Ohio County Receives $8M (So Far) from Marcellus Gas Leases
Ohio County, WV is reaping the rewards of leasing county-owned land for Marcellus gas drilling. The county’s land leases with Chesapeake Energy have already resulted in nearly $8 million in one-time lease payments for the county coffers, and soon will mean royalty payments too. Chesapeake has already completed a well on private land adjacent to (and drilling under) county land in The Highlands area. But gas from that well has not yet started to flow due to a delay in getting a pipeline built to the well. Once the pipeline is in place, the county will start receiving royalty checks from that well.
And within the next 12 months, Chesapeake will drill a new well, this time directly on county-owned land at the airport:
Read More “Ohio County Receives $8M (So Far) from Marcellus Gas Leases”
For some time now, MDN has covered the hydraulic fracturing ban passed by the city of Morgantown, West Virginia (
A new set of rules governing pipeline construction permits issued by the U.S. Army Corps or Engineers is causing extreme delays in getting gas from wells to market according to Chesapeake Energy. The new rules have turned what was an average 45-day process to file paperwork into a 300-day process.
The New York Department of Environmental Conservation (DEC) leased 19,000 acres of state forestland to Chesapeake Energy and Fortuna Energy (now Talisman Energy) in 2006 to allow gas drilling. The deal provided state coffers with $9 million and the promise of 12.5 percent royalties on any gas produced. Those leases are due to expire Nov. 15 of this year, but Chesapeake has let the DEC know it believes the leases for its share (15,472 acres) should be extended, a legal phrase called force majeure, because of the moratorium that has been in place since 2008 on hydraulically fractured gas drilling. In a letter to the DEC, Chesapeake implied they will sue the state to extend the lease agreements if the state does not willingly agree to an extension.
News of Chesapeake Energy’s major oil discovery in eastern Ohio’s Utica Shale prompted officials in Columbiana County to renegotiate their about-to-be-signed lease with Chesapeake. It was a smart move for the county—netting them an additional $255K:
The quarterly reports from public companies continue to roll in, which sometimes makes for interesting reading. EXCO Resources, Inc. has just issued their quarterly report and includes the following operational update on their drilling activities in the Marcellus Shale. Of particular note is EXCO’s statement about IP, or “initial production”. IP for oil and gas wells is that initial burst of activity which is not sustainable through the life of the well. Usually a well produces the most right at the start—according to EXCO IP is a 24-hour period during the first few days a well goes online. But as EXCO points out below, their Marcellus wells sometimes don’t hit peak performance until a month or two after they have come online.
Chesapeake Energy CEO Aubrey McClendon on Monday appeared on Jim Cramer’s Mad Money show on CNBC to talk about the company’s new, oil-rich discovery in the Utica Shale of eastern Ohio. He had some fascinating things to say, including that he expects there to be some 25,000 wells drilled in the Ohio Utica Shale, and that there will be $10 billion per year for at least 20 years (or $200 billion) of investments in the Ohio Utica Shale alone. Yikes! No wonder Gov. John Kasich is “gushing” about Chesapeake’s discovery. An investment of 1/5 of a trillion dollars is a major big deal for Ohio—not only for landowners but also for businesses and for those who will be employed by drilling and associated industries. You cannot overstate how important this discovery is.