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Members of Landowner Group in Broome County, NY Receive First Payment for Lease Deal

Stop the press: There’s actually been some GOOD news from New York State on the drilling front. Inflection Energy has just issued payments to some 130 residents in the Town of Maine (Broome County, NY) to secure drilling rights to their land, when/if drilling ever begins in New York State.

The deal, announced in February, calls for $6,000 per acre over eight years. About 130 residents with more than 3,000 acres have begun receiving checks for the first year’s payment of $1,000 per acre, said Robert Wedlake, a lawyer with Hinman, Howard & Kattell representing the group, called the South Maine Millennium Coalition.

The Inflection deal calls for 20 percent royalties “subject to certain deductions,” according to a press release from Wedlake and Inflection.*

*Binghamton Press & Sun-Bulletin (May 9) – Town of Maine residents getting $3 million for gas rights

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Cornell Hydraulic Fracturing Expert Headlines First Meeting of New York Residents Against Drilling (NYRAD) in Vestal, NY

Ingraffea_Anthony Nearly one week ago, on March 31, MDN attended the kickoff meeting of New York Residents Against Drilling (NYRAD) at the Vestal Public Library in Broome County, NY. No, MDN is not anti-drilling! We attend to listen and learn. The drilling debate is increasingly political in tone. Those of us who support drilling need to listen to those in our communities who oppose it—as a courtesy, to be sure we have not missed important information that informs our own opinions, and so we understand our opponents’ arguments in this debate—to be able to intelligently respond to their (often inaccurate and overhyped) accusations.

The meeting room at the Vestal Public Library was filled to capacity for the meeting with about 120 people attending. Local news media was there, as well as cameras from (presumably) NYRAD themselves. MDN observation: As was the case when DISH, TX Mayor Calvin Tillman recently visited, there were a number of balding men with gray-haired ponytails in the audience. MDN continues to posit the theory that many 60s hippies have found a new cause célèbre that now energizes them—gas drilling.

The meeting was opened by a NYRAD official who introduced the evening’s main speaker, Professor Anthony Ingraffea. Dr. Ingraffea is a professor of civil and environmental engineering at Cornell University. His Ph.D. is in rock fracturing mechanics. He has done twenty years of research on hydraulic fracturing for companies like Schlumberger, Exxon and the Gas Research Institute. If anyone knows how rock fracturing works, it is Dr. Ingraffea. I eagerly anticipated what he would say about hydraulic fracturing and whether or not the process contaminates water supplies, a commonly leveled charge by drilling opponents.

Dr. Ingraffea is an accomplished speaker. He is equal parts comedian and expert, and he knows how to “work a crowd.” I can easily imagine that he’s a favorite professor at Cornell, one whose classes fill quickly. In his opening remarks he admitted he feels passionately about the issue of drilling in New York State, and that he is opposed to it. He opened his talk with a technique often employed by those who are anti-drilling. He mentioned he loves fishing for trout in New York’s streams and he asked the audience a question: “Would you like to keep fishing in New York State?” The implication is that if drilling begins, trout fishing is finished. It’s a non sequitur—a statement that does not follow from the premise. In the course of his presentation he never once connected any dots that drilling activity would lead to poisoning of streams and the end of trout fishing. This was a tip-off that the evening might disappointingly hold more emotional statements rather than factual statements. Unfortunately, that’s exactly how it turned out.

Continue reading

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Binghamton Press & Sun-Bulletin Runs Wall-to-Wall Coverage of Marcellus Drilling Debate

The Sunday, March 28 Binghamton Press & Sun-Bulletin (Broome County, NY) devoted a number of pages to the issue of drilling in the Marcellus Shale. The chief writer for the P&SB on these matters, Tom Wilbur, is anti-drilling, and it shows in his articles. As people on the anti-drilling side of the debate often do, they resort to unsubstantiated “facts” and vague nightmare scenarios. Today’s articles were no exception.

On the front page we have the following articles:

Marcellus Shale: Is it safe to drill?
An abridged (and mostly one-sided) history of the shale gas drilling debate in the Southern Tier region of New York and Northeastern PA. Wilbur identifies some of the issues being debated, with the obligatory mention of Dimock, PA and the the isolated (only?) case of a driller who didn’t follow procedure and methane (not chemicals, but natural gas) migrated into drinking water supplies for 12 families. Dimock is the rallying cry for many who oppose drilling. He ends the article with the vague threat that anti-drillers will tie up the right to drill with legal harassment for as long as they possibly can. I believe him on that one.

Landowners face fight over NYC watershed
Politicians in New York City are making political hay out of the prospect of drilling with statements that drilling anywhere in the Catskill watershed area must be prevented at all costs because if the water supply for NYC is contaminated, they would have to install filters costing into the billions. The politicians from NYC want horizontal drilling banned in New York State as a preventative measure. And they’re threatening to tie up drilling with lawsuits. No one wants to pollute the City’s water supply! And no one will. What’s conveniently left out of the story by Wilbur is the fact that there is only one company, Chesapeake Energy, with any leases signed in the watershed, and that’s for 5,000 acres. Oh, and Chesapeake voluntarily said they would not drill in the watershed.

Continue reading

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While Albany Dithers on Marcellus Drilling, Landowner Profits Evaporate

George Phillips, a Republican candidate for the 22nd Congressional District in New York State, penned a viewpoint article in today’s Binghamton Press & Sun-Bulletin on the topic of drilling in the Marcellus Shale. In short, Mr. Phillips is pro-drilling while the man who currently holds that office, Maurice Hinchey (Democrat) is anti-drilling and supports federal government interference. While the article takes political aim at his opponent, Mr. Phillips makes strong arguments on why drilling should commence—now.

