Thursday, May 5, 2011

Whether They Like Drilling Or Not, Bradford County, Pa., Is Riding A... NATURAL GAS Tsunami

If Drilling Comes To Otsego County, A Good Lease Is Your Best Protection

The Otsego County contingent observed one manifestation of natural-gas drilling en route home from Towanda, Pa., Friday, April 29:  This rig near the New York-Pennsylvania state line.

A gas lease may be your best protection against gas drilling.
In a visit organized by the Otsego County Planning Department, a group of county officials, town and private citizens went to Dimock and Towanda, Pa., (Susquehanna and Bradford counties respectively), on Friday April 29.
I went as a private citizen, and the group (we) stayed together for the discussions.
From three stops, it appears that there is a known incidence of shallow methane gas migration at about 1,000 to 2,000 feet below the surface that can migrate up to the aquifer. It is a known problem, and as yet there is no known way to predict its location.
Based on a limited study of a different drilling system, in a different gas field the incidence of hitting shallow methane is about 2 percent. Anecdotal comments on the trip yielded both higher and lower estimates.
However, the methane exists, and will migrate. It is this methane type that is suspected in those faucets in the county that you can light.
There was common agreement among the people we talked to that the methane was released by the vertical drilling, and not by the hydrofracking. Industry claims that hydrofracking does not contaminate water wells may be true in the narrow horizontal 6,000-8,000-feet-subsurface sense of the word.
As we listened to the economic development official from Bradford County, it was clear that there were jobs, not necessarily on the rigs, but in the ancillary industries supporting the drilling.
More clear was that areas with drilling were facing a boom-and-bust scenario. Pennsylvania is studying this process. Although they were unready in Bradford County for the boom, they want to be better prepared for the bust.
Example: Subsequently I learned that all the hotels in Williamsport are full all year long, and the gas companies want to lease hotels year round. Problem: the Little League World Series is played in Williamsport every summer and they need the hotel rooms. Working with the town, the gas companies made Little League World Series week a vacation week, freeing rooms for the series.
Impact on Otsego County is different. Our baseball season is three months long. However, that coincides with low Susquehanna water. Problem: the SRBC that licenses water removal from the Susquehanna has never denied the gas companies a water removal permit, according to one person we met.
In any case, hotel rooms will get built for the boom, and lower room rates in the bust.
In Bradford County, county officials listed five things that they know now that would have made a difference three years ago when the boom started.
1. The drilling boom evolves into a maintenance phase, so don’t overbuild in the boom as it will go back to what it was before in the bust.
2. You need land-use controls, not just for drilling but for the ancillary industrial activity, and at the county level they don’t know what they can do about the environmental issues.
3. Rural roads have pinch points such as bridges and intersections. According to one Pennsylvania study, traffic will increase 4/5 times, and truck traffic will increase 10 times. One road supervisor said that he had no problems getting gas-company road damage repaired, once they figured out whom to talk to at the company.  He always had the option to close the road until he could get to fixing it. It turns out that it is cheaper for the gas company to fix the road than stop work for a couple of days.
4. At every level, you need construction/best practices standards. For example, when they started drilling in Dimock they used just steel pipe, and over time that evolved into multiple casings. Now that Shell has entered the business, Shell is setting a standard with five casings; others may use less.
5. In retrospect the Braddock County people feel that they should have done a better job educating land owners to negotiate good leases. They made the point that we own the minerals, and they come with the
land, but now we are seeing the separation of mineral rights from the land.
Why did I say a gas lease may be your best protection? A lease is a contract, and an enforceable contract for everything that is in it. For example, if you put in the lease a requirement for the gas company to test and certify the water within 30 days of signing or you keep the money and mineral rights, you can be reasonably sure they will do so.
The downside of not testing the water is a 2 percent chance of a bad well and the gas company will deny liability. The lease can contain the remediation and damages clauses. In one example in Bradford county three families claiming water well damage had to get appraisals of their homes after their water went bad. The appraised value of their homes went down by a reported 85 percent, and goodbye borrowing capacity.
For the people who don’t have leases and are incorporated into the drilling unit by proximity, they may not have the same protections as lease holders. Their major asset, their home, may lose value to a process they didn’t want, and did not receive payment for. A tenth to a quarter of an acre divided by any drilling unit isn’t going to generate more than a token payment, nowhere near the potential loss in value on their house.
The gas companies may extract gas for 30 years, and all of your rights are contained in the document you sign for the down payment when the glitter of gold is shining in your eyes. However it is that lease that may well be your only protection.

During the first stop, at the Springville, Pa., town hall, near Dimock, Roseboom Town Clerk Beth Rosenthal questions the motivation of a Dimock landowner who called cloudy water from a tap a “minor inconvenience.” 

At the second stop, the Wyalusing Overlook, Otsego County Planner Psalm Wyckoff points out rigs and gas-related facilities in the Susquehanna Valley below to county Rep. Kay Stuligross, D-Oneonta.

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