Shell's loss of interest in Marcellus Shale.

What  will happen to the undeveloped wells/units now that Shell has lost interest in Marcellus shale production?  Will Shell sell out to other companies?  Timeframe?

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Permalink Reply by Jack Young on April 26, 2014 at 2:35pm

A couple things to remember - those vertical wells will never be completed, they were just a cheap way to hold acreage that would have expired otherwise. And Shell is only renewing leases that expire in 2014 - if a lease expired last year, odds are they aren't renewing it. (Clearly they don't have a big budget for this play right now.) And it's not Shell leasing in Potter County - that's another smaller company. No real competition for either, which is why their $300/acre offers haven't changed.

Permalink Reply by Janice L. Hancharick on April 27, 2014 at 9:44am

You nailed it Jack.  They aren't renewing older leases.  It was crafty ( bad) lease wording that allowed a vertical shaft to hold acreage even if the depth was a few feet.  That plus showing "intent" by leaving a piece or two of company property no matter how rusty was another way companies were holding acreage but doing nothing.

Smarter landowners are now playing their cards closer to the vest ... either staying within their established group, or at the very least still attending meetings because this is an ever-changing playing field.  Most folks realize now that $300 AC just isn't worth picking up the pen. Glad you're staying connected although we don't always agree.

Permalink Reply by Tim Tarr on April 26, 2014 at 6:07pm
WOW, so $300/acre 12.5%? I'll just say tell'em to go somewhere else.
Permalink Reply by Rich on April 27, 2014 at 1:56pm
To whom it may concern! Folks plane an simple! The best pridictor of the future is what has happened in the past! That is a fact!!!! So all this talk about the big O&G Co. Leaving the area is complete ignorance!! They have cash cow here for years to come just like all the other shale plays in the country they are here to stay! They would not put all this money in the area not to get 10fold back!!
Permalink Reply by Glenda Willard Strong on April 27, 2014 at 2:12pm

You should read Reuters and ask SWEPI why they have laid off a lot of workers here in Wellsboro, PA.

Permalink Reply by Jon on April 27, 2014 at 2:25pm

Is there an article?

Permalink Reply by Rich on April 27, 2014 at 2:31pm
Where is wellsboro ?
Permalink Reply by paleface on April 27, 2014 at 10:02pm

 The initial phase of this gas play takes a lot of workers to get the leases HBP'D you need excavators to make the drill pads,trucks to haul stone,water and other materials,pipe fitters and layers,the drillers and the rigs and many more people,The support workers to organize this army of workers. My point is that phase is over the area is HBP'D  for the most part. Now its select drilling and pipe work, and all those workers move on to the next start up area,its not a shut down its normal progression.  

Permalink Reply by Glenda Willard Strong on April 27, 2014 at 11:38pm

Unfortunately, there are several vertical wells waiting for the horizontal drilling, fracking and a pipeline.  SWEPI kept telling us "maybe next year" since 2010.  Now, SWEPI has laid off workers (from their office) located at the former Penn College North Campus.  The news article from Reuters this last week indicated that SHELL is selling off its holdings in the US.  Wellsboro is located in Tioga County, PA.  Tioga County is located between Potter and Bradford Counties, next to the NY border.  SHELL has already surrendered my neighbor's well (vertical, only).  I may be next.

Permalink Reply by Janice L. Hancharick on April 28, 2014 at 5:59am

Are you saying that with regret?  If a well is surrendered, doesn't it become your property to bargain with again ... as in more upfront $$ @ a later time w/another company?  A vertical well in the northern counties is a well half-done.  The capping must be done, the owner should have paperwork in hand that the OGM's are His/Hers again ... all when the surrender is done.

This IS a normal progression stage if a firm wants to make more $$ elsewhere and quicker.  Remember that we've supply backups due to growth outpacing pipeline takeaway capacity.

 As wells are surrendered you'll see smaller companies rushing in to badmouth the region's OGMs and make pitiful offers.  Don't fall for this ploy.  We have lots of natural gas at many levels.  If you're old enough you may recall the huge blow-out down Tioga way back in the 60's.  It roared for weeks until Red Adair was called in from TX to get it under control.  Now that was a hint of what's under foot!

Permalink Reply by Glenda Willard Strong on April 28, 2014 at 10:03am

If anything is going to happen with my well, I hope it is within my lifetime.  At the rate things are going, who knows?  Oh well.

 

Permalink Reply by James Foster on April 28, 2014 at 10:32am

I would not "accept" a well from a drilling company nor purchase it in any way shape or form.  In Ohio at least the owner of record at ODNR is the owner of the well and is  responsible for it's upkeep etc.  They can plug and abandon a well.  Then the lease would be released and the well abandoned.  If the well is producing then they would continue to own it and take care of it.  If an old style vertical only Clinton well was producing in small quantities enough to heat a family house then the landowner could take ownership of the well by paying for it or just being given it. (I do not know of this happening with the deeper Marcellus or Utica well even if it is all dry gas.  My understanding is they will not hook up to a home.) This is a mistake in my opinion at least in Ohio because if you own a well and it becomes necessary to plug and abandon it you are now responsible for this.  This could be a very costly adventure for someone without any knowledge of how to do it.  You will have to hire someone to do this and they will charge whatever they want because they know you can not do it yourself.  If you have an orphan well in Ohio that they driller/owner abandoned and did not plug and you can find them you can make them plug it.  The orphan well fund is used to plug wells where the owner of record is deceased or the company is gone.  A small amount of permit money here I believe is used to fund the Orphan Well fund.  Again this is in Ohio so I am unsure of the regulations in PA but I would guess they are similar.

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