As evidenced by the attention of several major news outlets (The Wall Street Journal and The New York Times, to name a few), gas exploration in the hills of Western Pennsylvania is the hot topic of the day. Rising natural gas prices and technological advances in natural gas exploration and recovery have led to the eastward migration of gas prospectors from Texas and Oklahoma. The result is an astronomical rise in the price of leasing mineral rights in Western Pennsylvania and a new profit center for many landowners.
Though the existence of natural gas in the Marcellus Shale formation that slices through Western Pennsylvania has long been known, advances in drilling have made possible more cost-efficient exploration and recovery of natural gas in the deep recesses of the Marcellus Shale. In addition, thanks to horizontal drilling advances, drilling sites can be thousands of feet away with little or no disruption to the surface user. For example, drilling technology has allowed for the successful exploration and recovery of natural gas under shopping centers, churches and other high-traffic areas in the suburban areas of Fort Worth, Texas.
Despite the apparent low impact of gas exploration on landowners, legal protections in the lease documents are extremely important. "Standard" leases offered by gas exploration companies typically do not offer market pricing or many of the legal protections that landowners need and should require in such transactions. Careful review of insurance coverages, indemnities and other landowner protections are imperative.
As of today, no natural gas has been extracted from the gas below the Marcellus Shale; however, with the potential of recovering billions of dollars in natural gas, the leasing activity is likely to affect most landowners in Western Pennsylvania. Exploration companies looking to aggregate acreage will likely contact landowners in order to create a critical mass in specific areas that will justify the cost of drilling and exploration. Typically, several thousand acres are needed to justify the cost of drilling and smaller properties—those from 10 to 50 acres—can make up a large portion of these aggregations.
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