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Natural gas drilling companies leasing from area landowners

 
Brian DeNeal
updated: 5/12/2011 11:19 AM

Landmen are talking with Saline County landowners in hopes of leasing land for oil and gas drilling.

Two independent landmen, Paul Bertanzetti and Patrick Buchanan, have been working out of an office at 11 E. Poplar St. Since February doing title work and leasing land. They declined to state the company they are working for, but said two companies, Range Resources Appalachia LLC and Next Energy of Colorado are seeking leases and they have heard rumors of a possible third company, Bertanzetti said.

The two want to let the county know their intentions and the possible monetary rewards of the successful extraction of what they believe is a very gas-rich region.

"We are trying to contact as many people as possible. It takes time," Bertanzetti said.

Bertanzetti said the companies are primarily looking to extract natural gas through hydraulic fracturing of the New Albany and Mequoketa shale deposits. New Albany shale is 4,200 to 4,500 feet deep. Mequoketa shale is 6,100 feet deep.

"The formations we';re drilling into have not really been tested before," Bertanzetti said.

Five years ago another company, Bravo Natural Gas, explored natural gas in the county and sunk three wells that were ultimately unsuccessful, Bertanzetti said. He believes the companies today with better techniques will be successful, so successful Bertanzetti predicts Harrisburg will double in size through new money going into local hands through gas royalties.

"That';s pretty conservative," Bertanzetti said.

The offer

For a landowner who owns 100 percent of an acreage';s mineral rights the lease offer is $75 per net mineral acre. A landowner who does not own the full 100 percent mineral rights can expect half that amount, Buchanan said.

The lease is for a five-year term. If the five years comes to pass and the company wants to extend the lease for an additional five years the company will pay $150 per net mineral acre, Buchanan said.

If the company determines to sink a well the landowner is paid $10,000. If the land is cropland the company pays for the cost of crop production loss due to the well activity. A well usually takes 4 1/2 acres of ground, Bertanzetti said.

If the well produces the landowner receives a 1/8 share in royalties.

To get a well operating takes about a month, Bertanzetti said.

"Two of those weeks it';s loud when the drilling is taking place. The fracturing is not so loud," Bertanzetti said.

"It takes two weeks to drill and two weeks to fracture. Then they';ll move the rig off somewhere else to drill."

The crew will need enough room for a mud pit, enough room for parking, for trailers for the crew and room for storage of the drilling pipe.

The technique

Shale is a soft, often gray and organic mineral that often appears on the surface in eroded creek banks. Deep in the earth shale deposits also hold natural gas and sometimes oil trapped inside them.

"Nobody knew how to get oil and gas out of shale formations. They knew it was there in the 1920s, but there was no technology," Bertanzetti said.

In 1999 Mitchell Energy drilled vertically into the Barnett shale deposits at over 8,000 feet in Wise County, Texas, blasting sand into the shale and it worked, releasing natural gas, Bertanzetti said.

"As far as the eye could see wells were springing up around the Wise County countryside," Bertanzetti said.

He said Mitchell Energy';s Barnett shale boom lasted three years.

Mitchell Energy began as a small company in Johnson County, Texas, but then changed the game by drilling down 8,000 feet to the Barnett shale and then drilling horizontally.

"They got four times the amount of production than vertical well," Bertanzetti said.

"All of a sudden it just exploded."

By drilling horizontally from one location a single surface well could reach more area and reduce the eyesore of numerous vertical wells dotting the horizon.

"The problem with horizontals is it was all secret technology, very hush, hush. But there were some engineers who left Mitchell who too the knowledge with them and formed Stroud Energy," Bertanzetti said.

"They were highly successful drilling the Barnett shale wells."

He said in south Forth Worth, Texas, the company averaged $1.5 million in cubic feet of natural gas per day.

The average royalty to the mineral owners amounted to $300 per mineral acre per month.

Range Resources then bought Stroud Energy. Mitchell Energy was bought by Devon Energy.

"Range has drilled close to 400 wells producing in Barnett shale," Bertanzetti said.

