Gas Drilling Company Makes Pitch to Canonsburg-Area Residents in Meetings

Washington, PA Observer-Reporter
9 October 2009
By Michael Bradwell, Business editor, mbradwell@observer-reporter.com

Residents from the Canonsburg area asked a lot of questions about the possibility of leasing their natural gas mineral rights, but many came away from a two-hour presentation Wednesday evening seemingly optimistic about the opportunity.

Representatives of J. Howard Bass & Associates, a Georgetown, Texas, leasing company, talked to about 275 property owners from Canonsburg and those with adjacent plots in South Strabane, North Strabane and Cecil townships at the Hilton Garden Inn in Southpointe about the possibility of drilling into the Marcellus Shale to extract natural gas from about a mile beneath their properties.

The meetings held Monday through Thursday at the hotel followed similar sessions the company conducted two weeks ago in Washington.

But Bass landman T.J. Boley didn't spin any illusions Thursday about what landowners could expect.

"It's a difficult operation to lease in a town," Boley told the audience, "but it can be done."

What Bass is looking for is enough leases to create a contiguous 160-acre plot in Canonsburg with a centralized 5- to 7-acre lot from which to drill a horizontal well that would enable a driller to go beneath all of the properties to gather the gas.

He also told people that given the small plots of land most of them own - usually 3 acres or less - they could forget about becoming millionaires if they agreed to a lease. He said Bass is offering $500 per acre and a 17 percent royalty that would be split over the 160 acres for the gas that is extracted and sold.

"Think of it as mailbox money: You go out and open the mailbox, and there's a check," he said. "It might not be a great deal of money, but it will be some money."

According to Boley, Bass is not "one of the big dogs in size" when compared to its competitors in the gas business, but makes up for it by partnering with drilling companies to develop wells on the land it leases. He added that unlike many of the operators that focus on developing drill sites in rural areas with vast amounts of acreage, Bass is one of the few that attempts to lease in areas with higher population densities.

When an attendee asked if landowners might be approached by one of Bass's competitors, Boley asked the group if anyone had received a letter from a lease company other than Bass. Not one hand was raised.

Boley also acknowledged that drilling would create dirt, noise and bright lights at night, especially if crews are permitted to work 24 hours.

"It's essentially a construction project for about 90 days," he said, adding that the driller would be responsible for cleaning up, properly disposing of drilling water and repairing any damages to roads.

Bass would attempt to minimize the disruption by locating its drill sites just outside town, Boley said.

"We're looking at drilling sites as we speak," he said. "There are well sites available in Canonsburg. We can set up outside of the town limits and drill under the town."

But with thousands of landowners in the Canonsburg area, finding ample contiguous acreage is a challenge, Boley acknowledged.

"If you're for this project, talk to your neighbors," he said. "If your against it, talk to your neighbors. If we get the sense that this community does not want this type of activity, then we'll move on."

While Bass provides sample leases to those who attend its meetings, Boley told people to consult with attorneys who specialize in oil and gas leases.

When one man asked how many people in the area might hold mineral rights to their property, Boley estimated the number to be between 30 and 40 percent. He said Bass will research the properties of all interested landowners.

When a woman asked how certain Bass was that the Marcellus Shale existed beneath Canonsburg, Boley responded, "We are confident that the gas is underneath the city of Canonsburg and the city of Washington, and we will drill it with our partners."

He said once enough leases are signed and verified, it would take about 18 months for drilling to commence.

Greg Ross, a Strabane business owner who attended Wednesday's meeting, said he was encouraged by what he heard.

"It's the best thing that's ever happened in this area," Ross said, adding that since drilling activity has commenced in the county, he's been able to rent several units he owns in Canonsburg to people working for the drillers and their support companies.

Jim and Laverne Seder of Cecil Township said the session was informative, adding that it was the first time they had been approached by a gas leasing company.

Bass employees said attendance at the meetings at the Hilton, which began Monday, has ranged between 200 and 275 people each evening. They said the company sent between 15,000 and 16,000 letters to landowners in advance of the meetings.

Following Wednesday's meeting, Bass landman Clayton Stiba said the response to the meetings the company held in Washington two weeks ago was strong, adding that Bass is continuing leasing discussions with a number of landowners.