Alabama gas find could rival Barnett Shaleadmin
Energy companies are scrambling for drilling rights in north-central Alabama, where geologists have discovered a natural gas formation with the potential to rival any in the country.
Drillers have bought gas rights on 500,000 acres in and around St. Clair County during the past two years, paying up to $500 an acre plus a share of potential revenues. They now want state permission to begin widespread production on 40 square miles in and around Ashville, 37 miles northeast of Birmingham, according to Alabama Oil and Gas Board records. The site’s proposed name is the Big Canoe Creek Field.
Geologists compare the area’s potential to that of a legendary North Texas natural gas field called the Barnett Shale, which has grown to 5,000 square miles and produces more energy than any other onshore gas field in the country.
Shale formations in St. Clair County are 9,000 feet thick, dwarfing the 1,500-foot shales in Texas. Thicker shale means more gas per square mile.
“There are many billions of cubic feet of natural gas per square mile in St. Clair County,” said Phillip Meadows, an independent geologist who performed the analysis. “Once production methods are figured out, we are talking about wells that could easily be in operation for more than 100 years.”
Wealth from the energy business can transform counties such as St. Clair, which has a population of 65,000 and a $15 million annual budget. State law mandates that drillers pay a tax on their energy production. Last year, for example, Tuscaloosa County collected $9 million from oil and gas companies. That’s a drop in the bucket compared with what St. Clair is looking at if production begins.
The finds in St. Clair are part of a larger energy-rich geologic formation that runs north through Etowah County and into northern Georgia, said Meadows, who began studying the area in the late 1980s. The formation has been ignored until recent price increases of natural gas made it economically feasible to begin production.
The holdup has been the shale rock. The natural gas is compressed into it, and retrieving it requires expensive techniques.
Price increases in 2005 sent natural gas to a record high of $15 per million British thermal units. Energy companies such as Virginia-based Dominion Resources have been paying landowners as much as $500 per acre for the right to explore and produce, according to an adviser who represents property owners.
The companies also are offering an 18.7 percent share of eventual production revenues. Traditional natural gas offers in Alabama have been for $150 an acre and a 12.5 percent share of production revenues, the adviser said.
Birmingham-based Energen Corp., a gas and oil exploration and production company, has acknowledged in recent months that it has been buying shale land in Alabama. It owns 126,000 acres, but won’t say where, said spokeswoman Julie Ryland.
The scope of the new gas field is wide. Last month, the Oil & Gas Journal reported that energy companies were also seeking leases from property owners in Cherokee and Etowah counties.
“Some people here think it could be as big as the Barnett, but it’s still an unknown quantity for now,” said Tom Beaube, owner of Ashville’s Braswell Realty, who has leased 80 acres to Dominion Resources.
Beaube said Dominion, which operates Virginia’s largest electric utility, has been working his land for about two years. None of his wells is producing, Beaube said. But Dominion has asked the Alabama Oil and Gas Board for permission to begin widespread production.
Cascades of cash aren’t imminent, though. It took many years for drillers to extract gas from Barnett Shale. Only recent improvements in using pressurized water to fracture the rock and release the gas made it profitable. Meadows said no one is sure how or if that technique will work in Alabama.
If it all works out for St. Clair County, two-lane U.S. 411 will be jammed with roughnecks erecting wells and bulldozers clearing ground for a new pipeline. Ashville, population 1,700, will be expected to feed the workers and fuel the machines.
“There is no question that the economic impact would be great for our schools and our community,” said Beaube, the Ashville landowner. “But we are concerned about the economic impact and the potential nuisance. I hope we can find an equitable balance.”