Cherokee Horn Community Forum

Driving Change

Kudos to the City of Dallas for ordering 182 natural gas powered Honda Civic GXs. This is the largest single order to date for the Civic GX. Previously, the city of Oakland, CA purchased 58 for pool vehicle use. And what a car!

Dallas joins Los Angeles and the city of New York as large cities that operate Civic GX fleets. For these fleets, natural gas offers many advantages over conventional fuels, such as lowering harmful emissions and energy consumption and reducing America's reliance on imported oil.

Substantial supplies of natural gas exist in North America and the fuel is typically 25 to 30 percent less expensive than gasoline. The GX is powered by the cleanest internal combustion engine in the world and meets the most stringent tailpipe emissions standard in existence.

The vehicle is certified by the California Air Resources Board to the Super Ultra Low Emission Vehicle (SULEV) standard and is the first and only light-duty SULEV available outside of California. The GX actually produces nearly 60 percent less hydrocarbons than the SULEV requirements.

The Civic GX is assembled exclusively at Honda of America Manufacturing, Inc. in East Liberty, Ohio. The engine and transmission are assembled at Honda's engine plant in Anna, Ohio.

An American made car that can make use of America’s abundant natural gas resources now there’s an idea that needs time on the agenda of every city council, especially across North Texas that sets atop abundant stores of Barnett Shale natural gas.

Providing for the Greater Good

Let’s take a moment for “What If?” What if, instead of a green-eyed monster that fueled land owner greed, name calling and other ugly behavior, the Barnett Shale were regarded as a bountiful windfall, an unexpected source of greater prosperity, in short, an economic blessing for the area and its residents.

According to the Fort Worth Chamber of Commerce the Barnett Shale employs three times more people than the area’s largest single employer, American Airlines does. The Barnett Shale is responsible for the paychecks of some 83,000 individuals while American supports only 25,457. This fact alone should bring the economic impact into perspective for those who haven’t given much thought to the bigger picture.

Beyond the usual focus on bonus income and royalty income there is this phenomenal new infrastructure of employment dollars constantly flowing from Barnett Shale sources. Without these shale revenues the counties in this area might be feeling the same bind that others across the country are now experiencing as the US economy reels from an historic economic crisis.

Let’s break it down even further. A single gas well requires 40 or more employees and creates $1.75 million in wages. This does not include the jobs created and wages paid to workers employed by oil field companies that provide services to the rig. It also does not include the money that flows into title companies and other businesses including hotels and restaurants as well as into commercial and residential construction. The latter two areas saw increases of 22% and 3% respectively from the previous year.

According to a report by economist Dr. Ray Perryman, projections through 2015 forecast that natural gas from the Barnett Shale will create 108,000 jobs and will contribute $10.5 billion annually to the economy.

At the end of the day, when the sun goes down on the Barnett Shale, it’s been a good day for the greater good.

Peak Bonuses and Neighborhood Coalitions

Over the weekend local news stories pointed out that although some economic downturns would be felt in the area that the economic outlook for North Texas in 2009 is better than most. For the gas industry that means that instead of all deals being off the table, companies such as Cherokee Horn are still making offers and going forward with plans to lease out areas that are relevant to drill sites that they currently own.

Based upon activity at the end of the year, it seems that residents are finally beginning to understand that holding out for five digit mineral lease offers is like trying to auction an item on Ebay with a reserve price so high that there are no takers.

At the beginning of the Barnett Shale discovery, gas companies were clamoring to get as much land in the area as possible, which drove prices up unrealistically high. When the Barnett Shale was the only shale, it created a frenzy. Just in one year, however, gas companies have a choice of more than 21 different shale discoveries in the US alone and with that broader perspective, there’s a lot of land to be had and at much more realistic prices. It was historical that the Barnett Shale was among the first to use the horizontal drilling (fracturing) technology. It was exciting to see some competitive bidding as companies put their hat in the ring to try the new technology. Remember, this shale discovery had been known about for years, but until recently we couldn't get the gas out and bring it to market with such a minimal impact.

The same companies that were upping the ante on residential property in the early days of the Barnett Shale were hedging their bets that the price of natural gas will remain high, and the Barnett would be profitable. Holding out these days doesn’t mean much now, or in the future, because a downturn like this will not just clear up and change like Texas weather.

Going forward, holdout groups are best served by working out the best deal that they can with the company or companies that actually have drill sites in their immediate area, because those are the companies that have the only interest at all in their property.

To this end, organized neighborhood groups serve a purpose when they can organize residents to sign with the company that has a drill site. This will speed up the process of actually drilling a well and having it produce clean-burning natural gas, which in turn leads to royalty checks to residents. For those who want to be part of this opportunity, we don't want you to get left out, so whether coming in in groups or individually, we want to be sure you're get to participate.

In today’s new gas economy just as in the old days, royalties are where the money is for landowners and bonuses are just that, a little something extra that comes with the deal. Anyone, who says otherwise, isn’t very attuned to the marketplace or the business of natural gas leasing.