Time Magazine - FYI
Date: Wednesday, July 9, 2008, 9:40 AM
Good article per Gas drilling phenomenon
http://www.time.com/time/business/article/0,8599,1820884,00.html
Web-Savvy Homeowners vs. Landmen
By Hilary Hylton / Austin
In the pantheon of American mythology, the oil company “landman” is legendary. The archetype is Daniel Day-Lewis as the ambitious, conniving Daniel Plainview in There Will be Blood, a smooth-talking, seemingly friendly fellow who, in the short space of time it takes to sip a cup of coffee on the front porch, persuades a dirt farmer to sell his mineral rights for a song. But those kind of landmen exist only in the movies nowadays. There is no sweet-talking your way into a deal in these times. Today’s energy company landmen must deal with Texas soccer moms with their own websites and Pennsylvania dairy farmers/bloggers, all armed with Google maps and Excel spreadsheets. The domestic gas-exploration business has undergone a revolutionary face-lift.
For example, landmen showed up late last year in Wayne County, Pa., lured by the possibilities of huge gas reserves in the Marcellus Shale. But Ron Stamets, a website developer who moved to the country from urban New Jersey because he liked the rural lifestyle, heard about it and helped set up a quickie website to help his neighbors understand their options. No easy deals here. Marcellus lease prices ballooned, from $20 to hundreds of dollars an acre. So have the hits on his website, http://www.pagaslease.com, with as many as 100,000 a day, Stamets says. The site has also given birth to several “child boards” that focus on detailed tech talk about the economic, environmental and tax implications of gas exploration. The goal for most members, Stamets says, is twofold: “What’s in it for me, and how am I going to protect the other resources that I’ve enjoyed for so long?”
That kind of knowing, if not calculating, the market by landowners is what the energy industry faces, especially now when many of their rigs are going up in suburban and even urban areas like Fort Worth, Texas, or places like the rolling farmland of western Pennsylvania, where East Coast city dwellers have summer homes or send their kids to camp. And one need not be an urbanite or a suburbanite to profit from the Web support. In neighboring West Virginia, landowners have discovered, thanks to Stamets and others, that just because their fathers and grandfathers may have signed away coal rights, they still maintain mineral rights to natural gas deep within the southern section of the Marcellus. Similar knowledge, once out of reach, has sparked leasing frenzies in Michigan, Louisiana, Arkansas, Colorado and West Virginia.
What do the websites provide their users, be they hungry to sell or angling to fight off landmen? Stamets offers information on pricing and leasing, and even photographs of drilling rigs to illustrate just what a well next door to the dairy barn might mean. The site also has a Google map feature that shows up-to-date lease information, proposed well sites and infrastructure locations. It is a model that could be used countrywide, Stamets says. In the old days, locating who owned what and where meant hours of pouring over tract maps at the county courthouse. “Someone told me we are scaring the heck out of the oil companies,” Stamets says.
Stamets says what he and his Pennsylvania dairy-farmer neighbors are doing is based on the experiences of Fort Worth neighborhoods. The Barnett Shale site has long been known to Texas oilmen, but extracting what is estimated to be some 2.5 trillion cu. ft. of natural gas from the 350-million-year-old rocks beneath the Dallas-Fort Worth area only became feasible in the last decade with the advent of horizontal drilling techniques. Thirty-five years ago, Fort Worth attorney Bob West helped West Texas landowners negotiate royalty agreements, but he sees a world of difference in contract talks between one or two West Texas landowners and the energy companies back in the 1960s and today’s urban explorers. The Internet, particularly blogs, has proved to be a “fabulous tool” in today’s royalty negotiations, West says, empowering landowners and enabling them to form alliances.
But it’s not all bad news for energy companies, West says. Obtaining urban leases, particularly for horizontal wells that can radiate several thousand feet, often involves negotiating with numerous landowners. Working with a coalition of property owners can cut a company’s landmen costs, West says.
As rigs pop up from the heart of downtown to suburban ranch-style homes out on the prairie, blogs and websites have matched the pace. The Fort Worth League of Neighborhood Associations (http://www.fwlna.org) serves as a clearinghouse for neighborhood leasing information. Individual neighborhood associations, small-town newspaper websites and Web activists both pro and con are also proliferating. The website BarnettShaleNews.com, run by Gene Powell, serves as a combination Drudge Report and market watch, compiling a weekly service of shale news with downloadable Excel spreadsheets and charts — some free, others only by subscription — on the going rates for leases. Signing bonuses have reached as high as $25,000 per homeowner with royalties expected to bring in conservatively $20,000 to $30,000 over a 20-year period in some cases.
“I have never seen an issue that brings out people to neighborhood meetings like this,” says West, who briefs the groups on the legal intricacies of mineral rights. Zoning or crime issues might bring out a small group to a neighborhood meeting, but mention the Barnett Shale and hundreds show up, West says. Neighborhood association secretaries post the latest on contract negotiations between runs to soccer practice and summer swimming lessons, and yard signs urging neighbors to sign or resist drilling are everywhere.
