Contributed Photo This Cabot rig is at an unspecified location in Pennsylvania.

Cabot seeks to get out of Sullivan, Wayne

By Dan Hust
SULLIVAN COUNTY — July 16, 2010 — Cabot Oil and Gas, one of the early players in the natural gas leasing effort in the area, has put its entire leased acreage in Sullivan County up for sale.
It’s also doing the same in neighboring Wayne County, PA, likely because of the ongoing regulatory uncertainty in the Delaware River watershed.
Cabot’s director of external affairs, George Stark, told the Democrat this week that the company is selling the leases on its 4,707 acres in Sullivan County and its 11,797 acres in Wayne County in order to focus on operations in Susquehanna County, PA.
That region of Pennsylvania sits within the Susquehanna River watershed, where numerous permits have been given over the past three years to drill into the gas-rich reserves of the Marcellus Shale.
“This year, we’re set to drill 90 wells in Susquehanna County,” Stark explained.
He added that Cabot has invested $500 million so far in Susquehanna and plans to invest another $400 million there this year.
Meanwhile, leasing in Sullivan County has come to a halt as the industry awaits the outcome of rules rewrites by both New York State and the Delaware River Basin Commission (DRBC).
The state Department of Environmental Conservation (DEC) is getting ready to release a final Supplemental Generic Environmental Impact Statement later this year that will address more recent drilling technologies, including the controversial process of hydrofracking.
And the DRBC has put a moratorium on any water withdrawals within the Delaware River watershed for gas drilling until it can reassess and rewrite its rules pertaining to such. That could take as much as a year, though no specific timetable has been set.
Though production wells draw the most water – some estimates have been as high as four million gallons a day per well – even exploratory wells use some water, so the moratorium has stopped drilling plans on both sides of the Delaware (save for a few pre-existing exploratory wells in Wayne County).
When asked if the regulatory issues are responsible for Cabot’s decision to sell, Stark would not directly answer, only reiterating that Cabot sees great potential in north-central Pennsylvania.
“We’re excited to have the opportunity to invest in Susquehanna County,” he remarked.
Cabot, however, is embroiled in litigation in Susquehanna County, where residents of Dimock are alleging its well-drilling activities have contaminated their water supplies. The state investigated and agreed – forcing the company to pay fines and change its environmental practices – but Cabot continues to do drilling business in that area.
Cabot’s 4,707 acres in Sullivan County are mostly comprised of forested, hunting club land close to the Millennium Pipeline in the towns of Bethel, Delaware, Highland, Tusten and Cochecton.
The leases run with the land and are being advertised by Cabot’s auctioneer, the Oil & Gas Asset Clearinghouse, as its prime value.
A brochure put out by the Clearinghouse says the properties’ collective net revenue interest (NRI) is 85 percent and that the acreage features “dry, pipeline-quality gas” on land “located in proven parts of prolific Marcellus trend.” No drilling has yet been conducted on these properties, however.
Bids can be for all the properties (which includes 14,467 acres in West Virginia) or for just the acreage in a particular state. Bids are due by August 3.
For more information, go to www.ogclearinghouse.com.