County in 'hot zone'

By Dan Hust
SULLIVAN COUNTY — The idea that Sullivan County may be ground zero for natural gas drilling has been substantiated by one of Wall Street’s leading research firms.
A report released last month by Bernstein Research says southern New York and northeast Pennsylvania are being eyed by gas companies as the most potentially productive drilling areas in the Marcellus Shale expanse between Ohio and New York.
A map created by Bernstein indicates that the far northwestern corner of Sullivan County – the townships of Delaware and Fremont – may be in the core area.
However, the map is based on speculation rather than yet-to-exist well data, and virtually the entire county sits 7,000-9,000 feet above the Marcellus Shale area, wherein trillions of cubic feet of gas are thought to lie.
Indeed, Noel van Swol, co-founder of the Sullivan-Delaware Property Owners Alliance, has confirmed that gas companies are negotiating leases as far south as Port Jervis, as far east as the Town of Bethel and as far north as Walton.
The alliance itself has more than 57,000 acres being negotiated up and down the Delaware River valley, and van Swol considers Bernstein’s report to be “extremely significant,” especially since the company is used by individuals and businesses to make investment decisions.
Bernstein says it spoke with gas operators and regional specialists and then analyzed the Marcellus Shale’s thickness, depth, thermal maturity, silica content and permeability. The deeper and thicker shale areas are considered to have the best potential.
“This suggests that the northeast [section of Pennsylvania] will yield the most attractive acreage,” wrote analysts. “…Recent data also suggests that the core area extends into New York where XTO [a gas company] recently bought acreage in Sullivan County and into Delaware County, where Chesapeake has also been accumulating acreage.”
Bernstein says XTO and Chesapeake’s local activity has been joined by Exco, Range Resources, CNX Gas, Equitable, Petroleum Development Corporation, Anadarko, Talisman and EOG.
Each company is offering lease agreements that can reach $2,500 an acre if properly negotiated, plus at least 12.5 percent in profit royalties.
Despite the increasingly competitive bidding, many of these companies have been trying to entice landowners to let them lease drill sites for far less per acre – reportedly warning owners at times that they’re approaching a satisfactory level of properties.
“I continue to advise property owners not to sign any leases until we have further information,” said van Swol. “Don’t be panicked by the scare tactics of landmen [mineral rights negotiators] fronting for major oil and gas companies in the area.
“None of them is going to pull out.”