I received a Force Majeure letter from Fortuna & had three phone
conversations with Mr. Whedbee and wrote a similar letter (see below) to
Fortuna. While he insisted that Fortuna was within its rights to invoke
the Force Majeure, I am happy to report that my lease expired last Monday
& no Force Majeure was filed. However, Mr. Whedbee told me that Fortuna
could still invoke Force Majeure even after my lease expired. I guess
I'll find out if this is true.
Teri
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To All:
At this time many of you may have received a letter from Fortuna
threatening to declare Force Majeure to halt or toll your expiring lease
until such time as drilling permits can be reliably obtained.
Also they request you to consider extending the primary term of your
existing poor lease with NO Additional money in consideration for a
royalty increase to 15%. Wow has Fortuna not heard that the going rate
is more like $3500 per acre and 20% royalty.
A brief call to the Department of Environmental Conservation has revealed
that there is no ban or moratorium on such drilling, therefore there can
be no Force Majeure. For your convenience the response is below the line
the areas in red requires you to fill-in or check the dates in the
Fortuna letter. To generate your own letter simply copy the text below
the line and paste it into your word processor program. I have also
engaged the Attorney General's Office on the legality of both Fortuna and
Chesapeake's actions.
Your Name
Your Address
Today's Date
Mr. David W. Whedbee
Supervisor, AcquisitionLand
Fortuna Energy Inc.
337 Daniel Zenker Drive
Horseheads, New York14845
Re: Oil & Gas Lease to Fortuna Energy Inc.
Dated: ______
Town: ______
County: Chemung
Tax Map Parcel ID #(s): ______
Dear Mr. Whedbee:
Thank you for your letter of (whatever date is posted)
As you are aware the formations which you have leased from us in the
lease are not confined to the Marcellus Shale. There are many formations
underlying our property to which you could drill, including the Trenton
Black River, the Oriskany, the Herkimer, and various other formations.
The fact that you are having difficulty obtaining a horizontal well
drilling permit in the Marcellus Formation until the supplemental Generic
Environmental Impact Statement is generated by the State is irrelevant to
your ability to drill in any other formation. You have also erred in your
representation that there is a current ban on the issuance of Marcellus
Shale drilling permits under Article 23 of the New YorkState
Environmental Conservation Law. A brief call to the Department of
Environmental Conservation has revealed that there is no ban on such
drilling, but that if you wish a horizontal drilling permit in either of
the black shales, the Marcellus or the Utica, you must perform a site
specific Environmental Impact Statement as required under the New York
State Environmental Quality Review Act. This requirement has always been
in place in New York. The Generic Environmental Impact Statement only
shortens the procedures necessary for the approval of the Environmental
Impact Statement required for each well. That is because the Generic
Environmental Impact Statement covers most drilling techniques.
As you are aware, the horizontal drilling technique with its hydrofracing
and the use of undisclosed chemicals and biocides was not covered in the
original generic Environmental Impact Statement. As a consequence, New
YorkState, to make your job easier, has entered into the process of
formulating a supplemental generic Environmental Impact Statement to
include those concerns.
The important point to remember is that no ban exists on permits. What
exists is that no driller or operator can shortcut the SEQRA review
process by piggy-backing on the generic Environmental Impact Statement
when it comes to the black shales of Marcellus and Utica. The capacity to
obtain a permit is well within your control, as you have the right and
ability at any time to perform a site specific Environmental Impact
Statement.
As a consequence, your Force Majeure letter is not Force Majeure at all,
but amounts to an attempt to extend artificially a lease which will
otherwise expire by its terms.
Lastly, you have threatened to file some sort of document in the County
Clerk's Office putting the world on notice that you are attempting to
extend our lease. Please be aware that we would regard such improper and
illegal filing to be a defamation of our title, among other legal wrongs.
This letter is to advise you not to record any documents in the County
Clerk's Office, and if you do we will regard it as not only negligent but
a possible intentional attempt to damage our title and our ability to
market our land. As a consequence, you could be subject to punitive
damages.
We presume that you will act prudently and not damage our title in any
way and that if you wish to drill a well you will follow the required
procedures of the New York State Department of Environmental Conservation
and perform such site specific Environmental Impact Statements as are
required under the State Environmental Quality Review Act. None of these
are beyond your control, but are required by statute for all drillers.
I hope this has adequately responded to your letter of
We wish you the best of success in complying with New YorkState
Department of Environmental Conservation Regulations, the SEQRA process,
and in your drilling efforts.
Very truly yours,
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