Hydraulic fracturing, or "fracking," involves an injection of water, sand and caustic chemicals into the shale to fracture it and release the gas to the surface where it is collected. The New Albany shale deposit is about 200 feet deep.

Benzine is the primary caustic chemical injected into the shale, Bertanzetti said.

"It is a cancer causer," he said.

"We don';t want it getting into fresh water."

The purpose of the benzine is to negate the affects of anaerobic bacteria.

"The reason the fracturing fluid is caustic is, underneath the ground, once there is a fracture in it, anaerobic bacteria eats the oil and gas," Bertanzetti said.

The bacteria is the same kind that is eating the oil spilled in the Gulf of Mexico, he said.

The bacteria excrete a waxy substance that clog the fractures from which the oil and gas are extracted.

"We use caustic chemicals to basically kill the bacteria," Bertanzetti said.

The process uses a drill casing of cement and steel that descends 650 feet to protect freshwater aquifers from the drilling chemicals, Bertanzetti said.

"Anything below 650 feet starts getting salty," Bertanzetti said.

Faults in the earth can conceivably provide a conduit for the hydraulic fracturing fluid to reach fresh water aquifers.

"You can have a problem if you don';t fracture correctly. You can hit a fault and get up into the fresh water," Bertanzetti said.

Range Resources uses seismic 3D and 4D seismic imagery to map the ground, Bertanzetti said.

"They will see any of the major faults underneath the ground. They are very readable and they would adjust the fracturing accordingly. If you are blind you get in trouble in a hurry," Bertanzetti said.

The seismic readings were at one time done using dynamite. Now the companies use thumpers which are devices on truck that thump sensors onto the ground.

The seismic reading show faults to avoid, but do not show karsts, small fractures in the ground where there will be no gas. Bertanzetti said seismic readings could show everything looking good, but the well could end up dry because of karsts.

He said no water wells in Texas have ever been found to be polluted due to hydraulic fracturing techniques.

The Texas Railroad Commission is the agency that overseas all regulations of drilling in Texas.

"I personally contacted the Texas Railroad Commission to ask if there has been any wells with contaminated water. They tested over 100 wells and never found the drilling contaminated any wells. There is usually a muddy residue," Bertanzetti said.

He said there are over 10,000 natural gas wells in Texas.

Earthquakes

The state of Arkansas has recently experienced hundreds of earthquakes some speculate may be caused by hydraulic fracturing. Bertanzetti said he believes this is not the case since the process does not create the Richter Scale measurements being measured in Arkansas. He thinks the quakes are simply activity in the New Madrid Fault. But he said there is reason to suspect fracturing and part of the process has upset people who hear or feel a rumbling in the ground.

Just above and below the New Albany shale deposits and other shale deposits are layers of saltwater.

"If you get saltwater it costs money to dispose of the saltwater with saltwater injection wells. If you get a lot of saltwater there is no point in producing. It is not economical," Bertanzetti said.

He said the saltwater recovered must be pumped back into the ground through saltwater injection wells at a cost of $75 per barrel.

In the late 1990s there was drilling approved in the city limits of Denver, Colo., and the drilling went well for about a year, Bertanzetti said.

About six months later there occurred what appeared to be a series of small earthquakes. There was no damage reported, but the rumbling unnerved people and there were complaints made to the city council. The city council took about a year to investigate, he said.

"They did not stop the oil and gas drilling, but stopped the saltwater injection. That stopped the earthquakes. They had no more," Bertanzetti said.

"The earthquakes in Arkansas were probably not related. They were much stronger. They were probably associated with the New Madrid area of northeastern Arkansas," Bertanzetti said.

He said as the saltwater is pumped back down into the ground it lubricates the faults.

"You put the saltwater injection wells well away from the faults so it doesn';t lubricate them. But drilling itself has not been a problem," Bertanzetti said.

Bertanzetti said of the two companies he knows are talking to area landowners, only Range Resources has the drilling capabilities. He said any other companies are likely intending to sign leases and later sell them to Range Resources.

 

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