Oil and Gas Leases Don't Last Forever

On Wednesday, October 3, 2012 1 comments

There is a misconconception that if you signed an oil and gas lease years or even decades ago you are still bound to that lease. Truth is, leases for gas drillers don't last forever.

Gas Leases are set up for specific terms. According to a  recent article published by Post-Gazette, "Most leases signed in 2007 and 2008 were for five-year terms, meaning many that never saw drilling are coming close to expiration now".

If you signed an oil and gas lease years or even decades ago, your lease may not be "active". A licensed attorney can help landowners to read through their oil and gas lease language to help dermine whether or not the lease is is active and in what capacity.

When it comes to gas leases -- drillers would prefer the language in the lease in regards to expiration be as broad as possible, while landowners should demand the language be as specific as possible.

The language that explains the terms of the lease, specifically the language surrounding the expiration of the lease can mean a difference of thousands to hundreds of thousands of dollars for landowners.

It is recommended that all landowners contact a licensed attorney to receive their unique situation, lease and needs if considering entering into or soliciting an oil and gas lease.

If you are looking for a quick answer, the general rule of thumb is... do you have a well on your property that is producing gas? If you answered yes, you are most likely in an "active" lease - even if that lease is not providing you with the income you desire.

On the other hand, if there is NOT a producing well on your land - it may be a good idea to go back and revisit your lease to see how an "active" lease is defined in your lease language.


Need help? Contact Safe Shale Lease, LLC or a licensed lawyer in your area for a free personalized consultation. 

38 Million Acre Oil and Gas Lease Sale

On Monday, September 24, 2012 1 comments

WASHINGTON--(ENEWSPF)--. As part of President Obama’s all-of-the-above energy strategy to expand safe and responsible domestic energy production, Secretary of the Interior Ken Salazar and Bureau of Ocean Energy Management (BOEM) Director Tommy P. Beaudreau today announced that BOEM will offer 38 million acres in the Central Gulf of Mexico for oil and gas exploration and development. This sale will build on two major Gulf of Mexico lease sales in the last year – a 21 million acre sale held last December and a 39 million acre sale held in June – and supports the Administration’s goal of continuing to increase domestic oil and gas production which has grown each year the President has been in office, with domestic oil production in 2011 higher than any time in eight years.

Proposed Lease Sale 227, scheduled to take place in New Orleans on March 20, 2013, will offer all unleased areas in the Central Gulf of Mexico Planning Area, offshore Louisiana, Mississippi, and Alabama and could lead to the production of up to nearly a billion barrels of oil and nearly 4 trillion cubic feet of natural gas. This will be the second sale under the Administration’s new Outer Continental Shelf Oil and Gas Leasing Program for 2012-2017 and the first of five annual Central Gulf lease sales. Announced in June, the Five Year Program makes offshore areas with more than 75% of the technically recoverable oil and gas resources available for exploration and development, consistent with President Obama’s commitment to continue to expand domestic energy production and reduce America’s dependence on foreign oil.

“The Obama Administration is fully committed to developing our domestic energy resources to create jobs, foster economic opportunities, and reduce America’s dependence on foreign oil,” Secretary Salazar said. “We are moving full speed ahead on the President’s all-of-the-above energy strategy because the exploration and development of the Gulf of Mexico’s vital energy resources will continue to help power our nation and drive our economy.”
Since President Obama took office, domestic oil and gas production has increased each year, with domestic oil production at an eight-year high, natural gas production at an all-time high, and foreign oil imports now accounting for less than 50 percent of the oil consumed in America – the lowest level since 1995.

Lease Sale 227 encompasses about 7,250 unleased blocks covering approximately 38 million acres. The blocks are located from three to about 230 miles offshore, in water depths ranging from nine to more than 11,115 feet (three to 3,400 meters). BOEM estimates the proposed lease sale could result in the production of 0.46 billion to 0.89 billion barrels of oil and 1.9 trillion cubic feet to 3.9 trillion cubic feet of natural gas.

“This proposed sale is another important step to promote responsible domestic energy production through the safe, environmentally sound exploration and development of the Nation’s offshore energy resources,” said BOEM Director Tommy P. Beaudreau.

