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Shale-gas drillers turn to Georgia



Published: Mon, April 1, 2013 @ 12:00 a.m.

Associated Press

DALTON, Ga.

Trillions of cubic feet of natural gas believed to lie below the hills of northwest Georgia have remained virtually untouched and unwanted — until now.

Shale-gas drilling is slowing across the country, but a handful of companies are poking around this corner of the state looking for the next natural-gas play. If they succeed, Georgia could join the ranks of states reaping jobs, revenue and fears of environmental damage from energy production, The Atlanta Journal-Constitution has learned.

It has been at least 30 years since Georgia — which has never produced a drop of oil or natural gas — has seen as much exploratory activity.

An Oklahoma-based company that leased 7,500 acres outside Dalton has two test wells in place and plans another nearby. Seventy miles away, near Cave Spring, a Texas oil, gas and development conglomerate plans a deeper well.

At least three other companies recently have researched the so-called Conasauga shale field, a 20-by-100-mile swath of farm and forest that runs from Alabama across Georgia and into Tennessee.

Georgia joins Tennessee and North Carolina as Southern states newly popular with wildcatters and major gas and oil companies.

“They know that there’s gas here,” said Rick Huggins, whose mineral-rights lease outside Dalton recently was re-upped by the Oklahoma explorers. “But it’s all speculation. It’s like old Forrest Gump said, ‘You don’t know what you got until you open up that box of chocolates.”

The timing is odd. A gas glut and low prices make extraction economically unfeasible in many parts of the country. Production has throttled down in Pennsylvania, Texas and Kentucky.

Northeast Alabama raged with gas fever until 2010 when low prices and technological hurdles cooled the interest. Georgia doesn’t have the infrastructure — the trucks, tanks, pipes and refineries — needed to transform a liquid into a fuel to heat homes and cook food.

Oil and gas men are gamblers, though, looking months or years ahead. Energy analysts predict natural-gas prices will rise again as it increasingly replaces coal and other petroleum products. And where there’s gas, there’s usually oil and other money-making liquids nearby.

Jerry Spalvieri likes the odds. A wildcatter, or independent explorer, Spalvieri is betting maybe $2 million that the Conasauga field in Northwest Georgia will give up liquid riches.

“You have to be a gambler, because I look back and see where we lost a couple of hundred thousand dollars here and there and realized we shouldn’t have done that,” said Spalvieri, CEO of Buckeye Exploration of Chandler, Okla. “But the fun is in the hunt.”

In Alabama, the Conasauga shale field contains 625 trillion cubic feet of gas, according to Bill Thomas, a geologist who taught at the University of Kentucky and Georgia State. A similar amount could be underground in northwest Georgia, he added.

Wildcatters have poked around the state since the 1950s. Georgia officials in 1958 were so determined to create an oil industry that they offered a $1 million reward for the first gusher. The bounty, since reduced to $250,000, remains unclaimed.

Most drilling took place on the Coastal Plain, below the so-called Gnat Line that runs from Columbus to Augusta. Between 1903 and 1979, according to the Bureau of Land Management, 163 wells had been drilled in Georgia.

“All wells have been dry,” the BLM said in 2008. “No oil and gas wells are forecast to be drilled in Georgia in the next 10 years.”

Spalvieri received Permit Nos. 166 and 167 for his test wells outside Dalton in March 2010. Alabama, with on- and off-shore gas and oil wells, has issued 16,700 permits since 1945, according to the state’s oil and gas board.

Drawn by the geologic similarities embedded in the Conasauga formation, Spalvieri investigated Georgia in 2007. Within two years Buckeye and a partner had leased 7,500 acres of mineral rights from 130 landowners. Hundreds of acres remain under contract. The leases allow unlimited drilling on the property.

“Nobody was very optimistic about it, including the state. It was like I was being a bother to them,” said Spalvieri. “But it just staggers me that the largest land area in the East had never had a producing oil or gas well.”

Buckeye narrowed its search to two properties about 7 miles northeast of Dalton. They began drilling in the Good Hope community in late 2010 but stopped after a few hundred feet once rivers of water intervened.

Buckeye drilled 5,065 feet at the other well a few miles away. They needed to go deeper. Spalvieri will soon bring in another rig to reach 9,000 feet. He’ll also re-engineer his first well and dig another test well.


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