OUR THOUGHTS ON:

Questions Most Frequently Asked about Marcellus Shale by Property Owners

Energy & Resources

By Jeffrey Wlahofsky

What is Marcellus Shale?

The Marcellus shale is an organic-matter-rich rock formation that holds large reserves of natural gas. The Marcellus shale formation underlies large portions of Pennsylvania, New York, and West Virginia, and, to a lesser extent, portions of eastern Ohio, Maryland, Kentucky, Virginia and Tennessee. The Marcellus shale formation is typically found between 7,000 and 12,000 feet below the surface, with the densest layer of natural-gas-producing shale being located in Pennsylvania.


How is Natural Gas Extracted from the Marcellus Shale?

In order to extract natural gas deposits from the Marcellus shale, a vertical shaft is drilled from the surface to the area where the Marcellus shale is believed to be. Once the Marcellus shale formation has been penetrated to an appropriate depth, a horizontal shaft is drilled through the Marcellus shale layer. After the vertical and horizontal wells have been drilled, a mixture of water, chemicals and sand is injected into the Marcellus shale at very high pressure in order to fracture the shale and release the natural gas. This process is called hydraulic fracturing (or “fracing”). Fracturing the Marcellus shale releases the trapped natural gas, allowing it to flow freely into the pipeline.


How do I know if I own the Marcellus Shale rights for my property?

In Pennsylvania, the ownership of mineral rights (oil and gas rights) is specified on property deeds. Ownership of the surface real estate does not guarantee that a property owner owns the rights to the mineral, oil, gas, coal, etc. beneath the surface. A deed or title search at the County Recorder of Deeds office may be necessary to determine ownership of the oil and gas rights for a property.


What is a Marcellus Shale Lease?

A mineral lease is a contractual agreement between the owner of a mineral tract (in this case Marcellus shale) who grants the right to develop deposits of the mineral to a producer (the lessee). All mineral rights leases should be recorded at the Recorder of Deeds office of the county where the leased tract is located. A lease is usually secured by annual rental payments or a royalty on production paid to the owner of the property.

For further information, please contact Jeff Wlahofsky.

 

 

Schneider Downs provides accountingtax, wealth management, technology and business advisory services through innovative thought leaders who deliver the expertise to meet the individual needs of each client. Our offices are located in Pittsburgh, PA and Columbus, OH. 

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax-related matter.

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