Category Archives: Doddridge County

Antero’s Water Treatment Plant in West Virginia

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Ken Ward, Jr. of the Charleston Gazette-Mail put together an excellent article on the wastewater treatment plant that Antero Resources is building on the Doddridge County and Ritchie County line.  He explains the need for the plant, the controversy around the plant, and gets into the regulatory framework that is either being used or abused depending on your point of view.  There are a number of points of view represented.

Basically, the plant takes up a lot of space and has disrupted the lives of the people who live next to it.

For regulatory purposes the plant is supposed to be privately held and used by Antero.  Being private instead of commercial, the plant doesn’t have to go through some regulatory approvals.  Interestingly, Antero will be taking water from other companies and treating it.  Usually that would be commercial, not private.   It looks like Antero is using a loophole to avoid regulations.  People don’t typically like that kind of thing, particularly when their lives are being disrupted by someone who is making a lot of money disrupting their lives.

There’s more in the article.  We won’t ruin it all for you here.

Burket Formation Data, Another Point Against Force Pooling

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Zipper Fracking

As you well know if you’ve been reading this blog for any length of time, there are more producible formations underneath West Virginia than just the Marcellus and the Utica.  The Rogersville shale, among others, over in the western part of the state is getting some interest, and the Burket formation in the northern part of the state is finally getting some real air time, too.

Wrightstone Energy Consulting has put together some data on the Burket.

It’s not a very thick formation in West Virginia, but it’s pretty close to the Marcellus shale, lying just a few hundred feet above it here in West Virginia.  It’s not a ridiculously productive formation, but when drilling from one pad to the Marcellus and Utica it makes sense to drill to the Burket as well.

The best locations for Burket drilling appear to be in Doddridge, western Harrison, western Marion, and western Monongalia counties.  There’s a little bit in Wetzel, Tyler, and Lewis counties where they border the previously named counties, too.  There may be some good production in a small strip of Upshur, Barbour, and Tucker counties as well.  We don’t anticipate much development there because it makes more sense to drill where you already have pads, but we also know that Consol/CNX/Dominion was drilling to the Burket in Barbour county a couple of years ago, so if gas prices go up a little we expect to see them pursue that activity again.

By far the most interesting aspect of the data that Wrightstone Energy presents suggests that producing the Burket with the Marcellus could yield increased production from one or the other, or even both.  Fracking the Marcellus and then coming back later to frack the Burket may result in wasted energy as the fractures may communicate with the previous Marcellus fractures, resulting in fewer new fractures.  However, if both are fracked at the same time, or “zipper fracked“, the resulting production from both formations could be significantly higher.

We hate to harp on this one subject yet again, but this is yet another reason why it is important for mineral owners to be able to say no to a lease and not have to worry about being force pooled.  If the lessee is not going to produce the Burket with the Marcellus the mineral owner should be able to say they want to wait until a producer who wants to produce both formations comes along.

 

Doddridge County Meeting on Forced Pooling

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forced_pooling_cartoon

There was a meeting in Doddridge County last night where residents were able to express their opinions about forced pooling to a couple of state legislators, Woody Ireland and Mike Romano.  Woody Ireland is a proponent of forced pooling in the House of Delegates, and Mike Romano is a Senator who voted against it.

The article over at WBOY.com is short, but it’s important because it shows that the forced pooling agenda is still being pushed forward.  We oppose forced pooling on principle.  It’s not right to take a landowner’s property away from them and give it to another person or a corporation.  Other provisions of the bill were good, and we would like to see them passed, but forced pooling should not be the law.

Shocking! West Virginia Lease Prices are Stable in a Downturned Market…

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American flag flying in the wind

In November of 2014, Saudi Arabia announced that it would not cut production of oil.  This surprised everyone, as the price of oil had fallen quite a bit at that point, and Saudi Arabia’s usual move when oil prices had fallen in the past had been to cut production.  The result — oil prices fell even further.

There was a lot of speculation as to why Saudi Arabia wasn’t cutting prices.  Most people thought that it was a move to hurt Russia, Iran, and Venezuela.  Some people thought it was a move to kill fracking in the US.

More and more, people have decided that while hurting Russia, Iran, and Venezuela was a nice bonus, the real target was US fracking.

While fracking has suffered, it hasn’t died.  This article over at biznews.com explains why.  The short story — US frackers figured out how to cut costs.  A lot.  The article says that costs of various drilling services have fallen by 20 percent to 50 percent, and that some oil plays now have a break even point below $40/bbl.

That’s what entrepreneurs and CEOs do when they operate in a free market.  The Saudis didn’t count on that, and I don’t think anybody outside the US really believed it could be done.  We did it.

The fascinating thing for West Virginia oil and gas royalty and mineral rights owners is that bonus amounts and royalty amounts really haven’t changed much since November of 2014.  Royalty amounts haven’t dropped at all.  Bonus amounts have dropped some.  For instance, you can still get a lease for $2,500 per acre in Doddridge and Harrison counties, but you will have a harder time getting that for a lease in Ritchie County which was commanding even more than that at one point.  In Tyler County you can still get $4,000 per acre, and in Wetzel and Marshall counties you can get anywhere between $2,500 and $4,000 per acre.

Some counties have no development at all now, but it’s more because the formations under those counties are not expected to produce as much gas as other counties.  Those counties will be exploited (word choice purposefully made) in later months or years when gas has been fully exploited elsewhere.

The one real change that we’ve seen in West Virginia is that, while the price of an acre hasn’t dropped much, the sheer number of lease offers has.  Instead, we’re talking with more people who have been given offers to buy their mineral rights.  While we’re glad to help facilitate those sales in the right circumstances, we still recommend that people hold on to their mineral rights if they are in a position to do so.  Those mineral rights will be more valuable when the lease buyer comes knocking than when the mineral buyer comes calling.

We still think that in a few years the infrastructure for gas delivery will improve, the demand for gas will go up, and the price of gas will go up.  At that point leasing will pick up again.

For those of you thinking about whether to lease or sell, give us a call and we’ll help you decide what’s best for you.  In the meantime, celebrate the exceptionalism of the American free market over the 4th of July weekend.

And be safe.