If you refer to the “Gas Lease Seminar 4/16/2008″ post, you will see that one of our readers, Thompson, took the time to go to the meeting and post some valuable information. For that, this writer as well as all readers of this blog (except the landmen) thank you.
I do have one serious concern with the presentation. In the third post by Thompson, he reports that a Mr. Murphy answered a question about using chemicals in the fracking process:
“There was a question about the chemicals in the fracking water. He thought that those stories related to oil wells, that gas wells used water. He said that the water was recaptured from the well and returned to the tankers where it must be taken to a water treatment plant before it can be released or discarded.”
I direct your attention to the following two links, one from Congressman Henry Waxman (D) CA, Chairman, House Oversight Committee, Hearings from October, 2007, regarding using chemicals in the fracking process; and the the other from the Oil and Gas Accountability Project.
http://oversight.house.gov/story.asp?ID=1638
and
http://www.earthworksaction.org/oil_and_gas.cfm
The second site was a direct referral from the Congressional Oversight office during a phone call yesterday. While the individual I spoke with told me that they do NOT dispense legal advice, he suggested both sites above. He did stress that there is competent legal advice out there, generally it follows the “Play” as there are usually problems with the way these companies do business. He also agreed with the statement that if a well is being drilled anywhere near (of course “near” is a bit ambiguous) your well, it would be a good plan to have a complete - probably way more than the Penn State version - baseline test of your well. This way, if anything changes, you will have documentation to persue the appropriate remedies. I don’t know about you, but near could be within one mile.
If in fact it can be determined that diesel fuel and other carcinogens are being used, this is a cause for great concern. Personally, while I am not following the “Chicken Little” plan, I am going to have a complete, and I do mean complete test of my water done by an Independent Source.
As we have been told for years, once something gets into our underground aquifer, it can travel for miles. Whether or not it is correct this fluid is recovered, and reused is of little comfort. There is no way, even if it is attempted, that all of it can be recovered. I remember reading recently that 8 ounces of gasoline can contaminate almost 500,000 gallons of water. If you have a fuel spill, DEP will be all over you like a carpet. If using chemicals in the fracking process is as the Oversight Committee investigated, what is DEP doing to assure we have clean, non carcinogenic water?
The bottom line is this: if the United States Congress has spent the time to investigate this matter in other parts of the country, shouldn’t we be paying attention here? By the way, the hearings have concluded, however, the investigation, according to the person from the Oversight Committee I spoke with is still very much open.
One more site to view. This is a little older, but it is more disturbing.
http://www.salon.com/news/feature/2006/05/05/fracking/index.html
Pleasant dreams?
There will be a Penn State Extension presentation “Natural Gas Wells and Drinking Water” at Honesdale on June 9th and at Montrose on June 10th. Each will be from 7:00 PM to 9:00 PM. The agenda:
Gas Well Drilling Basics
How gas wells can impact groundwater wells
Regulations to protect private wells
Potential water pollutants
Testing strategies - including test packages through Penn State
How to collect water samples
Interpretation of water test results
“Water testing through the Penn State Water Testing Lab will be available through this program at 20% to 30% discount. Tests range in price from $40 to $100. You will be able to pick up a sample kit after the program and return it the next day for testing.”
RSVP: Honesdale - 570-253-5970×4110 — Montrose - 570-278-1158
Admission: $5.00 payable at the door.
Could this happen?
The “Primary Term” of the lease is the “five years” or “seven years” or “ten years” that most people talk about when they mention the “up front money”. This is the period when the gas company “looks for” oil, drills for oil or sells the lease to another company.
The “Secondary Term” is the period after the Primary Term when the lease continues for any of a number of reasons depending on your lease. The third reason on a lease I’ve seen is “or (iii) oil or gas, or their constituients, are produced from the Leasehold or lands pooled/unitized therewith.”
“Unitization and Pooling” is a large paragraph saying the Lessee has the right to lump your land (or portion thereof) with any other land it chooses before drilling or after drilling, to form a production unit. The land included does not have to be contiguous with your land and there is no restriction on the size of the unit.
Let us assume that toward the end of the Primary Term of your lease, the gas company drills a well on your 100 acres and it produces gas in marketable quantities. The gas company, who also has a bunch of leases that are about to expire, lumps them with your land making a 1000 acre unit. If your lease says that you get the statutory one eighth royalty, that royalty is also distributed to the other landowners in the unit - so you get one ninth of one eighth or 0.12500 times 0.11111 which equals 0.01389. On a $10,000 production day you’ll receive $138. The other $1112.00 that makes up the one eighth goes to the other landowners who are in the unit but do not have a well yet. The gas company had extended the leases of the other landowners by using the well on your land. Since there is no legal limit to the size of the unit, your piece could be smaller.
