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Marcellus by-product: Lots of legal work

James R. Grace, deputy secretary of State Parks and Forestry, at a Marcellus Shale gas-drilling site. Many lawyers in Pennsylvania believe their most lucrative work in the shale is yet to come.
James R. Grace, deputy secretary of State Parks and Forestry, at a Marcellus Shale gas-drilling site. Many lawyers in Pennsylvania believe their most lucrative work in the shale is yet to come. MICHAEL S. WIRTZ / Staff Photographer
James R. Grace, deputy secretary of State Parks and Forestry, at a Marcellus Shale gas-drilling site. Many lawyers in Pennsylvania believe their most lucrative work in the shale is yet to come. Gallery: Marcellus by-product: Lots of legal work

 If there is such a thing as a typical small-town law practice, then Les Greevy's could serve as the template.

Or at least it might have a few years ago.

Greevy, 66, has been practicing law in Williamsport in the state's northern tier for more than 40 years, just as his father and grandfather had before him.

His practice traditionally centered on representing municipal governments, insurance companies, and individual clients seeking advice on estate and trust matters.

Then came the Marcellus Shale natural-gas discovery, and Greevy's world was turned upside down.

Energy companies, many from out of state, raced to lock up the gas rights on millions of acres.

Landowners, in turn, flocked to local lawyers like Greevy seeking assistance with their lease agreements.

Now, Greevy has shifted the bulk of his practice to Marcellus Shale business. He has hired additional staff and boosted his hours. He works Saturdays and Sundays and regularly drives an hour or more at night to speak to landowners looking for advice on how to protect their newfound energy wealth.

There have been other big changes.

In his free time, Greevy likes to volunteer as an instructor for high-performing trap-and-skeet competitors, including athletes with Olympic dreams.

And he loves to tramp through the woods of his 5,600- acre hunting club in pursuit of whitetail deer and black bear, or to fish for trout.

But with all of the new Marcellus legal work, he has less time for these pursuits.

"It has created a lot of lease work, and it has created a lot of title work," Greevy said. "We don't know how big it [the economic impact of Marcellus gas] is going to be, but it is going to be big."

An abundance of legal work is one of the by-products. So far, most of the work has centered on preparing lease agreements between energy companies and landowners.

While much of that has been handled by local lawyers like Greevy, some big Philadelphia firms also have been handling lease negotiations.

In September, C. Baird Brown, of Center City's Ballard Spahr L.L.P., closed a lease deal with the energy company Hess Corp. that covers 70,000 acres in Wayne and Susquehanna Counties. Brown represented a group of landowners in the transaction.

The Marcellus discovery also has drawn the attention of out-of-state lawyers. The Texas-based firm of Burleson Cooke L.L.P. opened an office in the Pittsburgh area to represent energy companies in lease negotiations, and to handle other matters.

Rob Fox, managing partner for the environmental boutique Manko, Gold, Katcher & Fox L.L.P., based in Bala Cynwyd, plans to address oil and gas developers at a June conference in Texas on the nuances of Pennsylvania environmental laws.

"It is starting to move the needle," Fox said. "It is in the early stage and ramping up."

Lawyers Joel Burcat and George Asimos of Saul Ewing L.L.P. each have addressed the Pennsylvania Bar Institute's continuing-legal-education seminars on Marcellus and have a blog as well.

Burcat and Asimos did the environmental due diligence work last year for Kohlberg, Kravis, Roberts & Co., the New York private-equity firm, on its $800-million investment in a Marcellus project.

What is causing so much excitement is the magnitude of the discovery. There is enough gas in Marcellus, according to one estimate, to supply all of the nation's gas-consumption needs for the next 20 years. Many lawyers in Pennsylvania think the most lucrative work is yet to come, because development is in its infancy. As wells are drilled and pipelines are built, the amount of work representing drillers before state and federal regulators will burgeon.

So will legal disputes, or so the thinking goes.

About 70 lawsuits have been filed in state and federal courts pitting landowners against energy-development companies over how royalties are calculated. The landowners allege that, in some instances, gas developers have been illegally deducting refining and other postproduction costs from royalties. Nicolle Snyder Bagnell, a Pittsburgh-based partner at Reed Smith L.L.P., who represents industry groups in the litigation, says the case is likely to have wide implications.

"It is an issue facing all producers," she said.

David Mandelbaum, a partner with the firm of Greenberg Traurig L.L.P. in its Center city office, represents exploration and development companies seeking to tap Marcellus.He is representing the Houston-based company Seneca Resources in a litigation battle over its mineral rights on 187,000 acres in the Allegheny national forest.

"It is going to be very big," said Mandelbaum. " There are a lot of construction sites in the middle of nowhere, and it is impossible to get to those places without disturbing things. So there is going to be a lot of regulatory attention."

Many of the local lawyers see their role as standing up for farmers and other small landowners who risk being steamrolled by energy companies. Greevy, the Williamsport lawyer, pointed out that gas company leasing agents, known as "landmen," started in the region with lowball offers of $25 an acre, but that payments soon soared into the multiple thousands once the extent of the deposits became known.

Yet, in the gas-producing areas, the view is widely held, even among skeptical local residents and their lawyers, that the discovery will change things for the better.

"Folks who have worked all their lives," Greevy said, "are now going to be able to retire and get out of debt."

 


Contact staff writer Chris Mondics at 215-854-5957 or cmondics@phillynews.com.

Chris Mondics Inquirer Staff Writer
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