Senator Yaw is "Well" Placed
State Senator Gene Yaw of the 23rd District, Chairman of the Environmental Resources and Energy Committee, recently sponsored a bipartisan resolution directing the Center for Rural Pennsylvania - whose board Yaw also chairs - "to study the demand for residential, commercial and industrial natural gas service in the state by collecting and
analyzing information on the:
- estimated demand in un-served and under-served areas of the Commonwealth;
- estimated price consumers are willing to pay for access or conversion to natural gas service;
- regional differences in consumer demand and willingness to pay for natural gas service;
- relevant economic information on the costs and benefits to expand natural gas distribution infrastructure."
According to his website, Yaw has received numerous inquiries from
 |
Image: Ralph Kisberg
Flags fly on the drilling rig at the
"Gene Yaw Unit" well pad.
|
people "who want to
be able to benefit from this less expensive form of energy". The website also mentions that the Natural Gas Expansion and Development Initiative would include encouraging governments to switch to natural gas to heat municipal buildings; offer incentives to school districts, colleges and hospitals to switch to natural gas and create funding alternatives to help extend natural gas into under-served areas.
The Senator may want to consider the perspective of Deborah Rogers on NG pricing as part of the study. (See the article in this issue). In case you missed Ms. Rogers' "Shale Gas and Wall Street" presentation, Econ 101, or the common sense gene, an increase in demand for a commodity such as NG, or the market perception that there will be an increased demand, can lead to an increase in price.
For what its worth, a search of public records reveals the Senator, like many people in his district, does have some skin in the game, as the saying goes. In 2006 he leased 148 acres of land in Cascade and Gamble Townships in northern Lycoming County to Anadarko E & P Company, LP.
The lease was for a five-year term and included a bonus of $85 per acre. In August of 2010 a Declaration and Notice for a 640-acre Pooled Unit was recorded that included 99.40 acres of the Senator's property. Without seeing the entire file for each well, it is not clear when the first well in the unit was drilled, but it appears to have been in late fall 2010. In early 2011, Anadarko exercised an option to extend the Senator's lease for the same $85 per acre.
Drilling units are usually named after the owner of the property where the well pad is located. As the owner in this case is not a public figure, for our purposes let's just refer to the unit as the "Gene Yaw, Chairman of the Environmental Resources and Energy Committee, Unit" or the "Gene Yaw Unit" for short.
The Gene Yaw Unit makes a good case study for the progress of a typical drilling unit. The Pad is visible from Frymire Road and in passing by a few weeks ago, it was apparent that another well was being drilled.
Permits for three wells in the Yaw unit are in place, as are permits for three wells in an adjacent unit to the north, accessed from the same pad.
Four flags were proudly flying on the rig working on the pad: a Canadian flag, a flag representing the Edmonton Oilers Hockey Team, an American flag, and a green flag that was not unfurled enough to discern - Brazil? Greenpeace? Not sure what the flags represented, perhaps the allegiances of the drilling crew?
One thing the flags did not represent was the nation of origin of the "Operator and Non Operator Parties" of the unit, as further research of county records revealed Anadarko E & P assigned a 50% interest in the leases in the Gene Yaw Unit to Chesapeake Appalachia, LLC in September of 2006. Chesapeake then assigned an "undivided" 32.5% interest to Statoilhydro USA Onshore Properties Inc. (Norway) in November of 2008. Anadarko later assigned 32.5% of its interest to the
Japanese Company, Mitsui E & P USA LLC. Anadarko (USA, we think) is the operating party.
It is old news that Chesapeake entered into an agreement with Statoil
 | |
Image: Ralph Kisberg
|
for a 32.5% percentage of
their leases in Pennsylvania a few
years ago, and sometime in early
2010, Anadarko did a similar deal
with Mitsui, but it is interesting to see
it play out in filings in the Lycoming
County court house.
Deborah Rogers explains the
reasoning behind these deals very
well. If Senator Yaw is interested,
RDA will gladly drop off a DVD of her
presentation for him. He may be
surprised to know that Ms. Rogers
believes NG prices will go up and stay up if industry plans for massive exportation of national NG production become a reality.
Buried in the files received from a Right-To-Know-Law request regarding Anadarko's negotiations with the Pennsylvania Department of Conservation and Natural Resources on surface rights to the nearby Clarence Moore tracts in the Loyalsock State Forest was an anonymous handwritten note: "$3.25 may be break even price." As of March 19, the Henry Hub NG spot price was $3.96; up from $2.14 one year before - an 85.05% increase.
| 
