimes.com/interactive/2011/12/02/us/oil-and-gas-leases...

Permalink Reply by Paul Martinelli on April 5, 2012 at 6:09am

old HBP leases allow them to do all of the above....with no payment.

And, a well can be considered production practically for ever...if that is what is required to keep the buildings in place. Some old lease allow the land to be used to facilitae production from othe units.....FREE LAND!!!!!!

0l1a6laz7smpfPermalink Reply by 0l1a6laz7smpf on April 5, 2012 at 6:20am

Yes Paul is right....and it is a sorrowful situation if the oil companies take advantage of the ignorant who signed gas/oil leases back some years.   The people hopefully are smarter today but the lease contracts have they changed?  or only if someone pulls out a lawyer to negotiate and then the lease offering is a different contract?

I reluctantly show you this recent discussion of why some contracts may be held and extended even with NO paying quantities of production...

http://gomarcellusshale.com/forum/topics/extension-of-term-clause

Permalink Reply by Paul Martinelli on April 5, 2012 at 6:30am

I didn't say one existed....just that old leases signed in 60s/70s allow for the constuction of facilities to be used in production of Oil/Gas from the unit  or other units.

 

I wouldn't think a company would build such a facility...but the possibity exists.

 

I could see a company expoiting this clause to allow they to use 10s of acres for a staging area or such.

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