Barnett Shale Drilling Boosts Local Economy

CBS11TV news ^ | 05.02.05 | Tracy Rowlett

[q_an_a]

Maybe you've noticed all those gas wells going up west of Dallas. It's because of those wells -- and many more to be drilled -- that scores of North Texans stand to become very rich, very soon.

A dozen Texas counties are sitting on top of the largest natural gas field in America. In fact, the Barnett Shale is one of the biggest plays in the world. And if you own mineral rights. A bunch of drilling companies want to be your new best friend.

Saginaw rancher Pete Bonds says, "There's an old saying that cattle actually do better in the shade of a pump jack." Bonds has made a nice living raising cattle. But monthly royalties from the gas beneath his land have made him a multi-millionaire. He beams when he relates, "There's gonna be a lot of BTU's of gas coming out of here."

But those gas wells haven't changed his lifestyle. "We're still doing the same thing. I still drive a 13-year old pickup. It just makes it a little easier. It's a nice income. And it's happened to some people that really needed to buy a new pickup." Nobody's denying the pickup to the economy. It's huge. University of North Texas economist Bernard Weinstein says, "The biggest gas play in the entire United States is occurring here."

"it could be the equivalent to 20 Boeing aircraft plants relocating to the D-FW area."

[Dog Gone]

You can't drill a horizontal well on 40 acres. It takes at least that much acreage to build angle to kick it sideways.

And the horizontal portion of the well is up to a mile long.

[richardtavor]

It's too early to tell. These wells are very expensive and will have several workovers (in other words, have to be fracture treated every 2 to 3 years.) I know that the play is kind of like a manufacturing play, which means that their wells will be like an assembly line. The fact that the play is so competitive should mean that eventually you will get an income stream. However, remember that it usually takes at least six months to get income from the time the well is drilled (laying and hooking up to pipelines, division orders, etc.) If they are just now leasing, it could take a year before the wells are drilled, on stream, and you receive income.

[Left Coast Refugee]

It is one of my OK relatives who is lawyer that is doing the lease, and I do believe he has experience in this area, but again, he is like my Mom's second cousing or something, so I don't really know.

Anyway, I truly appreciate the feedback from those in the know. I have been curious about this, and at least I have some idea of what is going on.

Thanks again!

[Left Coast Refugee]

Richard,

Thanks for the input, your timelines seem about right from what I have seen/heard. Thanks for your input!

[Left Coast Refugee]

Richard,

Thanks for the input, your timelines seem about right from what I have seen/heard. Thanks for your input!

[richardtavor]

I attended an industry seminar on the Barnett Shale. Prices are going through the roof. The way industry sees this play is that ultimately we will recover between 52 TCF to 100+ TCF (I think that they are way optimistic on this.) It makes it one of the largest gas discoveries in North America. The current average acreage terms are $220 per acre, 3 year term, a drilling commitment (probably have to lease again if not drilled in some time frame.), 75% Net Revenue Interest (in other words, you keep a 25% royalty of the net acres that you own.) The play covers 7 counties, and they are leasing every acre in those counties that are unleased. Since so much of this will be in townsites, the plan is for each drillable site to have one vertical well drilled on it, and have 9 horizontal lateral wells from that vertical well (in order to minimize surface damages.) If your folks on the surface rights as well, they can get premium damages per location (I heard the figure of about $35,000 per acre.) Good luck and enjoy the income. I think that your folks will be really impressed as to how hard the Oil Companies are trying to minimize any surface effects....

[Left Coast Refugee]

Thanks Richard, I appreciate your keen insights. I still haven't heard anything, so it is taking some time, but that is the nature of things these days it seems.