Drilling for oil, gas planned east of Fredericksburg
A Texas-based energy company that has leased tens of thousands of acres east of Fredericksburg hopes to begin drilling for gas and oil within 18 months.
“That’s the best-case scenario,” Stan Sherrill, president of Shore Exploration and Production Corp. in Dallas, said in a recent interview. He says the company had hoped to be further along by now. But the death of its former president—Sherrill’s brother, Ed—and a subsequent reorganization, caused some delay.
Sherrill says the company’s sole focus is the Taylorsville basin, a geological formation running through parts of the Northern Neck and Middle Peninsula.
Shore has an office in the town of Bowling Green, and expects to relocate its headquarters there, Sherrill said.
Since 2011, Shore has been securing leases from landowners for mineral rights on more than 80,000 acres in King George, Westmoreland, Caroline, Essex and King and Queen counties.
“We’re going to continue to do leasing, and more reconnaissance before doing any drilling,” Sherrill said.
Shore, he says, is assembling blocks of contiguous land in likely spots for drilling.
“Sometimes we’re not getting the blocks we need,” he said explaining that a landowner may hold out in an area where all the others have signed, or where some owners are not interested.
“We’re well on our way to putting our blocks together,” he said, with much of the leased property on farms. And the company is working to line up drilling partners to share the costs of additional exploration and production.
HOW MUCH GAS, OIL?
Sherrill and his company are familiar with the area: They gathered leases in the basin in the mid-1980s, partnering with Exxon and Texaco. About a dozen test wells were drilled.
Shore wells in Colonial Beach, in the Ninde area of King George County and one in Caroline County, turned up traces of natural gas and some oil.
Just how much gas and oil lies under the largely rural swath of land in the Taylorsville basin is unclear.
A U.S. Geological Survey assessment released in June 2012 suggests there could be more than 1 trillion cubic feet of natural gas in the basin. By comparison, the massive Marcellus shale formation, running from northwestern Virginia to New York, is estimated to contain about 400 trillion cubic feet.
USGS scientists assessed Taylorsville and four other nearby basins along the East Coast.
“There’s a lot of uncertainty about how much is there,” said Jim Coleman, a USGS research geologist in Fayetteville, Ga. “The oil and gas potential is very speculative now.”
Amounts in those basins, “compared to the whole resource of the U.S., is practically insignificant.”
Sherrill says that assessment is based on limited exploration in the basin to date, and that the company remains confident in what it will find.
According to a state report, oil companies drilled a dozen wells in late 1989, four in Westmoreland, two each in Caroline, King George and Essex and one each in King William and Henrico counties. Shore’s own drilling in Colonial Beach, King George and Caroline brings the total to 15 exploratory wells.
“My guess is that no one really knows the amount,” Sherrill said of the USGS report.
“I think, in a basin like this that has never been [fully] explored, you are going to be continually surprised” by the thickness of gas-bearing shale deposits, “and different things that might be down there,” Sherrill said.
“We’ve been working in this area since the 1980s. We have good reasons to be confident,” that quantities of gas and oil are present.
The Taylorsville basin dates back about 210 million years to the Mesozoic Era. It’s among several basins extending from offshore, through Virginia’s Coastal Plain, west to the Appalachian Mountains.
Ancient organic material, under pressure and heat, created the coal, natural gas and oil, in layers that run from near the surface to deep underground. The challenge, geologists say, is choosing the right spot to drill.
PRICES A FACTOR
Ongoing analysis of leased areas, Sherrill said, will help guide the company’s search.
For example, “We might be targeting oil to begin with,” he said, though natural gas is thought to be far more abundant.
If oil prices rise, that would be a factor. Conversely, natural gas prices are historically low, and jumps in technology—horizontal drilling and hydraulic fracturing—are making much more of it available.
Sherrill said the state requires 40 acres for an oil well, 640 for a gas well. He says less acreage might be needed in Taylorsville basin. “This is subject to change if we can show them we need less [acreage].”
Drilling is a big, and risky, investment: the U.S. Energy Information Administration puts the nominal cost for drilling a gas well at about $4 million; an oil well is slightly less.
The only wells currently under production in Virginia are producing natural gas, and are located in seven counties in southwest Virginia.
Any drilling in the Taylorsville basin would first require state review and permits, and would have added scrutiny because the work would be first of its type along Virginia’s coast, according to Rick Cooper, principal executive to the staff of the Virginia Gas and Oil Board.
The permitting process would be the same, Cooper said—detailed plans would be required on matters such as the well-casing design, number and location of wells, and bonds would be posted.
Since the work would be in the Chesapeake Bay watershed, an environmental assessment would also be required.
Once a permit is approved, company officials “would have to give us notice of when they want to start construction,” Cooper said. The process would include inspections of ongoing work, “and they would also have to give us notice of when they are going to fracture the well.”
Hydraulic fracturing, also known as fracking, releases natural gas from underground deposits. The Virginia Department of Mines, Minerals and Energy rules require site-specific assessments of surface and underground conditions to be affected by drilling. In addition, no off-site disturbances or discharges are allowed.
The application process for drilling typically takes 30 to 90 days.
