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Gas Drilling Booms in Valley

Marcellus Shale Dominates Talk in 2010

Casey Junkins
The Intelligencer
December 25, 2010

Wheeling, Ohio - For many Ohio Valley residents, the words "Marcellus Shale" had little meaning at the start of 2010.

Much has changed since then, though, as the Marcellus Shale natural gas boom has dominated the headlines and brought hundreds of millions of dollars of new money to the local economy.

The Marcellus Shale formation - located more than a mile underground - is huge, geologists say, stretching from New York state to West Virginia.

According to a report issued by University of Wyoming professor Timothy J. Considine, "The Economic Impacts of the Marcellus Shale: Implications for New York, Pennsylvania and West Virginia" Marcellus activity boosted the Mountain State's economy by $1.3 billion in 2009, with gas companies paying lease and bonus money to property owners totaling $657.6 million. The research shows that drillers will pay as much as $221 million in state and local taxes in 2011 as well. The report also shows the action could create 22,928 new West Virginia jobs in 2011.

There already are a number of producing Marcellus wells in the local area, centered in Marshall and Wetzel counties.

That activity is slowly moving north, as drilling rigs should soon be near The Highlands and on Dement Road in Ohio County.

Chesapeake Energy, the primary energy company working in the Northern Panhandle, also has applied for permission from the West Virginia Department of Environmental Protection's Office of Oil and Gas to drill in Brooke County.

The Marcellus activity is not contained to the Northern Panhandle, though, as companies are now exploring options in Eastern Ohio.

Revenue and Jobs

Lease revenue payments have ranged from as low as $5 per acre to about $4,000 per acre over the past year with production royalty payments ranging from 12.5 percent to 18.75 percent. Many residents leased their gas rights in 2010, which led the Sunday News-Register to begin publishing weekly oil and gas lease transactions each Monday.

Many government agencies also signed away their lease rights in 2010, including the Ohio County Commission, which received $3,600 per acre for land at the airport, The Highlands and the Ohio County Poor Farm.

The Marshall County Board of Education signed 177 acres over to Chesapeake for $2,800 per acre and 18.75 percent production royalties.

The Marshall County Parks and Recreation Board also reached an agreement with Chesapeake for drilling in Grand Vue Park. The park board got $2,900 per acre through its lease, also with gas royalties of 18.75 percent.

Chesapeake is now approaching the Brooke County Commission and Brooke County Board of Education in search of drilling deals.

Several local property owners have signed drilling deals with AB Resources, including the New Vrindaban Hare Krishna Community in Marshall County. Members there are gaining $2,500 per acre in lease revenue for about 4,000 acres - and 18.75 percent for gas produced.

The effect of that new revenue has trickled down throughout the local economy, with several businesses reporting 2010 as being their best year ever.

Drilling also has brought new residents to the area, as many license plates from Texas, Oklahoma and Louisiana are now seen on local roadways.

Drilling Concerns

At the beginning of the year, many residents in Marshall, Wetzel and Tyler counties already knew what the rest of the Upper Ohio Valley would soon learn: With all the revenue and possible job creation that comes from Marcellus Shale drilling also comes the potential for fires, explosions, water contamination, traffic accidents, and other troubles.

An AB Resources well about six miles south of Moundsville exploded in June after workers penetrated a methane pocket in an abandoned coal mine. State regulators ultimately cited AB Resources for failing to set casing at the permitted depth for the site, and for inaccurately reporting coal seam depth.

Then, a Chesapeake gas well on Pleasants Ridge near Cameron ignited in September.

For this act, DEP officials cited Chesapeake for "failing to prevent the release of natural gas and the potential pollution of waters of the state."

Cameron resident Jeremiah Magers reported that his water well became contaminated with methane - and that natural gas began bubbling in Fish Creek - shortly after Chesapeake began fracking wells at a production site roughly 1,200 feet from Magers' water tank. Chesapeake officials confirmed the presence of methane in Magers' water well, but denied that their operations generated the gas.

There have also been traffic accidents involving gas rigs being transported on narrow roads. Still other residents have complained about possible water contamination and air pollution caused by the heavy drilling activity in Marshall and Wetzel counties.

Many residents remain concerned with the hydraulic fracturing, or fracking, process, which drillers use to stimulate Marcellus wells to release more gas by pumping millions of gallons of water, sand and chemicals down into the shafts.

2011 - and Beyond

Expect to see more natural gas drilling in the local area next year, as companies move on properties that are nearing the end of their initial lease life and work to firm up leases and pipeline rights of way throughout the region.

Companies such as Caiman Energy - which is working on a $350 million local investment for natural gas refinement and distribution - also will be playing a large role in the makeup of the area's industrial base. And Triad Hunter's distribution pipeline on the Weese property in Tyler County will be a boon for the area.

On the legislative front, natural gas drilling is expected to be a big point of discussion during the 2011 legislative session, which begins Jan. 12.

The primary concerns for state environmental officials appear to be erosion caused by drilling activity, runoff and also road damage, all of which could be addressed by legislators.