This sale will build on successful lease sales that BOEM has held within the past year. Western Gulf Lease Sale 218, held in December 2011, made 21 million acres available, and received high bids on tracts covering about one million acres, netting nearly $325 million. Central Gulf Lease Sale 216/222, held in June 2012, covered nearly 39 million acres, and attracted more than $1.7 billion in high bids for more than 2.4 million acres. The next sale, Western Gulf of Mexico Lease Sale 229, announced earlier this year, will take place in New Orleans on Nov. 28, 2012.

BOEM conducted an extensive environmental review and published a Final Environmental Impact Statement with analysis to support decision-making for proposed Lease Sale 227 and other Western and Central Gulf of Mexico lease sales scheduled under the new Five Year Program. The terms of this sale include conditions to ensure both orderly resource development and protection of the human, marine and coastal environments. These include stipulations to protect biologically sensitive resources, mitigate potential adverse effects on protected species, and avoid potential conflicts associated with oil and gas development in the region.

The proposed terms also continue to include a range of incentives to encourage diligent development and ensure a fair return to taxpayers. In addition, BOEM has implemented a new, streamlined format for sale notices, beginning with this sale, making the document more user-friendly and accessible to the public.

Proposed terms and conditions for the sale are available at: http://www.boem.gov/sale-227. The Notice of Availability of the Proposed Notice of Sale can be viewed today in the Federal Register at: https://www.federalregister.gov/public-inspection. Copies can also be requested from the Gulf of Mexico Region’s Public Information Office at 1201 Elmwood Park Boulevard, New Orleans, LA 70123, or at 800-200-GULF (4853). All terms and conditions for Lease Sale 227 will be finalized when the Final Notice of Sale is published at least 30 days prior to the Sale.

Source: doi.gov
Source: http://www.enewspf.com/latest-news/science-a-environmental/36833-obama-administration-announces-38-million-acre-oil-and-gas-lease-sale-in-the-central-gulf-of-mexico.html

5 Facts: Well Drilling

On Sunday, September 16, 2012 1 comments

There are countless article surrounding royalties, riches, water contamination and leases... but what are the "facts" surrounding drilling a well. Here are 5 facts regarding well drilling.

1. Dilling is a 24/7 operation.
2. The drilling phase itself is a temporary operation, typically lasting 3-4 weeks per well bore.
3. Multiple wells may be drilled, one after another.
4. After the well pad is constructed a drilling rig is moved on site. A single drilling rig can take 50-65 tractor trailers to move and will stand well over 100 feet tall.
5. Most Marcellus shale wells are drilled down vertically 5,000-8,000 feet and then horizontally 3,000-5,000 feet on average. To drill vertically and then horizontally, a special drilling bit is used.

PA Drilling Impact Fee Surpasses Estimates

On Monday, September 10, 2012 0 comments


In February, the State of Pennsylvania signed into law an "impact fee" on energy companies exploring Marcellus Shale.  Drillers were required to pay 50k for each horizontally drilled well and 10k for each vertically drilled well. It was estimated that the "Impact fee' could generate $100 million dollars for the State of Pennsylvania, benefiting not only the state but local municipalities.
 
The Public Utility Commission announced that the "impact fee" has generated approximately $206 million dollars from more than 4400 wells. The State of Pennsylvania will retain 25 million dollars o the revenue, while the remaining revenue will be split amongst 1,500 municipalities who host gas wells. The funds will be used to fix roads, repair bridges and improve other infrastructure. In addition, funds are earmarked to assist with providing affordable housing, preserving open space and buying equipment for first responders as well as assisting state agencies with drilling impacts.
 
Pennsylvania's new fee on gas drillers has raised more than $200 million, most of which will be distributed to counties and towns to fix roads, restore water supplies and pay other expenses borne by local governments in the Marcellus Shale region.
 
According to 13 News "Bradford County, the most heavily drilled county in Pennsylvania, expects to receive $6 million to $9 million".  They also shared the breakdown of revenue by energy company -
"Oklahoma City-based Chesapeake Energy Corp. was tops with $30.8 million paid on 624 wells. Two others paid more than $20 million: Calgary, Canada-based Talisman Energy Inc., $26.4 million on 540 wells; and Fort Worth, Texas-based Range Resources Corp., $23.7 million on 475 wells".
 
