SHELL Oil Company Makes Offer To Local Landowners

For some area landowners the wait is over. The marcellus shale train has arrived and is being fueled by the natural gas rush in western Pennsylvania. On Wednesday, November 16th, representatives from Shell Oil Company, (the world's largest producer and distributor of liquefied natural gas,) addressed an audience of about 150 landowners at the Clintonville VFD Social Hall. What’s all the hype? Natural gas!
Currently,  Shell is actively seeking land to lease to acquire the trapped gas that lies below in three formations; the marcellus, utica and a formation above the marcellus. Shell’s  current primary focus area is in southern venango county in Irwin,  Clinton, Scrubgrass,Richland, Rockland, Victory and Mineral townships.
A lease about ten years ago would yield you about $10.00 per acre, on Wednesday, November 16th that anty was raised to $3,250 per acre with 18% royalty. For the simple math, those with a hundred acres will add $325,000 to their pockets (minus taxes) and that’s not where the real money lies; an 18 % royalty could make millionaires out of many if drilled upon.
Interest lies in those with acreage of 20 acres or more. Current well pads encompass about 10 acres which allows for multiple wells on one site. It is anticipated that nine wells can be drilled on one pad.  With new developments,  horizontally drilling allows the ability to drill 10,000 feet in one direction. Spike it two ways and that area un-invasively covers 20,000 feet. Because of the vastness of area that can be drilled,  a production unit has been redefined as 1,280 acres which will greatly reduce the amount of surface impact throughout the area. All enough to spread the wealth. This replaces the old vertical and some horizontal drilled units which spread over 640 acres.
Shell is currently in the primary exploration stage and has yet to drill a well in Venango county. They have been actively pursuing land from New Castle in Lawrence County and now into southern Venango County.   Shell has just completed one of the first combination Utica/Marcellus drills in Lawrence County. Results from that well are unavailable. Speculation would lead you to believe it showed positive signs.
Landowners in attendance listened intently as the leasing process was presented. Landowners who would sign their lease would receive their bonus payments within ninety days. A lot of money to be paid out? Shell’s 2011 third quarter profits ($6.98 billion) are more than twice that from the third quarter in 2010 ($3.46 billion).
The average cost to drill into the marcellus/Utica etc. is about $10 million, all of which can be recouped if a hot spot is found. Will that spot be found in Venango County?
For local landowners  its a wait and see crap shoot and until then they are left with the opportunity to cash in on a nice bonus payment that will yield them more money then they ever could of dreamed of ten years ago.  In the mean time, hopefully many landowners will spend the next ninety days seeking professional advice on what to do with their money.