GASLAND: Film Review

GASLAND is the 2010 documentary written, directed, narrated, and primarily filmed by Josh Fox, an American filmmaker.  The documentary was nominated for a 2011 Academy Award for Best Documentary and received a notable amount of media attention.

Summary

The film begins with Fox reading a letter from a natural gas company offering him $100,000 to purchase the natural gas drilling rights on his family’s land in Milanville, Pennsylvania . The narration of the letter marks the beginning of Fox’s investigative adventure across the U.S. to talk with landowners about natural gas drilling and how it has affected their lives. Fox travels to towns and cities in Pennsylvania, Colorado, Texas, and Wyoming to learn how people have been negatively impacted by natural gas drilling on their land or surrounding properties.

Fox’s environmental passion and concern about water pollution is apparent in his interviews as he connects with people who experienced contaminated water as a result of unconventional natural gas drilling and hydraulic fracturing. His investigation focuses on how these drilling and completion techniques for natural gas have polluted the water, showing in many cases how vapors from drinking water and river water will ignite and continue to burn with the strike of a match.

The investigation did show a correlation between some areas of natural gas drilling and polluted drinking water. In parts of the film, families claim they told drilling companies about the contaminated water. In response, the companies replaced the contaminated water or tested the polluted water and denied claims of water contamination as a result of natural gas drilling.

The Take-Away

• “Currently” (2008-2009), laws to protect public health are ignored when it comes to oil and gas drilling.
• There should be more government data collected to determine the effects of natural gas drilling on the environment.
• There should be strict laws and government regulation regarding natural gas drilling.

The Reality

What the GASLAND documentary fails to point out is that the majority of natural gas companies are drilling and completing wells responsibly and properly without contaminating groundwater during hydraulic fracturing. Instead it focuses only on the fraction of companies that were drilling irresponsibly.  The documentary is one-sided and only highlights negative aspects of natural gas drilling and production. It fails to point out anything positive about the natural gas industry, which is one of the largest economic contributors in the U.S.

The natural gas industry has generated billions of dollars in revenue, created millions of jobs and as the cleanest burning fossil fuel, has the potential to reduce the harmful emissions generated by oil and coal. Abundant supplies of this domestic resource will provide a secure and stable energy future while reducing greenhouse gas emissions for generations to come.

Most people would agree that the government needs to closely regulate oil and gas companies to ensure they are properly drilling and completing wells without hurting the environment and its inhabitants. According to Sustainableshale.org , today oil and gas operators are implementing  standards of drilling and completion to ensure environmental safety across the country including the very areas Fox focuses on. Until the high demand for natural gas dissipates, and reliable alternative energy sources have been developed, natural gas production will continue to be necessary.

The price of crude oil, specifically West Texas Intermediate (“WTI”), has increased significantly over the past five months, reaching a high point of $110 on August 29, 2013.  If you are looking to sell your oil and gas royalties, now is the time.  Higher oil prices, of course, mean more money for sellers and the current spike in oil prices is not likely to last.

“Geopolitical risk is driving the market higher,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The escalation in Syria is coming after Libyan production has tumbled. The bulls seem intent on driving WTI close to $115.”  This, in spite of a report from the Energy Information Administration saying U.S. crude stockpiles rose 2.99 million barrels to 362 million last week.   “Absent the Middle Eastern news, we would be moving lower,” said Adam Wise, who helps manage a $6 billion oil and gas bond portfolio as a managing director at Manulife Asset Management in Boston.  “This is a very bearish report, but the market’s ignoring it.”

One question you may ask is, “Why would purchasers, i.e. royalty companies, want to buy royalties when the market price is so high?”  Royalty companies are in the business of buying royalties regardless of the price of oil and natural gas.  Crude oil and natural gas are commodities; their prices fluctuate based on the worldwide and domestic supply and demand.  Since royalty companies buy royalty interests all the time, some purchases are made when prices are high and some when prices are low.  However, due to the large volume of transactions over an extended period of time, the purchase price per transaction averages out.

Ultimately, it is up to the oil and gas royalty owner to decide when or if they want to sell. If you have been thinking about selling, now is a great time to get some more information on the selling process . Please contact us if you have any questions about selling your oil and gas royalties and overriding royalty interests.

Source of quotes:  Bloomberg article WTI Crude Rises to Two-Year High on Syrian Tension By Mark Shenk – Aug 28, 2013 2:30 PM CT

For those familiar with all the large shale plays, the magnitude of the Eagle Ford Shale is likely not lost. One of the biggest shale plays, the Eagle Ford Shale is well-known to residents who live in south Texas. Stretching more than 400 miles long and 50 wide, its wells can even be seen from space, as NASA recently showed. Its name is a direct reference to the town of Eagle Ford, Texas where it can be seen as clay soil. Only recently discovered in 2008, the Eagle Ford Shale is generating buzz outside of the oil and gas industry. This output is incredible, and is boosting Texas oil production to a point that it goes beyond a national scale. If Texas were a country, it would be the 14^th largest oil producing nation in the world.  Texas ranks first in oil production in the United States because of the Eagle Ford shale formation, according to the Institute for Energy Research.

Given its size, this shale play is significant enough to have attracted the interest of investors and oil & gas companies across the country as the play continues to hit record-high production numbers. Following is an excerpt from an Investors.com article discussing the impact of the Eagle Ford Shale on Texas that was published in July 2013:

“In only 2-1/2 years, the Lone Star State has doubled its crude output, making it what (Mark) Perry dubs Saudi Texas and reversing a 23-year decline that fueled speculation that the maximum rate of petroleum extraction has been, or will soon be, reached.”

The Eagle Ford shale is changing the way companies are approaching their oil & gas investments, even going as far to devote more or the majority of their assets to the shale, as the Motley Fool reports,

Not only is the oil production in the Eagle Ford Shale helping the United States to surpass other countries such as Venezuela and Kuwait with significant crude oil output, but it also is dramatically impacting the counties that it encompasses, as the Seguin Gazette reports. Sales tax revenues are spiking in relation to the activity involving the Eagle Ford Shale.

In addition to contributing to the overall economic boom in Texas, oil and gas exploration and production in the Eagle Ford Shale is helping the local economic growth, as resources continue to funnel in to help further develop the towns that the shale touches. If you own royalty or leased non-producing minerals in the Eagle Ford Shale, take advantage of the prime market of this play while it’s hot and get in touch with us via the Contact Us form on this page, as we are actively acquiring interests in the major plays around the United States.