The "impact fee" will be collected once a year for 15 years and vary based upon the price of natural gas.

Oil & Gas Lease Impact on Refinancing

On Monday, September 3, 2012 0 comments

One Pennsylvania homeowner was looking to refinance his home, located just 30 miles north of Pittsburgh, PA but he met a roadblock. It wasn't his credit score, it wasn't his job, it wasn't the appraisal value of the home... they were good. So, what was it, you ask? 

It was the oil and gas lease he signed allowing a company to drill for gas beneath his property that was raising a red flag to the bank. You see, each bank has different guidelines regarding financing properties with active oil and gas leases.  Oil and gas leases represent an "interest" in the property and depending how the lease is written, financial instituations may request that they be re-written to protect the "banks interests" first.

The Pennsylvania homeowner was lucky enough to be able to go back to the oil and gas company, who agreed to put the bank's interests first... but this it not always the case.  Some banks are not willing to refinance ANY homes with oil and gas leases on the property while others have strict guidelines that must be met to qualify for financing.

Banks are taking a new look at both the positive and negative impacts of oil and gas leases and drilling. Experts say, banks are just not sure how to assess the impacts of the Marcellus Boom relative to lending.

In the past -- lending institutions never even asked about oil and gas leases, but that has since changed. More than 350,000 oil and gas wells have been drilled since 1859.

Let's TALK Natural Gas History

On Monday, August 27, 2012 0 comments

We know where we are today -- in a drilling boom, but how did we get here? Let's explore a brief history of natural gas.

Did you know, the Chinese used gas from shallow wells to burn it under large pans and evaporate seawater for salt?  In fact, ancient cultures (pre-1800's) discovered natural gas and were mystified by it's presence.

(Fun Fact: Raw natural gas is odorless, colorless and tasteless so it wasn't until modern time that natural gas companies addded a chemical to natural gas to give it the smell of "rotten eggs" so it could be detected).

Fastforward to 1821...

Fredonia, NY - The first successful natural gas well was dug.

Fastforward to 1958 - same town... Fredonia Gas Light Company began America's first natural gas company.

Hard to believe that in 2012... Natural gas accounts for 24% of the energy we use in the United States. Coal accounts for 23%.

How does Natural Gas Form? Scientists believe that natural gas was formed from the remains of tiny sea animals and plants that died nearly 400 million years old... this is why natural gas is generally considered a non-renewable resource.  The sea animals and plants would sink to the bottom of the oceans and buried under layers of sediment, that eventually turned into rock. Over millions of years, scientists believe that the rock which was thousands of layers thick subjected the remains to enormous pressure. It is predicted that the pressure and heat combined changed the remains into pertroleum and natural gas.




All Signs Point to Marcellus Boom Still Going Strong

On Friday, August 24, 2012 0 comments

 Natural gas production Pennsylvania has doubled in the past year despite facing low market prices and a new tax on the industry.

The Department of Environmental Protection released figured that were quite impressive and surprising to some. Drillers operating in PA, extracted 895 billion cubic feet of gas during the first half of 2012.

According to watchdog.com "More than 2,700 actively producing Marcellus shale gas wells exist in Pennsylvania, with the highest concentration in Washington and Greene counties in the state’s southwest corner and Tioga, Susquehanna and Bradford counties along the northern tier, according to DEP.

At the midpoint of 2011, about 1,600 wells were producing gas in the commonwealth, a figure that climbed to more than 2,200 by the end of last year.

Mark Szybist, a staff attorney for PennFuture, an environmental organization here, said celebrating increased production should include a thorough review of the environmental impact of the industry.
“It would be nice if DEP tracked environmental consequences as much as they do the production itself,” Szybuist said. “It seems premature to assess what this production means without looking at those costs.”

Sunday said the department commissioned a yearlong study of emissions from natural gas compressor stations in Washington County, which began at the end of July.

The department also required all drillers in the state to submit emissions data for 2011. Sunday said that data would be available before the end of the year.

Read the entire article published by Watchdog.com.

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