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Finding strength in numbers

Organization bands landowners together to work with shale gas leasing companies

January 30, 2011
By PAUL GIANNAMORE, Business editor

BLOOMINGDALE - A meeting will be held from 6 p.m. to 8 p.m. Thursday at the Jefferson County Joint Vocational School for people interested in learning about an organization that aims to band landowners together to work with shale gas leasing companies.

The Associated Landowners of the Ohio Valley, a group based out of Columbiana County, was started several months ago after farm owner Bob Rea, of Salem Township, near Salem, and his neighbors started talking about offers they

were hearing for oil and gas drilling rights.

Rea said, "We found many of our neighbors who signed earlier were getting $75 an acre and what was being presented to some of us at that time was $500 an acre. Then, we found other communities in other parts of the county at $800 or $1,000. The first thing you ask is, 'why?' The answer I got was that it is whatever the market is on that day."

Rea said he learned the market is created when landowners and landmen agree on a price.

Through research, discussions with experienced attorneys from the Western oilfields area and meetings with local landowners, a lease was developed for landowners to agree to use as a group in dealing with the energy companies.

Fact Box

Landowners meeting:

A meeting for landowners interested in learning more about the Associated Landowners of the Ohio Valley group, which is putting together ways for landowners to negotiate in large numbers with shale drilling developers, will be held at 6 p.m. Thursday at the Jefferson County Joint Vocational School.

The organization grew from a meeting of about 18 people in his immediate neighborhood to the point where there are 30,000 acres of land signed on with the organization and its lease. Further, the group has solicited additional oil drilling companies to come into the area, to open up competition for bidding for the drilling rights.

Rea will discuss many of the intricate details of the leasing process that he's learned in the ensuing months since there was a knock at his door.

He said the 30,000 acres will be one group, but the organization is looking to accommodate a second group that could form as a result of calls his organization has been receiving. He said large amounts of land need to be involved to make meaningful impact in a negotiation.

"We found from experience that even 6,000 or 8,000 acres cannot get the terms in our lease done," he said.

The meeting at the JVS is being sponsored by Billy Petrella, a financial adviser with Tri-State Financial, who said he has clients who have been asking questions about the shale leasing.

Petrella said Jessica Tully, a Pittsburgh-area attorney with experience in oil and gas leasing business, also will make a presentation.

Rea said more than just signing bonuses or per-acre prices to consider, landowners need to watch for automatic renewal clauses and terms and conditions relating to royalties.

"We consider this a partnership. It's a serious issue, no matter who the driller is. This is the most important decision people will make in their lifetime, and the effect of that decision can go on for generations, through decades of production," he said. "We're not just here to demand a price and we aren't just people in the way of the companies to get to the mineral development."

He said though current talk is about the Marcellus shale gas deposits, the drillers also may one day be interested in the deeper Utica shale formation, which may also contain oil.

He said people can attend the meeting or call him at (330) 337-3100.

(Giannamore can be contacted at pgiannamore@heraldstaronline.com.)

 
 

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