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Oil company president says environment is No. 1 concern during drilling

Posted on Wednesday, November 27, 2013 at 9:43 pm

Oil is definitely in Caroline County, and a Texas oil company president says the environment will be his No. 1 concern during drilling.

Stan Sherrill, president of Shore Exploration and Production Company, said his company found evidence of oil from test drill sites on property along U.S. 301 near the Luck Stone quarry. If all goes well, Shore Exploration could be operating productive oil wells in 2015.

But all may not go well. Two conservation groups, Friends of Rappahannock and Caroline County Countryside Alliance, have scheduled a meeting at the Bowling Green Town Hall for 6:30 p.m. on Dec. 11. Another meeting is set for 6:30 p.m. on Dec. 12 in the General District Courtroom in Montross.

Sherrill is aware that opposition to oil drilling in Caroline may be forming, he said in an interview.

However, the environment will be his No. 1 concern when drilling for oil, he said.

A news release from the two groups says, “Leases for gas and oil drilling in Caroline County cover over 40,733 acres, nearly half of the total of 84,390 acres leased in the region since 2010, according to a search of county courthouse records this summer, said FOR Executive Director John Tippett.”

Tippett, in the FOR news release, said, “We’re getting questions about what leasing means for landowners and the community. The workshop (on Dec. 11) is designed so that landowners and others can learn more before they have to make any decisions.”

Shore Exploration has already signed seven-year leases for over 40,000 acres at $15 an acre in Caroline to do testing. Shore has spent over $600,000 on leases in Caroline and its outskirts. Much of the acreage is farmland.

It costs from $6 million to $8 million to dig one oil well, but a productive oil well can produce $12 to $24 million worth of oil, and the farmer would receive one-eighth of the gross revenue, Sherrill said. “Some of these farmers and landowners will get $3 million and even more, depending on production,” he noted. Once drilling starts, it takes five or six weeks to get a site operational. “The farmer gets his money as soon as we get our money.”

The oil would probably go to refineries on the East Coast. “We know we have ready markets,” he said, adding that Caroline is likely to produce a sought-after “light sweet oil.”

According to Wikipedia, “High-quality, low-sulfur crude oil is commonly used for processing into gasoline and is in high demand, particularly in the industrialized nations. Light sweet crude oil is the most sought-after version of crude oil as it contains a disproportionately large fraction that is directly processed into gasoline, kerosene, and high-quality diesel. The term “sweet” originates from the fact that a low level of sulfur provides the oil with a mildly sweet taste and pleasant smell. Nineteenth century prospectors would taste and smell small quantities of oil to determine its quality.”

The state allows the county to levy up to a 3 percent severance tax because “the oil is severed from the ground,” Sherrill said. “That could be millions of dollars every year for Caroline County,” he noted, adding that it could mean more money for new school buildings.

“I have heard that your county is deep in debt,” Sherrill said. “The community needs to realize oil and gas will benefit everybody. Some counties in Southwestern Virginia have nice school buildings as a result of oil and/or gas severance taxes.

“Environmental groups want people to think this could be disastrous,” Sherrill said. “But the No. 1 thing on our mind is the environment. This is Virginia’s Tidewater area. Everything here runs to the Chesapeake Bay. We know the environment is all-important. If anything happens to the environment, Virginia will shut you down.”

The Virginia Department of Mines Minerals and Energy (VDMME) sends inspectors out to monitor the drilling process, Sherrill said. When drilling through areas of groundwater in Virginia, an oil company is required to install a steel casing that is enshrouded in concrete. A pipeline for the oil is then inserted in the steel casing and this prevents oil from ever mixing with groundwater.

The FOR release says that Gwen Lachelt, a Colorado commissioner, will attend the meeting and discuss the shale gas and oil industry and answer questions from landowners who have leased their land, are thinking about leasing or are just concerned about landowner rights and the impacts of drilling on their land and in their community. She founded the national EARTHWORKS Oil and Gas Accountability Project to expand awareness of landowner and community options after more than 1,000 gas wells were proposed in her County of La Plata.

Caroline County, Essex, King and Queen, King George and Westmoreland counties are in the Taylorsville basin. The basin was formed during the Triassic geologic period, which was 200 million to 250 million years ago, when continents separated. The rift created a fresh water lake that was 10,000 to 14,000 feet deep and stretched from Richmond to Maryland, Sherrill said. Dead plants and animals, including dinosaurs, from that period sank to the bottom of the lake. Millions of years, combined with high pressure, turned the plants and animals into oil.

“Trying to compare the Taylorsville basin to something in Colorado is wrong,” Sherrill said.

The U.S. Geologic Survey says, “The basin formed along the continental margin in response to the regional uplift, extension (rifting), and crustal thinning that occurred during the early opening of the Atlantic Ocean in middle Carnian (Late Triassic) time, approximately 227 million years ago.”

Sherrill said his company will be looking for natural gas, and FOR representatives have concerns about that. “Horizontal drilling technology, known as hydrofracking or fracking, uses high pressure to force millions of gallons of water, some sand and chemicals a mile or more underground to break up shale rock and release gas or oil,” says the FOR news release. “The drilling process is widespread in the Marcellus shale in West Virginia, Pennsylvania and Ohio.”

Opponents of fracking say it causes groundwater contamination. Some residents in other states say fracking chemicals carry a strong stench. Other complaints focus on mechanical noise during the night, along with truck convoys that damage roads.

Sherrill said the VDMME has already allowed thousands of fracking sites in Virginia—all free of groundwater contamination.

What would it take to stop Shore Exploration in Caroline? “It’s not impossible that we would pack up and leave if they fight enough,” Sherrill said. He cited the case of a Houston-based energy company, Carrizo Oil & Gas, Inc., which was on its way toward extracting gas from the ground in Rockingham County, Va.

All that Carrizo needed was a special land-use permit from the Rockingham County Board of Supervisors. By denying that one permit, “the board of supervisors were able to stop it,” Sherrill said.

A VDMME official said his department could issue a permit for Shore Exploration to drill in Caroline, Sherrill said. “But the Department of Mines Minerals and Energy also said you need the support of the Board of Supervisors.

“We want to get with the supervisors and educate them,” Sherrill said. “We’ve got to go through some public hearings.”

Shore Exploration was formed to find oil on the East Coast, Sherrill said. So far, the company has drilled in Georgia, South Caroline and North Carolina. Caroline County appears to be the most promising place so far. “It’s beyond any doubt that we have oil and gas in Caroline. The question is whether it’s there in commercial quantities.”