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READER FEEDBACK

Pa. Tapped, Drillers Not

A new lease: As gas wells power up, parts of the state are going from getting by to getting rich.

By Andrew Maykuth

Inquirer Staff Writer

HUGHESVILLE, Pa. - W. Neil Barto's 180-acre Angus breeding farm reflects a man struggling with burdens. A barn has collapsed into a heap of lumber and hay. Tomatoes rot by the driveway. Rusted junk and empty bottles clutter the porch. Weeds flourish.

Barto's wife, Louise, came to the door in a wheelchair. She was disabled 23 years ago in an automobile crash, and Barto quit his county job to care for her. Barto's health is not so good, either. He lost a finger to a log splitter, got a knee replacement a few years ago, and had a kidney transplant in 1995 that freed him from dialysis.

"The wife and I, we've been without for quite a long time," Barto said last week as he stood by a pen of watchful, mud-caked heifers.

Barto's luck may have turned. In April, two wells drilled on his farm began producing natural gas, and the royalties started arriving in the summer. He and his neighbors became the latest Pennsylvanians to strike gold in a mile-deep layer of black rock called the Marcellus Shale.

The full scale of the Marcellus gas boom is still coming into focus, but Barto likes what he has seen so far.

In July, four days before Barto's 67th birthday, he received the first check from Chief Oil & Gas L.L.C., the Dallas company that last year drilled the wells on this hardscrabble farm, 21 miles east of Williamsport.

Barto's monthly royalty checks now come in at about $7,000. It's just the beginning. He and 14 neighbors get royalty checks from the sale of the gas, but the wells capture only a fraction of the gas trapped in the rock. Chief plans to drill many more wells on Barto's land and surrounding properties.

Barto is trying to keep his newfound bounty in perspective. With the compensation he got when Chief drilled on his land, he splurged on a $42,000 McCormick tractor - the first new tractor of his life - and he built a new metal barn.

"All I want to do is keep my cows and take care of them," he said. "That's good enough for me."

As each new well comes into production, gas drillers are reporting robust discoveries. They're scrambling to lock up the most promising properties in northern Pennsylvania, where there has been little gas development. Gas leases that could be bought for $25 an acre four years ago, and $2,500 last year, are approaching $6,000 an acre.

"You should have come up and bought yourself a hunting camp about 10 years ago," said Bill Wilson, a retired airline pilot who organized the Wyoming County Landowners Group. Last month the group, representing more than 600 property owners with 39,000 acres, signed leases with Chesapeake Energy Corp. for a dizzying $5,750 an acre. The deal will inject $225 million by year's end into a rural county west of Scranton with a population of 28,000.

"There's a lot of smiles up here now," said Wilson, who stands to earn more than $1 million in bonus money to lease his 200-acre farm, regardless of whether any gas is ever developed.

The bonanza is attracting idle drilling rigs from other states.

While oil and gas drilling nationwide has fallen by half since the stock market crashed a year ago, the number of rigs has doubled in Pennsylvania. There are 59 active rotary rigs in Pennsylvania, the most outside the traditional energy giants of Texas, Louisiana, and Oklahoma, according to Baker Hughes Inc., an oil and gas field services company.

In the first nine months of this year, 1,340 Marcellus permits were issued and 385 wells drilled - more than double the number from 2008.

The object of the quest is a layer of bedrock formed from sediments on the deep ocean floor 365 million years ago. The Marcellus underlies 54 of Pennsylvania's 67 counties. In northern Pennsylvania, where much of the activity is taking place, the formation is up to 300 feet thick and lies 7,000 feet below the surface.

Though the Marcellus was long known to contain gas, its potential became clear only recently as developers perfected a horizontal drilling technique that allows them to follow the contours of the shale bed. Since horizontal drilling began four years ago in southwestern Pennsylvania, geologists have raised their estimates of the recoverable reserves. By some estimates, the 363 trillion cubic feet of gas could supply the entire country for 15 years at current consumption rates.

The proximity to big Northeastern markets makes the gas particularly attractive. Though natural-gas prices plummeted in the last year, several of the biggest operators in the Marcellus said at a conference in Pittsburgh on Monday that the new Pennsylvania wells were profitable even at depressed prices.

"It looks like the Marcellus has the best rate of return of any of the resource plays out there," Jeff Ventura, the president of Range Resources Corp., told more than 1,000 people who flocked to the conference, sponsored by Hart Energy Publishing. He said Range would produce up to 200 million cubic feet of Marcellus gas each day next year, eight times its 2008 production.

