Introduction to
MARCELLUS SHALE
GAS DRILLING

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.
  

Halliburton fracking Marcellus Shale gas wells

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 4 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% or more.  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 of the gas. Wording should be added to standard 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, Utica 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 within a certain radius (1,000 feet in Pa. in 2010) 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 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.
   

home     terms of use     contact
Copyright ©2009-2012    Marcellus-Shale.us    All rights reserved.