There are two things I know might affect this story:
1. Some say that the law requires that the landowner must get one eighth of the value of the gas and your lease might say that you get “net value”. That is, you get one eighth after expenses. Some folk say this voids your lease. No court cases.
2. Some say that the state law says that the owner of the land with the well must get one eighth of the value of the gas and it can not be shared with other landowners as described. This has not been tested in court either.
The Marcellus Shale is radioactive (reference: http://geology.com/articles/marcellus-shale.shtml). The ground up rock and shale that the well drilling brings up to the surface is stored near the well until the well is finished. I asked if there was a radiation danger at the Tunkhannock meeting - no answer.
They did say that the solid stuff brought up from the well is dried and a material that causes it to bind together is added and then the whole pile is buried 30 inches below the grass, right next to the well.
If anyone hears anything about a radiation hazard, please post it.
“Isopach maps of the Devonian Hamilton Group (the Marcellus Shale is the lowest member of the Hamilton Group) and of the highly radioactive shale within the Hamilton Group were prepared by Joseph Schwietering and are available at Pages from Schwietering, J.F., 1981, The Occurrence of Oil and Gas in Devonian Shales and Equivalents in West Virginia (pdf). Note that the Hamilton Group is not present in the far western part of the state.”
ref: http://www.wvgs.wvnet.edu/www/datastat/devshales.htm
“Normally Occurring Radioactive Material (NORMS): NORMS are found in many geological formations and can be brought to the surface on drilling equipment and in fluids. Once at the surface it can accumulate as sediments in holding tanks and ponds. This is an issue in the Barnett Shale, which are not the same rock. However, NORMS occur in NY at higher levels than in PA and have not been tested in the eastern part of the state.”
ref: http://catskillmountainkeeper.org/node/290
“The Marcellus shale area near Syracuse was selected as a potentially high risk area for indoor radon concentrations above average values, whereas the Pine Bush area near Albany was selected as a low risk area. The soil Ra-226 concentration, soil gas Rn-222 content and the permeability of the soil for gas flow have been measured for surficial soils from both areas. The Marcellus shale is a middle Devonian marine shale, 15 to 60 feet thick with outcroppings located in a band across the state. The shale contains high concentrations of both organics and radionuclides.”
ref: http://www.nyradon.org/abstracts.htm
“Blasted free by millions of gallons of fresh water and chemical soup sent miles below ground, some of earth’s baddest geological actors – radioactive elements capable of scarring soil and scourging human health – are slowly rising to the surface along with the Barnett Shale’s natural gas.
“Known as technologically enhanced, naturally occurring radioactive material, or NORM, the residue can be the most toxic waste that oil and gas production generates.”
ref: http://berita-kebumian.blogspot.com/2007/11/radioactive-waste-surfaces-at-texas-gas.html
U.S. Geological Survey power-point presentation. Interesting pictures, mentions radioactive shales.
ref: http://pubs.usgs.gov/of/2005/1268/2005-1268.ppt
OIL AND GAS LEASES
58 P. S.
§ 33. Guarantee of minimum royalties
A lease or other such agreement conveying the right to remove or recover oil, natural gas or gas of any other designation from lessor to lessee shall not be valid if such lease does not guarantee the lessor at lease one-eighth royalty of all oil, natural gas or gas of other designations removed or recovered from the subject real property.
1979, July 20, P.L. 183, No. 60, § 1, effective in 60 days.
ref: http://www.dep.state.pa.us/dep/deputate/minres/oilgas/OIL%20AND%20GAS%20LEASES.doc
——————————————
Does this mean one-eighth less costs? Or one-eighth.
Les Greevy said, “A lease is like a deed” (At the Tunkhannock Meeting). It is a contract; all that is required is “signature and delivery”. You sign the paper and hand it over to someone and it is done. Even if you haven’t been paid yet. When you bought your house it is likely that the seller signed the papers at almost the exact same time you handed over a certified check in full payment. I have seen one lease where the gas company didn’t even sign even though the landowner’s notarized signature was there.
When you “sign and deliver” the lease, the gas company goes to Montrose (since this is a Susquehanna County Blog) and registers the lease against your deed.
How does it ever get removed?
The answer is the gas company or current owner of the lease writes a letter notifying you that the lease is terminated. And you take that letter to Montrose to be filed against the lease you originally signed.
Is there anything it your lease to encourage the then current owner of the lease to do that? Or, is it going to be a legal battle on your part to get the lease removed?
And if you disagree with the gas company?
One lease I read says:
“ARBITRATION. In the event of a disagreement between Lessor and Lessee concerning this Lease, performance thereunder, or damages caused by Lessee’s operations, the resolution of all such disputes shall be determined by arbitration in accordance with the rules of the American Arbitration Association. All fees and costs associated with the arbitration shall be borne equally by Lessor and lessee.”