The industry has not been shy about tooting its horn, spending freely on lobbying and laudatory academic reports.

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Comments

Posted 03:29 AM, 10/25/2009

mikeyg

It is obvious these people do not have cable TV or they would have seen the numerous documentaries and exposes on the hazardous effects of this "mining". He will be long dead before he realizes the side effects of the chemicals and environmental fallout. But because our government subsidized farmers NOT planting on their land, in tough economic times, they had to find something to survive. Now Dick Cheney gets rich raping the land as well as the trust of the American people.

Comment removed.

Posted 08:48 AM, 10/25/2009

chesterfield

hey mikeyg dont you understand its time for us to drill and stop sending our troops into harms way. Take it from someone who has done research our health is taken into account with these operations. maybe your just resentful someone is making a buck.

Posted 08:52 AM, 10/25/2009

chesterfield

Posted 09:32 AM, 10/25/2009

94Bravo

mikeyg: jealous much??? BTW, much of that land they are drilling on is NOT farmland, I've been upstate and seen it. I'm glad for them, as it's an area that is pretty low income.

Posted 12:10 PM, 10/25/2009

Fitzy31

Just look to Colorado, where the issue of fracking has caused many land-owners to file lawsuits against the drilling companies for polluting their water. PA will see the same, in due time.

Posted 12:19 PM, 10/25/2009

jze

The idea that PA has to not tax to be competitive with other states is a joke. The GAS is stuck here and can't be moved to a no tax state. Of course the greedy energy industry will go wherever it needs to suck the earth dry for profit, including a PA with taxes. This is just yet another endless case of Corruption in the state legislature, the most for-sale body after NJ.

Posted 01:49 PM, 10/25/2009

bobguzzardi

Affordable energy is good for all Pennsylvanians. Residential users have lower home heating bills. Businesses have less energy costs to produce more goods with more employees. Natural gas companies are taxed with Capital Stock Tax and Corporate Net Income Tax. Profits pay people and profits are paying rural landowners for use of their property. There is an anti-business and anti-free market that seems to be driven by envy or hostility that some businesses ( who employ us and provide us with goods and services including energy) are bad because they are profitable. The natural gas drilling is subject to a great deal of state regulation. The less taxes and less government involvement the less corruption.

Posted 02:09 PM, 10/25/2009

94Bravo

bobguzzardi: Thank God for someone who "gets it". The amount of anti-business and anti-capitalism on this board and elsewhere really frightens me sometimes. Without business, we would not have jobs and money to live, no matter how the current administration would have you believe the government is the answer to all our ills.

Posted 03:47 PM, 10/25/2009

chesterfield

Hey fitzy31 that is why we have a State Department of environmental resources. Let all those civil service and political appointments get off there butts and take a walk through the forest. start checking the water etc. We have the department you need to tell them to do some thing!

Posted 03:48 PM, 10/25/2009

cosrivron2

PA is sitting on a state saving windfall. Fast Eddie is mad that he couldn't tax every cubic feet of natural gas coming out of the ground (at the wellhead). PA is already getting $2000 a year per every acre leased for mineral rights. So far PA has leased 130,000 acres = 260 million dollars. Let's face it, any tax at the wellhead is passed on to customers, as with all taxes imposed on companies. So why should anyone back a well head tax...oh that's right, the state can't survive without it so they have to lay off hundreds of workers. Letting workers go from already bloated departments is a good thing, isn't it? Taking away drunk state officials' cars is a good thing, isn't it? Routing out corruption in government is a good thing, isn't it? I have read a half dozen newspaper editorials from across the state. They all say PA needs to tax those Big Energy Producers at the wellhead to close the budget gap. (Oh yes, by the way, could you bail us, the great print media, out too? You see, people just don't want to be led around like sheep anymore, they don't want to be lied to anymore by out of touch academics and "journalists".

Posted 05:03 PM, 10/25/2009

SilverCTS

Good for them. I am glad their luck changed.

Posted 08:18 PM, 10/25/2009

rbpeeple

Good for these people!! And to all the people ranting about "Mother Earth"...and "Dick Cheyney"...puhleese.

Posted 08:24 PM, 10/25/2009

Wm.

The good Lord says, "Use it up. The earth is yours. Consume it all. The sooner its gone the sooner you can have the 70 virgins I've lined up for you in heaven."

Posted 12:50 PM, 10/26/2009

storm3

I am happy for the people of that part of the state, they have been so poor for so long it is about time some good luck has come there way. God Bless them!