Posted on 03/25/2015 4:40:04 AM PDT by thackney
For an average price of $8,732 per acre with 20 percent production royalties, the West Virginia Department of Commerce with allow Norway-based Statoil to frack for oil and natural gas thousands of feet beneath the Ohio River.
The finalized lease agreement for drilling in state-owned mineral tracts under the river is in addition to those filed by Noble Energy and Gastar Exploration, which would pay the state $4.9 million and $749,000, respectively, in addition to the 20 percent royalties. These deals are not yet official, however, as the companies remain in negotiations with state leaders.
"We are still finalizing agreements with Gastar Exploration and Noble Energy, but expect to have those executed before the end of the month," commerce department spokeswoman Chelsea Ruby said.
Statoil officials could not be reached for comment.
Gastar Senior Vice President and Chief Operating Officer Mike McCown estimates his firm's deal, alone, would eventually yield a $40 million windfall for West Virginia officials. He said it would cost his company "much more than $10 million" to drill a single Utica shale well under the river.
Statoil plans to drill on about 474 acres beneath the river in southern Marshall County and northern Wetzel County. Ruby said the West Virginia Division of Natural Resources, which operates under the auspices of the commerce department, considers a number of factors when discussing the bids. These include the ability of the company to develop the wells, the reputation of the drilling firm and the proposed location of the wells.
Although some environmental advocacy groups oppose plans to drill under the Ohio River because of potential drinking water contamination, state and industry leaders seemingly have no such concerns. The state Department of Environmental Protection's Office of Oil and Gas issues drilling permits in West Virginia. Chief James Martin has said fracking under the river would not be any different than doing so elsewhere because the horizontal wells will be thousands of feet below the riverbed. The producer could also establish its drilling pad more than one mile away from the target because of the length of the laterals.
"I am convinced we can do this safely - and we will demonstrate that," McCown said. "We have drilled over 70 Marcellus wells and two Utica wells in West Virginia."
Statoil previously operated wells in Ohio County in conjunction with Chesapeake Energy, with Chesapeake owning 71 percent of each operation and Statoil holding the remainder. However, the company reduced its interest in the local wells from 29 percent to 23 percent upon Chesapeake's $5 billion sale to Southwestern Energy.
Seems to be a bad time to try this with oil in the $40-50 range.
Because West Virgina is not the approval authority for crossing the Canadian Border.
“Seems to be a bad time to try this with oil in the $40-50 range.”
Either they believe that these prices are quite temporary )T Boone Pickens himself said he expects $70 oil by the end of the year), and/or they want a permanent presence here in time for America rising like a phoenix with Ted Cruz.
Just like Toyota is allowed to build cars in the US, Companies that are headquartered in other nations invest in the US for the production, transportation and refining of oil.
Drilling is down, but it has hardly stopped. Also, this is in the Marcellus and Utica area so it will likely be mostly Natural Gas (which is also down in price).
That would be relatively close to Charleston, wouldn’t it? I know that area a little bit since my dad moved to NC. I use US-35 as a shortcut to get to 64/77.
CC
No, not exactly.
I don't understand your reply.
Excellent news and how jobs and money are made.
Right now most of the gas drilling action along the river in WV is in the Parkersburg area
Not much action. Last week there was not a single active drill rig recorded in Wood County. Doddridge had 7, Wetzel had 2, Marshall had 1.
Interactive drilling map
http://gis.bakerhughesdirect.com/RigCounts/default2.aspx
were American companies allowed to bid on the concession won by the highest bidder?
Leases for public/state owned minerials are always public auctions.
“Seems to be a bad time to try this with oil in the $40-50 range.”
Gas prices are different than crude prices.
The Marcellus is the rich prize of natural gas close to the largest gas markets in the US, which means they are less susceptible to the downturn effect other places are experiencing.
The ability to continue to drill under the weight of lower prices is really a bonafide sign of vitality for an industry which relies on a commodity pricing for income but can overcome due to technology of horizontal and fraccing.
“Why can’t keystone get the same treatment?”
Under WV law, the beds of navigable waterways are owned by the state, not the riparian owners. Therefore, WV claims ownership of all minerals under navigable watercourses in the state. Since WV is pro-mineral development, fortunately it is a whole different ballgame than dealing with the bureaucrats in the District of Corruption.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.