for The Intelligencer on March 12, 2010
Natural gas from the Marcellus Shale formation is a hot commodity in the Northern Panhandle.
Members of the New Vrindaban Hare Krishna Community in Marshall County can attest to that, as they are set to gain roughly $10 million in lease payments from AB Resources.
With Ohio-based AB Resources set to pay the community a lease rate of $2,500 per acre for about 4,000 acres - and 18.75 percent production royalties if the company begins pumping natural gas - community member Gabriel Fried said he believes now is the time to sign.
"We could wait two years to see if the price goes to $5,000 per acre. But we wanted to get the production going because the royalties are the real source of revenue," Fried said.
AB Resources, Chesapeake Appalachia, Trans Energy Inc. and CNX Gas Corp. are just some of the companies sending representatives throughout the Northern Panhandle in efforts to lock up land for gas exploration and drilling. These companies have signed landowners to contracts for wide-ranging lease and royalty payments.
Current lease contracts range from as low as $5 per acre to as high as $2,800 per acre, with production royalties ranging from 12.5 percent to 18.75 percent. Landowners are being urged to think carefully before signing any contract.
Per acre lease amounts are paid even if no drilling occurs; percentage royalties kick in only if natural gas is produced.
In Marshall County, Chesapeake has drilled 26 Marcellus Shale wells, with 45,000 acres under contract.
Last month, the Marshall County Board of Education signed rights to 177 acres in Sherrard to Chesapeake for $2,800 per acre and 18.75 percent production royalties. That's $495,600 coming to the board, without even producing any gas.
"These wells are providing us, and our competitors, the necessary data that continues to drive leasing efforts throughout the county, and has recently increased the market value of this acreage," Sheppard said.
Michael D. Schriml, an independent contractor for A B Resources, did not know the exact number of active wells his company has in Marshall County, but said the number was "several."
"I have worked on several 'major plays' in my career - Marcellus Shale is a very big deal," Schriml said. "The shale has been there, but new production technology has made it more profitable."
The Marcellus Shale formation likely will have a positive impact on the local economy for years to come, as it is believed to hold enough natural gas to fuel the nation for decades. Experts believe this could help the United States alleviate some of its dependence on foreign oil.
Tim Carr, a professor of geology at West Virginia University, said, "People are drilling more and more wells and having success. Many people are trying to get in on this rush."
He said the Marcellus Shale has a "tremendous amount of gas" attached to it.
St. Marys, West Virginia-based Trans Energy has been drilling into the shale to retrieve natural gas for two years, according to Land Department Manager Mark Woodburn.
"Right now, we own and operate over 300 wells in Marshall, Wetzel and Marion counties. ... We have about 40,000 acres under lease," he said.
With Trans Energy looking to broaden its operations, Woodburn said the run on shale "is a lot bigger than some people realize."
"Marcellus Shale will forever change the Northern Panhandle of West Virginia. It could lead to a major overhaul of our national energy policy," Woodburn said.