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Mineral rights leases surge in county

August 9, 2010

LISBON - The number of mineral rights leases being obtained has exploded over the past three months, a sure sign the Marcellus Shale boom has come to Columbiana County.

Approximately 208 mineral rights leases have been recorded at the county recorder's office between May 1 and July 31, compared to just 18 over the previous three-month period. Employees say all but a handful of the leases are being filed by agents, or landmen, representing companies interested in drilling for natural gas in the Marcellus Shale.

"In a way, it's like that gold-rush mentality," said county Recorder Craig Brown of the skyrocketing activity in his office.

Marcellus Shale is the name for the large underground formation stretching from western and central New York though Pennsylvania and eastern Ohio into West Virginia. Columbiana County is among the 10 Ohio counties within the Marcellus Shale.

Brown said several months ago the first teams of landmen began arriving to research deeds in the basement portion of his office open to the public and used by employees with local land title companies.

"What we're seeing is not one guy coming in with one or two people, but we're seeing a dozen or 20 people coming in. It's kind of like a siege mentality that these people have right now ... Last week we had 28 people downstairs, and we only have four computers, so everybody's jockeying for position," he said.

The landmen are to secure the leases for the drilling companies they represent, and Brown estimated there are three to four drilling companies being represented in the county at this time, the biggest among these being Chesapeake Energy. He said most of these landmen are reluctant to divulge whom they represent, and some may be independent contractors who sell their leases to drilling companies.

Because of the spike in activity, Brown has made it a point to learn "From what I understand is if you own 20 acres or more, they want it," he said. Ohio requires a 20-acre minimum for an oil and gas well.

It is Brown's understanding these landmen are offering one-time bonuses of between $500 to $1,500 per acre, with the property owner also sharing in the royalties if and when any gas drilling occurs. He is telling people not to jump at the first offer because it is his understanding they are paying considerably more per acre in Pennsylvania.

He pointed out that in Ohio someone can own the land but not necessarily the mineral rights for the ground underneath, "which makes things more complicated."

There is also the process of mandatory pooling, an existing law by which a landowner can be forced against their will to join a "drilling unit" if the tract of land under lease for a well is of insufficient size or shape to meet the requirements.

Brown is urging all landowners who are contacted to see an attorney.

"Most people are saying, 'I need an attorney to look at the (lease)' and that's the right thing to do," Brown said, adding there are several attorneys in the county with experience in oil and gas leases.

"Just do your do your homework and try to understand what is going on - before signing any lease," he added.

Natural gas is released from the Marcellus Shale by hydraulic fracturing, or fracking, which is the process of blasting away at the underground formations with millions of gallons of water, sand and undisclosed chemicals until the shale cracks. Although the industry says this can be done in an environmentally safe way, others have expressed concern about fracking resulting in possible disruption and contamination of groundwater supplies and polluting of rivers and streams.

The Ohio Department of Natural Resources hasn't issued any Marcellus Shale drilling permits in the county over the past 12 months. The Farm and Dairy reported in June 60 Marcellus Shale permits have been issued statewide and 42 wells drilled to date.

The Cleveland Plain Dealer reported in July 2009 that Ohio's laws were among the most lenient in the nation, but since then the state legislature passed Senate Bill 165, the first comprehensive overhaul of drilling regulations in 25 years. Brown said the ODNR Web site is a good informational resource on gas and drilling regulation, and it includes a detailed analysis of the updated regulations.

Brown believes the reason Marcellus Shale activity has taken off in Ohio in general and the county in particular is because New York recently imposed a drilling moratorium, forcing drillers to move to other states. Pennsylvania also is looking to crack down. He said another reason is Ohio has less regulation and the leases can be obtained more cheaply.

"Generally, I don't think having them (landmen) is necessarily a bad thing. But I think we need to educate ourselves, and we certainly need to watch what's going on," he said.



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