The Barnett Shale in Texas
The Barnett Shale is a natural gas rich geological formation in Texas that is estimated to stretch from the city of Dallas to west of the city of Fort Worth and south, covering 5,000 square miles and at least 17 counties. Some experts have suggested the Barnett Shale may be the largest onshore natural gas field in the U.S.. The field is proven to have 2.5 trillion cubic feet of natural gas and is widely estimated to contain as much as 30 trillion cubic feet of natural gas resources. Oil has also been found in lesser quantities, but sufficient enough to be commercially viable.
The Barnett Shale is known as a "tight" gas reservoir, because its gas is not easily extracted. The shale is hard, and until recently it was virtually impossible to produce gas in commercial quantities from it. However, recent developments in hydraulic fracturing technology and horizontal drilling coupled with increasing natural gas prices have made development of the Barnett Shale economically feasible. Production rates have increased dramatically.
Development of the Barnett Shale
Future development of the field will be hampered in part by the fact that major portions of the field are in urban areas. Some local governments are researching means by which they can drill on existing public land (e.g., parks) without disrupting other activities so they can earn royalties on the oil and gas produced. Others are seeking compensation from drilling companies for damage to rural roads caused by overweight vehicles and equipment.
Two key developments in exploration methods have made development of the Barnett Shale commercially feasible:
- Horizontal Drilling - Recent advances in horizontal drilling have opened up the potential of the Barnett Shale as a major producer. Horizontal drilling enables producers to drill horizontally beneath neighborhoods, schools and airports. Since much of the gas in the Barnett Shale is beneath the City of Fort Worth, horizontal drilling methods are key to making it accessible for production. A horizontal well also exposes more rock , more natural or induced fractures to the wellbore , which can have the benefit of making a gas well more productive.
- Hydraulic Fracturing (Fracking) - Hydraulic fracturing in the Barnett Shale is achieved by pumping water into the well bore under high pressure to fracture the surrounding rock formation. These fractures allow a greater volume of gas to be extracted, and allow wells to produce at economically feasible rates.
As of 2007, bonuses paid to landowners in the southern counties range from $200 to $2000 per acre with royalty payments in the 18-25% range, much greater than what was being paid as recently as 2004. Terms of recent leases have included $15,000 per acre and a 25% royalty for homeowners in Ryan Place, Mistletoe Heights, and Berkley on Fort Worth's south side, and $22,500 per acre and a 25% royalty for a group of homeowners in south Arlington.
Collective Signing Bonuses & Royalties
- March 2008 - Homeowners in the Greater Meadowbrook area in eastern Fort Worth are being offered $25,000 per acre and a 26.5% royalty.
- June 2008 - SEACTX and POSAR community groups in Arlington (South of I-20) reached a collective agreement with XTO energy for $26,517 per acre with 26.5% royalties.
- July 2008 - Homeowners in Ridglea Hills, a neighborhood in SW Fort Worth, are being offered $25,000 per acre and a 25% royalty from Chesapeake Exploration, LLC, an affiliate of Chesapeake Energy.
One lease in Johnson County now has 19 wells permitted. New drilling permits in Johnson County are being approved at an average rate of 60 per month, and in Hill County at a rate of 20 per month. Per the Fort Worth Star-Telegram, 100,000+ new leases were recorded in Tarrant County in 2007. In 2006, the Barnett Shale was responsible for 55,385 permanent jobs and contributed $491 million in revenues to Texas and $228 million in revenues to local governments. Economic projections indicate that by 2015 the Barnett Shale may be responsible for 108,000+ jobs.
Talk to a Houston Oil & Gas Attorney Today
If you own mineral interests in the Barnett Shale region, you may already have been approached by landmen wanting to negotiate oil and gas leases with you. You owe it to yourself to be fully informed of the many issues that should be addressed to maximize your potential revenues, and to protect your property and interests.
Contact a Houston oil and gas attorney to learn more about your options.