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Thursday, August 28, 2008

Natural gas leasing boom is likely to spread

The recent boom in natural gas leasing and drilling is likely spread beyond some of the areas previously reported, such as the Haynesville Shale in the Ark-La-Tex area and the Marcellus Shale in the Appalachians, reports Clifford Krauss of The New York Times. (NYT map)
Prospectors have "identified at least two dozen shale beds in North America that could contain large amounts of gas," Krauss writes. "Real estate speculators are becoming overnight millionaires in Pennsylvania, Louisiana and Texas by buying up parcels of land and flipping them to companies that drill for natural gas. Wildcatters are ordering every rig they can get their hands on, and paying signing bonuses of $25,000 an acre to drill below houses, schools and churches. Pipeline companies are building as fast as they can to get the new gas to market."(Read more)

There is a concern among landowners that many companies looking to drill for natural gas are attempting to lease land for less than the leases are worth. Steven Christ of Wealth Daily reports that some individuals are leasing their land for as little as $100 and acre, while other individuals have negotiated "leases up to $2,500 an acre along with 15 to 18 percent royalties."(Read more) The normal oil and gas royalty is 12.5 percent, or one-eighth.

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