ANOTHER GAS BOOM UNDERWAY
Speculators hoping to strike 'gold,' fueling economy

Drilling equipment will become a more familiar site in the region over the next several years as drillers tap into local natural gas and oil seams.

Not since the gas boom of the 1930s have so many speculators been scurrying around the region, hoping to strike gold.

The number of permits being requested and issued in Potter County is steadily increasing. In Cameron County, the activity has not yet begun. But, that could change quickly since so much of the land in Cameron County is owned by the state, which has opened its land to gas and oil exploration.

"As long as the price of the commodity (stays where it is), we anticipate we'll continue to see increased permit applications in the region," said Fred Tarbell, DEP's Community Relations Coordinator. In Potter County, speculators are f ueling the local economy  motels, restaurants and gas stations are the main beneficiaries - as they spread out in search of leases and seek to cash in on gas reserves that were either overlooked by, or out of the reach of, earlier drillers.

Three factors have fallen into place, much like a slot machine, to send prospectors into the field: higher prices, increased demand and improved extraction technology.

In the process, they've dangled modest lease payments, combined with the lure of lucrative royalties in the event of a profitable strike, to tie up underground rights from hundreds of private landowners.

The heat is on, confirms Potter County Recorder of Deeds Gary Kelsey, whose office at the county's Gunzburger Building in Coudersport has been a hub of activity created by those searching records to clear up ownership issues.

"We've been very busy. There have been a lot of people in here researching," Kelsey explained, noting that in Pennsylvania surface rights and oil-gas rights are separately deeded, making the research to figure out who owns what rights all that much more time consuming.

Kelsey noted that many of the researchers are from out of the area and have been scouring records in his office for a year.

Researchers are scouring the county's records to determine who owns gas, oil and mineral rights. A broker typically assembles large land blocks and buys individual leases to sell to an oil and gas company.

If others hold the rights, a landowner often has little recourse but to watch devel- opment as it occurs. That's because surface owners in Pennsylvania have few rights under the law, although they pay the taxes for that surface.

A surge in drilling activity is imminent. Several companies have multi-million dollar budgets allocated to drilling in the region.

Steve Rhoads, executive director of the Pa. Oil and Gas Assn., said drillers are interested in shallow natural gas caches that were originally explored a quarter-century ago. These pockets of gas were not economical to tap in prior years.

"As long as wellhead prices remain at historic levels, you will see a historic number of wells being drilled," Rhoads said. "You have to be able to drill new wells when the production from the old ones continues to decline (and) the income is now available to invest in new wells."

DEP has confirmed that the number of oil and gas drilling permits being applied for and issued since 2002 has been skyrocketing- so much so that DEP has put on extra personnel to handle the increased activity.

"The increase really started about five years ago," explained Tarbell. "And it's steadily increased since then."

In Potter County, 14 permits were issued last month alone (9 combination permits oil/ gas, 2 just gas, 3 just oil). In 2007, 67 permits were issued and 49 wells were drilled; in 2006, 120 permits were issued and 25 wells were drilled.

Cameron County's activity has been limited to 16 issued permits in 2006. No wells have yet been drilled.

Much of the natural gas that producers would like to access is located underneath state forest land, where production is also expected to rise.

Dominion Transmission Corp. drilled a well on land leased from the state on Steam Hill Road, near the Cameron/ Potter County border. Seneca Resources and Homeland Energy Ventures have also been active on state land.

Earthmoving activities involved with the typical oil and gas projects consist of clearing trees, road building, grading (well site establishment), pipeline installation, and tank battery construction. These activities generally involve between one and five acres and require erosion and sediment control practices to protect nearby watercourses.

Another risk is gas migration, such as what occurred recently in Kushequa, McKean County, where water wells have been polluted by migrated gas.

Drilling activities and roadbuilding are monitored by local conservation districts and the Pa. Dept. of Environmental Protection.