'Shale' leasing activity reaches frenzy level

The "Haynesville Shale Train " is gathering speed in North Louisiana, with talk of lease bonuses exceeding $30,000 per acre, and of expansion of the possible borders of the underground natural gas formation eastward to encompass as the southern half of Lincoln, all of Jackson, Red River, the west half of Natchitoches, a sliver on the west side of Ouachita, most of Caldwell, a triangle across the northeast corner of Winn, and a bubble extending into the west of Franklin parishes. Already identified as sitting on top of Haynesville Shale potential are all or parts of Bienville, Webster, Claiborne, Bossier, Caddo, DeSoto, Red River, and Sabine parishes.

A frenzy of lease activity has public and private landowners exploring the prospects of big money, and the nation's oil and gas producing companies are busy contacting landowners. Chesapeake Operating reportedly already has 550,000 acres under lease, and KCS Resources/Petrohawk has over 220,000 acres.

A private landowner organization called Haynesville Shale Landowners was formed shortly after the discovery was announced by Chesapeake Operating, Inc., with the purpose of collective bargaining for lease terms. The group operates one of several websites offering advice, and soliciting landowner clients. The landowners website is www.haynesvilleshalelandowners.org.

Public bodies, including the City of Shreveport, the City of Bossier City, the Louisiana State Mineral Board, and others, have taken leases, or are offering leases for bid. In Baton Rouge during July, the Louisiana Mineral Board received a record $48.7 million in lease payments. Eight Haynesville Shale leases on behalf of local governments accounted for about $46.5 of the $48 million sale total. Seven of the North Louisiana leases were located in Caddo parish, and averaged over $30,000 per acre in bonus and 30 percent royalty. Bonus money received by the Caddo Parish leases amounted to $17.7 million and covered about 585 acres.\par }{\plain Other North Louisiana leases covered 1,045 acres in DeSoto parish and brought in$28.8 million in bonus, which averages $27,512 per acre, and 27.5 percent royalty.

The Haynesville Shale is a rock formation containing oil and gas approximately 10,500 to 13,000 feet deep in north Louisiana and East Texas, According to geologists, shales were deposited millions of years ago, usually in deep ocean environment. Fine silt particles and countless trillions of life forms settled to the depths, and over millions of years, the mud gets pushed deeper by the overburden of layers being deposited on top, until finally it turns to rock.

Presence of the shale rock has been known from geologic studies, but production has not been possible until the invention of modern drilling and extraction methods which involve horizontal drilling. Wells are said to cost in excess of $8 million each.

The Haynesville is one of several shale formations being explored and produced.

The Greater Dallas-Fort Worth airport property is said to have received $186.4 million for their Barnett Shale rights, which is one-third of the airport authority's annual operating budget. Current six drilling rigs are active on the airport property, by Chesapeake. Other landowners have received $30,000 to $40,000 per acre for Barnett Shale rights.

In Texas, T. Boone Pickens has revealed his bold alternative energy plans, that include wind energy for electric power generation. Pickens is also invested in Excore Producing and Operating Partners, who paid $3.3 billion for Anadarko's gas field in Jackson Parish, Louisiana. Pickens also invested in Canadian oil sands that will produce major quantities of oil for U.S. and Canadian use.

Landowners are advised to seek professional guidance before leasing land. Shreveport attorney Allen Senbaugh said, "I have clients who have received $100 or $200 per acre for their Haynesville Shale leases that are worth $24,000 to $30,000 per acre, and it is reported that 5,000 oil and gas "lease hounds" are "beating the bushes" to lease up the Haynesville Shale rights for a pittance of what they are worth, he said.

Back