Marcellus shale boom making its way to Ohio? Only time will tell the story

STEUBENVILLE, Ohio — A difference in a state boundary seems to be a separation point for the potential for drilling through the Marcellus shale for natural gas.

Tom Tegund, deputy chief, Oil and Gas Program for the Ohio Department of Natural Resources’ Division of Mineral Resources Management, spoke at a public meeting June 7 on the subject of oil and gas drilling.

Activity reports

Judging from the number of permits and the activity in Ohio so far, he said he doesn’t see the amount of drilling occurring in Pennsylvania happening in Ohio in the near future.

Tegund said due to the depth of the Marcellus shale in Ohio, he expects there to be only pockets where the drilling will occur.

According to Tegund, 60 permits have been issued for the Marcellus shale drilling to date, and, so far, 42 wells have been drilled. The leader with permits issued is Belmont County , 19; Jefferson County, 14; Washington County, 13; and Monroe County with nine. The remaining permits were issued to counties in the eastern portion of Ohio.

The drilling has boomed in Pennsylvania. In 2008 in Pennsylvania, 196 wells were drilled, and 519 wells were permitted. In 2009, 763 wells were drilled; 1,985 were permitted.

So far in 2010 in Pennsylvania, 280 wells have been drilled and 584 have been permitted.

The state of New York quit issuing permits for drilling there.

Many questions

However, the packed room of 200 at the Eastern Gateway Community College in Steubenville had a different opinion than Tegund.

Many in the audience have been approached about leasing their ground for gas drilling through the Marcellus shale, or were concerned for what may be ahead for the environment due to the effects of the drilling.

Some of the attendees questioned what is a fair leasing price for the acreage, while others were concerned about the effects on groundwater on the property.

Dale Arnold, director of energy policy for the Ohio Farm Bureau Federation, gave some pointers to the crowd on what to look out for when negotiating a gas drilling lease for the property.

Things to remember

The first tip was to have an attorney look over the lease before signing it. They will be able to decipher legal language and ensure the property owner is protected.

The second tip is to ask for references. Don’t settle for references from people with leases. Ask for at least five references from people have had gas wells drilled on their property. He stressed to ask for more than three because three can be easily obtained, five might not be.

Another tip is to make sure the company clearly understands you want the first year’s lease rental and any bonus to be distributed when the lease is signed. Also, be sure to have an attorney put in the lease, the property owner has a set number of days (an example of 30) to cash the check or back out of the lease without cashing the check.

Also be sure to include in the lease, a minimum depth for any pipes that have to be constructed underground on the property. This is especially important if the property is being farmed. Keep in mind any conservation practices you may implement on the property and farm tiling in fields.

Require maps

Include in the lease that any lines have to be clearly identified and marked and they are included on all sub- and above-surface maps. Be sure the lease states that the property owner gets a copy of the maps and one is filed at the courthouse.

Arnold added another tip is to have an attorney include a provision for an escape clause in the lease in case the property owner wants out at the end of the lease. Watch out for automatic renewal clauses that can occur if you cash checks after the lease is finished.

Liability clause

It’s also recommended to include a clause about making the company liable for damage to growing crops on the property, trees, fences, buildings, tile lines, drainage ditches, springs and water wells.

The most important thing to remember, when considering to sign a lease with a gas company, Arnold emphasized, is to do your homework and be armed with knowledge and legal advice.