Here are the rules:
http://www.adr.org/sp.asp?id=22440#R2
The clause does not say that The American Arbitration Association will do the job, just that their rules would be used. Notice the section on determining where the arbitration proceedings will take place:
“The parties may mutually agree on the locale where the arbitration is to be held. If any party requests that the hearing be held in a specific locale and the other party files no objection thereto within 15 days after notice of the request has been sent to it by the AAA, the locale shall be the one requested. If a party objects to the locale requested by the other party, the AAA shall have the power to determine the locale, and its decision shall be final and binding.”
What are the chances that all the parties will agree on Montrose?
And what are the fees? The above URL discusses some; and you will probably want an attorney to help on your side too.
NORM
Naturally Occurring Radioactive Material
This is from the Barnett Shale Energy Education Council. It discusses the use and disposal of the fracking water (water is more valuable in Texas) and goes on to discuss NORM. If you click on “City Ordinances” in the upper left you can see what each of the affected cities have done to restrain gas drilling.
http://www.bseec.org/index.php/content/facts/environment/
The Railroad Commission of Texas regulates gas and oil drilling and production in Texas. This is their page on the Barnett Shale. They say they do not respond to odors, a subject of previous mention on this site, and give a reference to the “environmental quality” site, which says little. FAQ number 20 discusses NORM.
http://www.rrc.state.tx.us/barnettshale/index.html
The National Library of Medicine maintains a Hazardous Substances Data Bank that is accessed through TOXNET. This page relates to Radium and gives more detail than you probably want about health efferct.
http://toxnet.nlm.nih.gov/cgi-bin/sis/search/r?dbs+hsdb:@term+@na+@rel+radium,+radioactive
From OSHA: “Potential Health Hazards Associated with Handling Pipe used in Oil and Gas Production” This is detailed!
http://www.osha.gov/dts/hib/hib_data/hib19890126.html
OSHA has a detailed description of the well drilling process and the hazards involved to the workers. No mention of fracking, but very nicely done.
http://www.osha.gov/SLTC/etools/oilandgas/index.html
Also a dictionary of petroleum terms.
http://www.osha.gov/SLTC/etools/oilandgas/glossary_of_terms/glossary_of_terms_a.html
NORM Good News
The New York Department of Environmental Conservation did a credible evaluation of the radiation hazard posed by New York gas wells. Their conclusion: Gas wells New York offer no radioactive threat.
http://www.dec.ny.gov/chemical/23473.html
I tried to find the Pennsylvania DEP document mentioned in the above New York report and tripped over the meeting schedule of the “Gas & Oil Technical Advisory Board of the Department of Environmental Protection”. I says that there were two meetings scheduled for 2007:
Meeting_Schedule - 2007
October 3, 2007 TAB Meeting, 10am, Harrisburg Office, Rachel Carson State Office Building. The Oil and Gas Technical Advisory Board meeting scheduled for October 3, 2007, was cancelled. and not rescheduled. For information contact Carol Daniels at 717-772-2199 or e-mail cardaniels@state.pa.us.
The Oil and Gas Technical Advisory Board meeting scheduled for May 23, 2007, has been cancelled. Notice will be given when a new date is established. For information contact Carol Daniels at 717-772-2199 or e-mail cardaniels@state.pa.us.
ref: http://www.dep.state.pa.us/dep/subject/advcoun/oil_gas/oil_gas.htm
More NORM good news.
California did a study that showed there were no really hazardous wells. Some were a little high. This suggests that the radiation should be monitored by DEP. The beginning of this report is very good in explaining radiation hazards and the terminology involved.
ftp://ftp.consrv.ca.gov/pub/oil/publications/norm.pdf
It is 66 pages of pdf, so download may take a while.
Thank you for all your research. I do wonder if the geological conditions in California are similar or not to NorthEastern, Pennsylvania. For example, as we know, radon is a gas which occurs in this area and is of concern to some homeowners in this area. According to the EPA maps of radon by states, Pennsylvania http://www.epa.gov/radon/zonemap/pennsylvania.htm has highest potential for radon concentrations in counties roughly along the Marcellus Shale line. California http://www.epa.gov/radon/zonemap/california.htm has only two counties, Ventura and Santa Barbara, which have the same potential.
Here are the other two states which have the Marcellus Shale, New York and West Virginia, http://www.epa.gov/radon/zonemap/newyork.htm and http://www.epa.gov/radon/zonemap/westvirginia.htm
Pennsylvania has more radon than California:
http://www.epa.gov/radon/zonemap.html
Agreed. However, since there has been no real drilling, etc. in this area, shouldn’t this be closely monitored until there is a more complete history?