WHEELING - Tim Greene wants Upper Ohio Valley property owners to exercise their rights when approached by Marcellus Shale gas drillers.
An overflow crowd of landowners and concerned residents squeezed into the Health Plan Pavilion at WesBanco Arena in Wheeling Thursday to hear Greene, secretary and treasurer of the National Association of Royalty Owners, speak.
The event was part of West Liberty University's 2010 Financial Planning Seminar Series. University officials moved the seminar from the school's branch at The Highlands to the arena to accommodate the large turnout.
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Tim Greene, secretary and treasurer of the National Association of Royalty Owners, speaks to a packed house Thursday at the Health Plan Pavilion at WesBanco Arena in Wheeling.
"Do not be intimidated by these people who come out to you and say, 'You either sign this or you are going to lose it,' because you're not," Greene said of gas company representatives.
Greene said the recent rush on natural gas throughout the area - resulting in landowners signing leases with drillers such as Chesapeake Energy, AB Resources, Trans Energy Inc., CNX Gas Corp. and others - has led to some people discovering they have mineral rights of which they were unaware. This is because the companies send squads of employees to conduct title searches to find out who owns each property, he said.
Terms for Northern Panhandle lease contracts range from as low as $5 per acre to at least as high as $3,600 per acre, with production royalties ranging from 12.5 percent to at least 18.75 percent. Older people may want a high lease payment and low royalties. Those who want more money for later, however, may want a higher royalty payment to enrich a family in later years, Greene said.
Greene, a longtime employee of the West Virginia Department of Environmental Protection, said concerns about groundwater contamination and water usage can be addressed during the leasing process.
"If you don't want them dumping water all over your property, then fight for that," he said in the drilling contracts. "Address it in your lease that they will protect the groundwater. At some point, your water is more valuable than the revenue."
However, the DEP is not that much help when it comes to lease payments, Greene noted. This is because drillers are only required to report their gas production to the department's Office of Oil and Gas one time per year.
"The DEP could care less about your lease - they do care about your water," Greene said. "It would be impossible (for DEP officials) to go out and check all wells for 10 MCF (10,000 cubic feet of gas)."
Greene also said if a small property owner wishes to withhold a property from leasing, this will not stop gas companies from drilling in the area. When asked why the drillers try to sign all the landowners to leases, Greene said the companies want to have "happy people" in the neighborhood.
As for how companies go about drilling, Greene said the standard practice for Marcellus Shale wells in West Virginia is to create a 640-acre pad. Those who own property within this pad will gain royalties based on the percentage of the land they own, the established royalty rate, and the going price for natural gas.
"If they drill anywhere in that 640 acres, you will get some revenue as long as you have some property within that unit," he said.
One concerned property owner, who after the meeting declined to give his name, had a document from a leasing company called "Dale Property Services Penn LLC."
According to its website, the company is a "land acquisition firm" that has a "strategic alliance" with Chesapeake.
"They told me I have until Aug. 9 to sign or the deal is off," he said. The man - who owns 140 acres in Jefferson County - said Dale Property Services' final offer is $1,000 per acre and 13.5 percent on royalty payments.
"I am not going to take it - I am just going to wait it out," he said.