Horizontal Shale Drilling: the Process of Drilling and the Impacts by: Chris Penrose Associate Professor, OSU Extension & Extension Educator Ag/NR Basic Lease Considerations by: Clif Little Associate Professor, OSU Extension & Extension Educator Ag/NR
Site Range: 4 8 Acres Pad Depth: 2 ft of Rock ½ to 1 Acre Site When Fracking Complete 1,500+ Trailer Loads of Water Per Frack Companies are Looking to Recycle Water to Reduce Water Usage Associated with the Process Source: Horizontal Shale Drilling: The Process of Drilling and the Impacts, Chris Penrose, Ohio State University Extension
Carroll County - Utica Shale Horizontal Drilling Source: Horizontal Shale Drilling: The Process of Drilling and the Impacts, Chris Penrose, Ohio State University Extension
Guernsey County Well Site Source: Horizontal Shale Drilling: The Process of Drilling and the Impacts, Chris Penrose, Ohio State University Extension
Harrison County Utica Shale Well Source: Horizontal Shale Drilling: The Process of Drilling and the Impacts, Chris Penrose, Ohio State University Extension
Hydraulic Fracturing has the Potential to be Life Changing For the Better Potential for Large Bonus Payments Potential for Large Royalty Payments Potential For a More Secure Financial Future Source: Horizontal Shale Drilling: The Process of Drilling and the Impacts, Chris Penrose, Ohio State University Extension
Hydraulic Fracturing has the Potential to be Life Changing For the Worse Royalty Payments May Diminish Rapidly Potential Damage or Changes to Property Increased Traffic / Congestion Strain on Family / Neighbor Relations Addition of Gas Lines / Roads / Right of Ways Potential Water Issues / Surface Spills Source: Horizontal Shale Drilling: The Process of Drilling and the Impacts, Chris Penrose, Ohio State University Extension
Hydraulic Fracturing has the Potential to be Life Changing Land owners will need to weigh the benefits and the costs and answer this question: At what cost are you willing to have potential damages / changes to your property for a lease with bonus and royalty potential and a more secure financial future? Source: Horizontal Shale Drilling: The Process of Drilling and the Impacts, Chris Penrose, Ohio State University Extension
Sample Lease Considerations What is the subject of the lease (oil, gas, other minerals)? What is the primary term of the lease? May the lease be assigned? What constitutes commencement of drilling? Source: Basic Lease Considerations, Clif Little, Ohio State University Extension
Sample Lease Considerations Does the lease include underground storage rights? Does the lease allow for roads, pipelines, storage tanks, right of ways? Is the Lessee responsible for surface damages (extent)? Are there provisions for the use of resources? (land, water, timber, etc) What types of buildings, fixtures, etc are allowed on the property? (distance from home, existing buildings, etc) Note: Leasing companies may have multiple leases and/or multiple addendums which contain different terms. Source: Basic Lease Considerations, Clif Little, Ohio State University Extension
Community Economic Development Potential Community Impacts Increased Water Usage Increased Traffic and Congestion Wear and Tear on Existing Roads / Infrastructure Road Maintenance Concerns Due to Increased Traffic Strain on Existing Housing Stock (lack of housing for rental / purchase) Possible Displacement of Current Renters / Commercial Tenants Strain on Community Infrastructure Strain on Local Financial Institutions Due to Loan Payoffs Need for Additional Training for Emergency Responders Need for Cell Coverage at Remote Well Site Locations Possible Displacement of Workers from Existing Jobs
Community Economic Development Potential Community Impacts New Pipeline Development New Roads and Infrastructure Improvements Increased Sales Taxes and Other Revenues Increased Revenues / Opportunities for Existing Businesses Tractor Dealers, Auto Dealers, Restaurants, Lodging Owners, Caterers, Cleaning Services, Trucking Companies, Grocery, Waste Disposal, etc Increased Occupancy Rates for Housing / Commercial Rentals Need for New Housing Units, RV Parks & Commercial Developments New Business Opportunities Job Opportunities Welders, Truck Drivers, Mechanics, etc
Community Economic Development Potential Community Impacts Short- and Long-Term Population Changes / Labor Migration Temporary Workers - Transient Crews Skilled in Specific Stages Development of Temporary Housing Facilities Hotels, Motels, Trailer Parks, Campgrounds, RV Parks, Rental Units, etc How Will Community Absorb Unoccupied Units When Temporary Workers Leave? Increased Demands on Water, Sewer, Roads, Telecommunications, etc Increased Demands for Emergency Services Police, Fire, Medical, Hazardous Materials Teams, etc Increased Enrollment at Local Schools Increased Real Disposable Income Potential Impact on Tourist s Perception of the Region
The information provided by the University of Illinois Extension and/or Ohio State University Extension is not meant to serve as legal advice and should only be used as an educational resource. Potential leaseholders should consult with an attorney before signing a lease agreement.
Contact Information adamfeig@illinois.edu (618)842-3702 cjbeck@illinois.edu (618)252-8391