North Georgia becomes a hunting ground for natural gas

Spalvieri is offering $5 an acre to landowners who’ll lease him land for a test site. It little matters to Spalvieri that nary a drop of natural gas has ever been commercially produced in Georgia. Texas we ain’t.

But Spalvieri is no dummy. He drilled a test well outside Dalton five years ago that promises a gusher when — if — gas prices rebound and he can figure out a way to get it to market.

Rome, like Dalton, abuts the Conasauga Shale Field, a geologically enticing oil and gas belt running from central Alabama to southeast Tennessee. Prospectors, including one large Texas company, periodically plunk down big money to lease land above the Conasauga for exploration.

Frank and Julie Windler wish they’d disappear. Retirees, and refugees, from Atlanta, the Windlers live along a pristine, tree-lined stretch of the Oostanaula River near where Spalvieri wants to drill. They fear that the river or the groundwater will be contaminated, especially if the wells are fracked via huge injections of water and chemicals into the ground to pry free the gas.

“We’re still very much in a learning curve; we don’t know what we don’t know,” said Julie Windler, 67, a former TV producer. “It could have a positive economic impact. It could also have a negative environmental impact. You just don’t picture something like this in North Georgia.”

Spalvieri does. He’s playing the long game, exploring for gas when it’s cheap in anticipation of full-on production when it’s not. Meantime, he watches the ever-cyclical natural gas market, studies the geology of the Southern Appalachian region and lays the groundwork for a future bonanza.

“He’s crazy like a fox,” said John Absalon, a retired geoscientist and part-time educator at the Tellus Science Museum in Cartersville. “He really does know what he’s doing. There are some factors here in Georgia that work to his advantage. Ultimately, if he keeps at it, he’ll be successful.”

On the radar since the ’50s

Wildcatters have been drawn to Georgia since the 1950s, incredulous that the biggest state east of the Mississippi River hasn’t produced a gusher. Georgia was so keen to create an oil industry that it offered a $1 million reward for the first sustainable hit. The bounty, now lowered to $250,000, remains unclaimed.

Explorers near-salivate over the potential oil and gas riches that lie beneath Floyd, Chattooga, Walker and Whitfield counties. The northwest corner of Georgia sits atop a shale field maybe 15,000 feet thick in spots and holds, possibly, a lucrative gas reservoir that could one day rival the famed Bakken Shale Field in North Dakota.

Bill Thomas, a geologist who taught at Georgia State, estimated that 625 trillion cubic feet of gas, about as much as the Bakken, remains locked within the Conasauga underneath Georgia. A similar amount attracted wildcatters, landsmen, drillers, roustabouts and a couple of major oil and gas producers to northeast Alabama in 2007.

They sucked 187 million cubic feet of gas from the ground via 18 wells, according to the Alabama Oil and Gas Board. The gas was compressed, put in a pipeline and shipped to an energy-thirsty public willing to pay $13 per million BTU.

The price fell to almost $2 per million BTU two years later and the Alabama wells were soon capped. (It was $2.67 last week.)

Spalvieri, again, saw opportunity. His company, Buckeye Exploration, got state permits to drill test wells outside Dalton in March 2010. He lined up 130 landowners to lease him the mineral rights to 7,500 acres.

One well proved too wet, finicky and expensive, so Spalvieri closed it down. He went 5,000 feet deep on the other well — nicknamed Daphne-Mayfield — and hit gas, oil and methane in sufficient quantities to, one day, bring to market.

Meanwhile, 50 miles away near Cave Spring, a Texas real estate and energy conglomerate gobbled up the mineral rights to 67,000 acres in Floyd and Chattooga counties. A permit stated that Forestar planned a 14,000-foot-deep well — the John Wayne-Mudcreek No. 1. — the deepest ever in Georgia. It wasn’t drilled, though.

Forestar, rumored to again be sniffing around Rome, couldn’t be reached for comment.

“The Southern Appalachians are so unexplored, but it’s so promising,” said Spalvieri, who has drilled 300 wells in Oklahoma, Tennessee, Kentucky and Georgia and hit upon six producers. “And there’s a demand here in northwest Georgia that could be met with locally produced natural gas and be beneficial to the economy. Demand is only going to grow.”

Potential for fracking raises concerns

So, too, is opposition. Spalvieri, 61, met in a Dalton hotel last month with potential leaseholders eager to hear his plans. He spoke of jobs; the 4,300-acre target area north of Rome; state permits (but not, to the dismay of his audience, local zoning permission); and the $5 an acre he’s offering landowners for the right to drill on their property.

First audience question: Are you going to frack these wells?

Residents fear the toxic mix could leach into the groundwater or the Oostanaula.

Test wells don’t require fracking. Full-bore gas drilling, though, is another matter. Spalvieri, in an interview, wouldn’t rule out fracking in the distant future.

“If I were buying property up here and I heard they were doing fracking, I’d move on,” said Frank Windler, 75, a chemist who worked in the state crime lab in Atlanta. “Maybe in remote areas fracking is the practical thing to do. But we’re concerned about property values and the water we need. We’re concerned about Floyd County.”

He added, “I wouldn’t let a truck come down my road for $5 an acre.”

Absalon, the geologist, says the Conasauga Shale Field is already rife with fractures, so gas could be extracted easily via conventional drilling and without fracturing. A bigger problem, he said, is getting the gas to market. Georgia, unlike North Dakota where a network of drilling rigs, pipelines, processing plants and compressor stations appeared almost magically in the past decade, has very little gas infrastructure.

“It takes a lot of people to build a successful well, and none of that is here,” Absalon said. “That really is a handicap.”

Time, though, may yet again be in Spalvieri’s favor. Construction of a 110-mile gas pipeline from Dalton through Atlanta’s western flank could begin next summer. Two major interstate pipelines are planned through eastern and southwestern Georgia.

Terminal owners along the Atlantic and Gulf coasts, including Elba Island near Savannah, are petitioning Washington for permission to export gas to Europe. The Southern Co. is replacing much of its electricity generated by coal with gas. And energy experts predict the price of gas will begin rising next year.

Spalvieri wanted to begin drilling by Thanksgiving. Opposition, though, may keep the first bit from hitting rock until March — if ever.

“The leasing in Floyd County is going slow,” he admitted. “If nobody leases you the land or gives you a chance, then people will throw up their hands and say it’s too difficult to drill here. I wonder if that’s why nothing has been done in the past.”