WHEELING - Chesapeake Energy and other companies have a long way to go to install all the pipelines needed to transport natural gas, oil and other valuable commodities from the Marcellus and Utica shale formations.
And, as Tim Greene emphasized, until there are pipelines connecting the wells in Ohio, Brooke and Hancock counties to transmission lines or processing plants, there will be no production - and no royalty checks for mineral owners.
Greene is the owner of Land and Mineral Management of Appalachia and is a former West Virginia Department of Environmental Protection oil and gas inspector. He said some companies are still having a hard time getting right of way agreements to build pipelines, largely because landowners believe they got bad deals from leases that pay as low as $5 per acre with 12.5 percent royalties.
"Before Chesapeake (Energy) sold their midstream company, they were telling people they were getting the pipelines in place," said Green. "Now, there is another company involved. People are still upset about getting shortchanged on their gas leases, so they are not really open to it right now. They want to wait to see how much they can get for a pipeline."
As Greene noted, Chesapeake Energy, the only company with active drilling operations in West Virginia's three northernmost counties, recently sold its stock in the officially independent pipeline company known as Chesapeake Midstream Partners to a firm named Global Infrastructure Partners. Among GIP's listed partners are former employees of General Electric and Credit Suisse.
"Appalachia Midstream Services is continuing to secure the necessary rights of way and permits for pipeline construction," Chesapeake spokeswoman Jacque Bland said when asked about the company's efforts to gain authority to build lines. Appalachia Midstream is a division of Chesapeake Midstream. Ohio County Clerk Office records show this company has acquired several rights of way agreements.
The pipeline contract is a deal with the surface owner, rather than the mineral owner. Some West Virginia and Ohio residents only own the surface on which their home or farm sits, while someone else owns the mineral rights.
"If you are just a surface owner, you're not getting anything from the gas anyway," he said. "So you're really just pretty upset with all of it."
As for the price an owner should expect to receive for a right of way agreement, Greene said the whole problem is that no one is sure what they should be getting now.
"Is it $25 per foot, $50 per foot, $100 per foot? Who knows how high it could go?" he said.
As for the some of the lines that are now being installed, Greene said it is "pretty unusual to be building a pipeline that close to so many waterlines" when asked about recent reports of pipeliners breaking and exposing waterlines in Marshall County.
"I would really figure the gas company would stay as far away as they could from waterlines," he said. "The gas companies should be asking the county folks where the infrastructure is and should try to stay away from it."
Recently, George Lagos, general manager and chief operator for Marshall County Public Service District No. 4, has said pipeliners working in his district have been breaking rural waterlines and leaving them exposed to sunlight. Lagos said he has multiple pipeliners moving around his waterlines on a daily basis.
"They really need to have better communication," Greene noted.
"Each county has an (emergency management agency) that is worried about spills, explosions and accidents. I would think they could be a little more alert on where the pipelines are going to avoid these sorts of problems."