Update May 2016…This blog originally spoke of “Negative royalties as what I call the cost that society bares in living in an industrialized airshed and all the ill-will health & property devaluation costs”. But as I updated this blog that the royalty payout was getting smaller, and once you factor in all the negative aspects of fracking, the checks indeed begin to seem so small…and figuratively NEGATIVE…Recently I ran across someone complaining of NEGATIVE LINE ITEMS on their royalty statements! So it is here that a claim has been made that someone has effectively PAID Chesapeake to take their gas…..wow
Update August 2014…here is an article where WV couple claims a lien has been put on their home by Chesapeake.
update…below is mention of choking back the wells ….here is a cut and paste as to why thats not so good…
Permalink Reply by Joe Aldridge on May 1, 2013 at 5:14am
update.. this link shows some unhappy Chesapeake mineral owners of which one claims that here in the Barnett Shale that Chesapeake only paid .15 cents per mcf.
I jus luv sharn’ ma letters to the city on this blog……
From: Kim Feil <firstname.lastname@example.org>
Date: May 18, 2012 2:03:25 PM CDT
To: Roger Venables <email@example.com>
Subject: yesterday’s ATF meeting / negative royalties ?
Here is the video I took of the meeting yesterday ….
Roger, I should have sat closer to hear you better and I should have turned on my recorder sooner cause taking notes and listening is hard sometimes.
I need some clarification on some things you said.
The good news I heard you say is that all the pipelines R in and so there will be no more lag time in developing minerals. The bad news is that the price of NG is low. I understand that our royalties are half of what they were last year too.
I missed the part you said about if any drillers are shutting in the wells to wait for higher NG prices. Is Chesapeake doing this or one of the other drillers?
I also missed the part where you said the drillers were locked into some timeline where they need to drill so many wells within so many days? Can you restate that for me?
You also mentioned about “choking back” the well. Do you know which drillers are doing that?
Please provide specifics because I understand that Chesapeake may have some production quotas to maintain, and can be purposely overdeveloping the wells which could be shorting the city royalties by developing municipal minerals at the worst $$ possible time when NG is at a ten year low.
Why would Chesapeake NOT choke back the wells…you may ask? The answer could be that they need to make good on some Volumetric Production Payment contracts they have with the Chinese or with banks.
Deborah Rogers, Ft Worth economist, said “The court documents claim that Chesapeake has been overproducing wells in order to meet production targets for these banks. Overproducing shale wells is known to be potentially detrimental to the overall EUR’s (Estimated Ultimate Recovery) of the wells which raises the question as to whether this is prudent management with regard to mineral owners and their interests which Chesapeake has an obligation to uphold.” http://energypolicyforum.com/?p=345
The futures markets don’t expect NG to go to $6MCF before 2020 is what I’ve read. Also if the price of a barrel of crude stays above $70 then they can afford to frack for oil. Dry gas (what we have) can’t compete with oil because I did the math and figure that one MCF (thousand cubic feet) of natural gas has almost 6 times “less” the BTU’s of one barrel of crude oil.
We should be trying to prove if Chesapeake is being negligent in trying to frack in such as way (shorter frac stage segment lengths) so as to get a huge Initial Production Rate.
We need to be finding out which Arlington wells are tied to (off record?) VPP contracts that may be subject to production quotas….we might have legal grounds to ask Chesapeake to halt activity here until the price of NG goes up if they are being reckless in the timing or the way they are developing our minerals.
Keep an eye on the pressure dropping (and the production rates) on the White (monster well) drill site….it could go flat line at anytime and can be the victim of an intentional attempt to “drill to get a high IP rate” so that a positive sounding press release could be a misrepresentation of the majority of the other not so great? wells.
As usual, my most recent correspondences with Arlington government has been made public on my blog, so be sure to respond with that in mind, thanks.
PS Negative royalties is what I call the cost that society bares in living in an industrialized airshed and all the ill-will health & property devaluation costs.