My grandpa had a saying: You can never own too much land.
His words of wisdom still ring true today – though land investors might throw in one thing more: Be sure the mineral rights are included in your purchase.
With shale gas and oil being discovered and produced in numerous unexpected areas of the country and with 2.5 million miles of pipeline on the surface, owning land and minerals in the right place could pay off big.
You might be surprised to learn that 30 U.S. states overlie shale formations.
What Land Investors Know That You Should Know
Land — They aren’t making any more of it.
Most people don’t think of vacant land this way, but the reality is – land is an extremely valuable resource with limited quantities available. When you purchase land in the path of growth, you find yourself with a finite asset that a lot of other people would like to get their hands on.
That growth could very well be shale production.
We’ve gone from a country that imported massive amounts of oil and gas, to a country that’s sitting on massive supplies of it… directly underneath us. There’s real wealth flowing from the ground up.
Where Is The Shale?
Drilling in the shale is a different ball game than with conventional oil, which was mostly about finding oil in the first place. Exploration for natural gas typically begins with geologists examining the areas where it is geologically likely that petroleum or gas deposits might exist.
Each state’s division of natural resources has public geological survey records, paid for by your tax dollars.
Within an individual shale play, geophysicists and geologists identify suitable well locations in areas that have the greatest potential to produce commercial volumes of natural gas and oil. These areas are identified using rock core samples and geophysical and seismic technologies to generate maps of the subsurface hydrocarbon resources in a shale formation.
A spokesman for the Ohio Department of Natural Resources said that their geological survey teams map out all underground rock formations, including the shale. But it is up to the individual oil and gas companies to find the most productive areas to drill.
These companies share their information with the ODNR during the permit process.
Finding The Sweet Spots
Drillers and producers are in search of the sweet spots – target locations or areas within a play that represent the best production or potential production.
Sweet spots in shale reservoirs may be defined by source-rock richness or thickness, by natural fractures, or by other factors – using geological data.
So far, the industry has only been somewhat successful in predicting sweet spots. It typically takes numerous boreholes before sweet spots can be located with confidence. These spots are the only places commercial production can reasonably take place.
Do You Own Oil & Gas Minerals?
Surprisingly, most people don’t know if they own the mineral rights under their land. If you’d like to find out, stopping in at your county clerk’s office is a good place to start.
The county courthouse has land records that will show a property’s chain of title – documents showing how the mineral rights have changed hands through the years.
You can also read about my own personal experience.
Land Investing Is An Opportunity
Bruner Land Company in Byesville, Ohio, has been making land deals for two generations. When Doug Bruner joined the family business several years ago, no one had heard of the valuable Utica and Marcellus Shale formations that underlie the area.
“It was an added bonus when this information started coming to light,” said Bruner.
Bruner explained that today’s landowners are now very conscientious of the valuable minerals, and it’s difficult to find land to purchase in the area that includes the mineral rights. When minerals are included in the sale, he said, it is very expensive.
It should come as no surprise that, when it comes to U.S. shale, it all comes back to location, location, location… And having a little inside geological information is an advantage.
Texas is also booming. The Eagle Ford formation in South Texas popped up out of nowhere. Starting in 2007 with essentially no production, today it’s producing nearly 1.4 million barrels per day. The Permian Basin in West Texas is also alive with shale production.
Next time you fill up your gas tank, there’s no need to think about Saudi Arabia or OPEC. Instead, think about Texas, North Dakota, Oklahoma, Louisiana, Pennsylvania, West Virginia, Ohio and even Colorado.
Who knows? Shale production may soon be coming to a location near you.