BEWARE ROYALTY HOLDERS - The Grab Is On, Rights Being Purchased Dirt Cheap



By Bob Weaver

Beware, royalty holders.

Natural gas companies and speculators are after drilling rights all over West Virginia.

They are trying to lock up rights on many long-ignored proprieties, quickly and cheaply.

Royalty owners, in many cases, are getting trampled.

The Associated Press reported West Virginia farmer and convenience store owner Brad Castle is still smarting from his experience.

Castle thought he was getting a windfall when he signed a $5-an-acre lease and promise of 12.5 percent royalties on gas rights to 800 acres they own near Rowlesburg.

His elation disappeared when rival companies started offering $350 an acre and royalties as high as 15 percent, said the AP.

Chesapeake is reportedly offering $10,000 an acre for a lease in Northwest Louisiana for drilling in the Haynesville shale which is comparable to the Marcellus shale in West Virginia.

In West Virginia, the gas in Marcellus Shale is located 6,000 feet below the earth's surface, virtually untapped.

People in Louisiana have been going to meetings to become knowledgeable as to how to proceed with the energy companies.

Chesapeake has had a very successful horizontal well from the Haynesville shale recently in Bossier Parish, which is just across the river from Shreveport.

The well produces an average of about 16.8 million cubic feet of natural gas per day.

Gas companies such as Chesapeake Energy are aggressively leasing rights in the Mountain State.

The Oklahoma City-based natural gas giant calls its aggressive lease acquisition program the "land grab" in its latest annual report to the Securities and Exchange Commission.

West Virginia's biggest natural gas reserves are yet to be tapped.

Geologists says trillions of cubic feet of recoverable natural gas lies right beneath the feet of West Virginians.

With about 3,000 wells being planned overall by producers, Scott Rotruck of Chesapeake Energy says the Marcellus Shale was one reason his company decided to locate its corporate offices in West Virginia.

Chesapeake predicts 3,000 new jobs in the natural gas industry in the state.

Then, there is the giant reserve of deep well gas below the current deposits, still waiting to be tapped.