Garrett gas deal still unpaid for

500 gave drilling rights to Texas firm

December 15, 2008|By Joe Burris | Joe Burris,joseph.burris@baltsun.com

Optimism abounded in Garrett County in September, when more than 500 landowners signed leasing contracts allowing a Texas-based oil and gas company the right to drill on their properties for the natural gas deposits believed to be underground.

Landowners were to receive, among other concessions, a $1,150-per-acre up-front payment on five-year leases. The first landowners were to receive the payments within 90 days - or the first week of this month.

But then the economy soured, and investors in the deal became reluctant to make sizable financial considerations up front, county officials said. Now, one week after the initial deadline passed with no payouts, county officials say they are working with Texas-based Lodge Energy LP to amend the leases for payouts over four to five years instead of the lump sum.

"We had a meeting a few weeks ago with key people in the company, and we're still optimistic," said Del. Wendell R. Beitzel, who was among a group of Garrett County officials and landowners working to amend the lease agreements.

"At this time, it appears to be moving ahead, and they fully intend to execute some of the leases and drill here in Garrett County," said Beitzel, a Republican who signed a lease for about 300 acres he owns in Accident.

"They want to pay out the lease payments over four or five years, and [that] is fine with us," Beitzel said. "Some people prefer that, for tax purposes, and so that they don't execute in select locations and drop others. We want them to pay out to everyone who signed up with the company."

Calls made Friday to Lodge Energy, which is based in Fort Worth, Texas, and to Western Land Services, a Michigan-based leasing agent for the company, were not returned.

Geologists say the county is perched atop an untapped wealth of natural gas - part of a 34 million-acre reservoir stretching from the Appalachian Mountains in East Tennessee to upstate New York. Because drilling technology has improved in recent years, gas companies say they can tap into large deposits of Marcellus shale, a black rock that is a major source of natural gas.

Delmer Yoder, a semiretired school bus operator from Accident who spearheaded the original deal, said both sides are working to put the amended agreements in writing. He expects that those who signed the first leases will receive initial payments "within the next month or so."

"You can't blame anyone; the economy isn't going as well as planned," Yoder said.

Beitzel said that after the initial deadline passed without payment, he received a few calls from landowners who signed agreements.

"No one has received payment yet, and that's a bad thing, but we still expect them to come here and explore for gas," he said.

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