Barnett Shale Natural Gas Means Big Bucks for Home Owners

The Laguna Area Gas Group (LAGG) is a group of neighborhoods in Grapevine, Texas working to achieve competitive mineral rights leases for their member residents who live over a geological formation called the Barnett Shale. This massive formation is estimated to contain nearly 23 trillion cubic feet of natural gas.

Until recently, energy companies have all but ignored this massive resource due to the complexity and expense of extracting it. Over the last decade things have changed and today a rush is on to harvest this long ignored source of natural gas. This is due to several factors including new technology for less expensive extraction and the rising price of petroleum. Where these gas deposits once were considered un-extractable, the development of a method called fracture drilling has made it possible to remove this energy source from the ground with less expense and thus sell it at a significant profit.

Fracture drilling involves drilling long horizontal shafts and pumping them full of a brine and chemical mixture that is then vibrated to create fractures between cells of natural gas deposits within the Barnett Shale. The fractures allow the gas to escape into the main shaft, and the brine mixture pressurizes it to force it to the surface. Over time, the fractures settle and the energy company returns to re-fracture the well, creating new paths for the gas to follow. This process can be noisy and messy.

Residents who live close to fracture well locations have to put up with days or weeks of noisy pumps and seismic equipment running while the fracturing phases are under way. Once the energy companies complete that phase, however, the area is usually quiet during production extraction. One other common complaint results from the tendency for large marine mosquitoes to invade areas close to the well. This happens because the energy companies have to build large brine ponds as reservoirs for the salt water they use in the hydraulic injection fracturing process. Marine mosquitoes breed and thrive around brine ponds.

Why do residents put up with all that? Lease signing bonuses in the thousands and monthly royalty checks!

Many home owners in the Barnett Shale area encompassing several Texas counties including Tarrant (which Ft. Worth and Grapevine are a part of) are in for some extra income, because energy companies have to purchase the rights to extract natural gas from land owners who own those rights.

Recent leases in this area have been reported with signing bonuses as high as $20,000 per acre with royalties in the 25% range.

XTO, Chesapeake, and other Energy companies have been buying these leases from residents and are continually contacting them with lease offers.

Mineral rights leases are complex. Don't sign a lease without being informed and educated about the process and pitfalls. Many people have fallen prey to the false sense of urgency and pressure of energy company negotiators and rushed into a lease only to regret it later when they discover that by doing some research and waiting a few months they could have doubled, tripled, or even quadrupled the amount of signing bonus they ended up with.

Some land owners have been pressured into lease deals with energy companies and later discovered that clauses in the agreement have virtually negated their royalty payments. Common complaints center around "service costs" which are built into the contract to extract fees for transport of natural gas from the well site to other regions. Maintenance and other service fees are often built in to the leases in complex wording and drains all the expected royalties from the home owners, even though they read the lease and thought it was a fair deal.

Residents have been forming neighborhood and even regional groups to negotiate leases as unified organizations in order to ensure each member gets a fair deal. No cost royalty leases and much higher signing bonuses are more common results when residents negotiate as a group.

LAGG and other resident groups say they're here to help. They invite residents in their area to join LAGG and take advantage of their growing leverage to negotiate a great deal with the energy companies.

The Laguna Area Gas Group web site is http://www.grapevinelagg.com