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As we look at gas drilling projects around the Marcellus Shale it is
important to understand a few of the basics...
The Marcellus name
The origin of its name:
Marcellus Shale is named for a distinctive outcropping near the
village of Marcellus, New York, just to the west of Syracuse.
Types of wells
There are two types of gas wells on Marcellus Shale, horizontal and
vertical.
Horizontal wells, which are first drilled down then
gradually curved and drilled horizontally, require much more water for well completion than
vertical wells. Water requirements in early Marcellus gas wells have
averaged 3 million gallons per well.
Vertical wells, the type of gas wells traditionally drilled
in the past, are drilled straight down without any laterals
extending horizontally. Water requirements are much less, often
under 10% of the water required for a horizontal well. Gas
production is usually less as well.
Locations
of natural gas
The next distinction is what type of natural gas is being exploited,
Marcellus shale gas or coal bed methane (CBM), since both types of
wells exist around Marcellus Shale country.
Marcellus
Shale gas wells are typically 6,000 to 7,000 feet deep with
laterals extending another 3,000 to 4,000 feet. Drilling pads
often contain 8 wells on each pad.
Coal Bed
Methane (CBM) wells reduce the amount of explosive gas
present around coal seams prior to mining activities. Depths are
usually in the hundreds of feet instead of the thousands of
feet, as seen with Marcellus wells.
Types of natural gas
There are two types of natural gas, wet gas and dry gas.
Wet gas doesn't mean
"wet" with water, even though some water comes up with the gas.
"Wet" means the mix of hydrocarbons that contain a
considerable amount of condensable or liquid compounds, like propane
and butane, that are heavier than ethane. Gas processing companies
earn extra revenues from the compounds extracted from wet gas, which is
typically found on the western edges of the Marcellus Shale
formation.
Dry gas
is more pipeline ready since it doesn't contain all the liquids
that need to be extracted before pipeline shipment.
Natural gas money
Gas lease payments and royalty amounts have been all over the board
during the first five years of Marcellus leasing.
Leasing
acreage
Some acreage has been leased for as little as $5 per acre, while
other leases are for $5,000 per acre or more. Many early
Marcellus leases were signed for very low acreage amounts. Lease
amounts have often fluctuated with the current market price of
natural gas.
Talking points should be addressed early that include
gas
pipeline right of ways. Royalty agreements
Percentages have traditionally run the spectrum from 12.5% (Pa.
minimum) to 20%. Landowners usually do best when they are patient and form a group to
negotiate the best acreage lease amounts and percentages. Some Marcellus gas
companies deduct fees from royalty payments for drying,
transportation and storage.
Wording should be added to leases to
cover all the bases.
Gas lease
term
Just because a property owner signs a 5-year lease doesn't mean it
will only be 5-years long. A drilling company can move a piece of
excavation equipment onto leased property the last day of the lease,
and the lease will be extended since the land is "held by
production."
What is covered in a lease
Unless specified, the lease may contain rights to gas and
mineral rights other than just Marcellus Shale. For example, it
might also include the rights to the Oriskany or Trenton Black
River formation. You may be granting permission for an
impoundment or temporary
pipeline to be placed on your property, so study the fine
print. Leases should be fine-tuned by a knowledgeable
professional to address these various details and prevent
unpleasant
surprises.
Water wells
Well owners are advised to get complete "baseline" tests of their
well water done
prior to
the start of any gas drilling activities nearby. If well water
quality is adversely affected by gas drilling, legal claims must be
made within a set time period. This time period may be six months or
less, so time is of the essence.
Gas well traffic
Once there are gas wells on a property, there will be
continuous and ongoing traffic to and from these well sites by well tenders, vacuum
trucks and maintenance crews. Many landowners are relieved that they forced
drilling companies to move their access roads further away from
their houses than originally planned, due to the incessant traffic.
Pipelines & Compressor Stations
Pipeline right-of-ways are cleared of trees for the pipelines needed to
gather and move natural gas off site. Once these gas lines areas are
cleared, trees can never be planted on them again, since it would
risk damage to the pipeline.
Compressor Stations are built along pipelines to move the gas
through pipelines. There are often issues of noise, light and odors
around these compressor stations, as well as health issues
due to poor
air quality.
Heavy truck traffic
The heavy flow of truck traffic catches many communities by
surprise. Traffic is heaviest during the preparation, drilling and
completion of Marcellus Wells. Municipalities are well advised to
adequately bond their roads to cover road repairs that will be
necessary due to hundreds, if not thousands, of heavy truck trips. Bridges should be
inspected to ensure they have proper weight ratings, and later
patrolled to enforce these weight limits, as heavy truck traffic
increases.
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