“It is much stricter,” Sherrill said of the permit process where he wants to drill. “If you wanted to drill in Western Virginia, it’s a whole different set of rules.
For the Taylorsville basin, “If there’s any creek or water source nearby, they don’t want any [pollution] ending up in the Rappahannock or Potomac.We’re ultra-sensitive to this.”
Rusty Dennen: 540/374-5431
LANDOWNER SAYS NO TO TEXAS COMPANY’S REQUEST TO DRILL
Bill Dustin’s friends and neighbors gave a Texas company permission to drill for oil and gas on their lands.
So did his son, who lives next to Dustin’s home in Caroline County. Likewise, his sister signed a contract to lease her half of the 173-acre farm she and Dustin inherited from their mother.
But Dustin has no plans to sign over his part of the land. He’s loved the rolling hills and open farms of the area since he was a boy, and he’s not about to risk losing them.
Should Shore Exploration and Production Corp. find massive amounts of natural gas or oil, he fears the region would experience unprecedented growth.
“It’s just going to change the scope of a rural landscape I have loved all my life,” said Dustin, a 65-year-old grain farmer.
Dustin said he understands that his neighbors want to get a little something from their land. Their contracts with Shore provide them $15 an acre, each year for five years, and a percentage of the profits, should the company strike it big.
That’s why George Bowie leased his 473 acres in Westmoreland County. That and because “everybody else was signing up,” he said.
“People just hope they get a couple dollars out of it,” Bowie said.
Dustin said the lease looks like “free money” and people may assume nothing will become of the exploratory drilling—which is what happened when Shore leased land in the mid-1980s.
Dustin said he’s looking a little farther down the road and wants the view to stay the same.
He and his wife, Barbara, live in the eastern part of Caroline County, near its border with Essex and King and Queen counties. The land that Shore representatives seek is the farm he and his sister inherited. It’s about 10 miles west of his home, past Sparta.
Calling the area rural might be an understatement. From the house on the farm property, where Dustin’s sister, Carolyn Farmer, lives, one other home can be seen. The rest of the view, aside from red barns and walnut trees, is of farmland.
This time of year, soybean plants turn yellow in the fields, and all that’s left of the corn crop is the stubble of stalks. There’s no shoulder on the paved, unlined road leading to the farm.
Rows of corn were planted, from right beside the asphalt, all the way to the forest.
There aren’t any fast-food outlets, convenience stores or even gas stations in this neck of the woods. Instead, the scenery off Sparta Road includes chickens in the front yard, firewood stacked neatly next to houses and an occasional tire swing dangling from a tree branch.
If Shore were to find enough oil or natural gas in this area, it would have to build wells and storage tanks, as well as a pipeline to carry it out. Dustin has read about similar explorations in South Dakota, which turned a small area into a big boom town.
“They can’t build housing fast enough,” said Dustin, grimacing at the thought of the same taking place in Caroline. “That’s not my cup of tea.”
Shore officials have been “very nice,” but persistent, he said. He and his wife have had at least 25 visits from them in the last two years.
“Finally, my wife told them: ‘Don’t call us, we’ll call you.’” Dustin said.
Cathy Dyson: 540/374-5425
STATE ENVIRONMENTAL GROUPS CONCERNED ABOUT FRACKING
Shore Exploration and Production Corp. is at least a year or more away from any drilling, but environmental groups are already expressing concern about the prospect of first-ever hydraulic fracturing in Virginia’s Coastal Plain.
Hydraulic fracturing, also known as fracking, involves drilling and injecting fluids underground at high pressures to fracture rocks, releasing oil and natural gas.
According to the Virginia Department of Mines, Minerals and Energy, fracking has been used in about 1,800 wells producing natural gas from shale, sandstone and limestone formations in southwest Virginia. The agency says that, to date, there have been no water-quality issues directly associated with fracking there.
Companies using the technologies around the country contend the process is safe, creating jobs and revenue for localities.
In March, the Rappahannock Group Sierra Club held an information session in Fredericksburg on the Taylorsville basin plan, and potential pollution and groundwater contamination from drilling.
Friends of the Rappahannock, a river-protection group based in Fredericksburg, last month said it would soon launch an educational campaign. The groups contend that the Northern Neck and Middle Peninsula are surrounded by creeks and rivers, and that the potential for drilling-related pollution is greater.
Much of the attention about fracking is centered on the Marcellus shale formation running along the spine of the Appalachians, from Virginia to New York. Drilling there has prompted concerns about chemicals used in the process contaminating groundwater, and other pollution.
In other developments:
The Environmental Protection Agency is working on a national study to better understand potential impacts of hydraulic fracturing on drinking-water resources.
The U.S. Forest Service is weighing whether to allow fracking in the George Washington National Forest, which covers more than a million acres across Virginia and West Virginia. The Virginia chapter of the Sierra Club and Environment Virginia are among conservation organizations opposing a change in the forest’s management plan.
In a recent report on global warming-related flooding in the Tidewater area, the Virginia Institute of Marine Science cautioned that if drilling were allowed, “extensive studies would be necessary to ensure that extraction did not exacerbate sea level rise issues.”
Rusty Dennen: 540/374-5431