He closes his article with this:

But the window of opportunity may be closing. As more areas of the country move forward with plans to develop these types of resources, prices naturally fall as supply increases. This leaves our residents waiting, watching potential profits and opportunities evaporate as others reap these benefits while our government dithers.*

Ah yes, the dithering officials in Albany. Albany needs to move forward now. Other shale plays are becoming active, and the Pennsylvania Marcellus is red hot. If Albany drags on much longer with their obstruction of drilling, landowners will be the ones who suffer.

We also hope, along with Mr. Phillips, that the federal government (and Mr. Hinchey) stay out of states’ business.

*Binghamton Press & Sun Bulletin (Mar 8th) – Clear way for drilling

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Vestal, NY Landowner Coalition Still Shopping for a Deal, Comes Down on Their Price

Binghamton Press & Sun-Bulletin (Feb 20)
Vestal Coalition gives broker an extension to get deal on Marcellus Shale drilling sites

A Vestal, NY landowner coalition with some 550 people has given their designated broker another few months to try and negotiate a lease on behalf of the group. According to the article:

Members of the group, called the Vestal Coalition, have agreed to settle for a minimum of $5,750 an acre, plus 20 percent royalties, for a five-year lease of mineral rights, and a three-year extension.

The opening offer was $7,500 an acre and 25 percent royalties. There were a few counter offers, but no deals for those terms.

Drilling companies, for now, are in a holding pattern for New York deals until the New York State Department of Environmental Conservation issues drilling guidelines. Once that happens, and once permits start to be issued, the Vestal Coalition expects to get a deal done.

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DISH, Texas Mayor Calvin Tillman Visits Binghamton – Marcellus Drilling News was There

This will necessarily be a long article. As a regular reader of Marcellus Drilling News, you have come to expect brief articles highlighting information useful for landowners and other interested parties in the Marcellus Drilling debate. Last night, your faithful scribe attended a local meeting in Binghamton, NY at Binghamton’s East Middle School, to hear DISH, Texas Mayor Calvin Tillman and his views on natural gas drilling. I went with an open mind to evaluate whether Mr. Tillman and the other speaker of the evening—lawyer Helen Slottje from Ithaca—would present information that would challenge my views that drilling can be done safely when it’s done right.

I would say it’s a fair statement that if you went to the meeting as a supporter of drilling, or as an opponent, your view was not changed by the presentations. I attended on behalf of the average landowner, even though I do not have land for lease in the Marcellus myself. I tried to be your eyes and ears at the meeting. Disclaimer: I am in no way affiliated with, nor compensated by, anyone in the drilling debate on either side of the debate. I’m just an interested blogger and advocate for landowners and the rights of private property owners.

This is an account of what happened last night…

Continue reading

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Susquehanna River Basin Commission Monitors Waterways for Contamination

WETM-18 TV (Feb 15)
Gas Drilling Prompts More Water Quality Monitoring

Due to concerns over drilling in the Marcellus and discharge of wastewater from drilling operations into area waterways that ultimately find their way to Susquehanna River, the Susquehanna River Basin Commission has placed monitoring devices in the Twin Tiers area of New York (Binghamton and Elmira). So far 10 monitoring devices have been installed, with another 20 to be installed by June.

Marcellus Drilling News applauds the efforts of the SRBC to ensure local waterways remain contamination-free from drilling activities. Everyone wins when there is vigilance and monitoring.

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Millionaire Landowners – In New York State?!

Crain’s New York Business (Nov 1):
The new gold rush

With heavy dollops of anti-drilling sentiment (so the reporter keeps his job), this article is worth a read because of the fountain of good information about economics for landowners in the Marcellus Shale. The theme that runs through it is the story of a truck driver with 120 acres outside of Binghamton, NY who stands to become a millionaire many times over if and when drilling starts to take place in New York. The truck driver, Jeff Decker, is not allowed to divulge the terms of his upcoming lease, but it’s thought to be in the neighborhood of $700,000–and that’s just the signing bonus for his 120 acres. If they drill on his property and he gets, oh say a 20% royalty, he’s easily into millions of dollars.

This nugget of useful detail from the article:

An 80-acre swath of the Marcellus can eventually produce $42 million worth of natural gas, says Dean Lowry, president of Fort Worth, Texas-based Llama Horizontal Drilling Technologies. With drilling leases now giving landowners 20% royalties on productive wells, Mr. Decker could become a millionaire several times over.

Drillers, whose cost to develop an 80-acre parcel is about $4 million, would also prosper. “Fifty percent of the gas could be extracted in the first three or four years,” Mr. Lowry says. “You get your investment back in the first year to 18 months. Then you get seven to nine times your money over the next 20 to 25 years.”

I would also caution about what’s coming in the way of taxes when drilling finally does start in New York. This rather sobering paragraph from the article:

In New York the Paterson administration, heeding the cries of landowners and local officials in economically depressed upstate communities, has issued draft regulations to allow it here. Landowners are keen to lease their property. Cash-strapped municipalities are eager to tax the extracted gas. Business groups say drilling would bring jobs and jolt local economies. The state would collect more income tax and, if it imposes one, a tax on gas production.

You can expect local municipalities to not be able to resist putting their hands into landowners’ pockets to relieve them of some of their new found money. And New York State will undoubtedly not be able to resist either. Politicians are like drug addicts who need an economic “fix”. Just a warning so you’re not surprised when it happens.

We also have the obligatory couple of paragraphs on “don’t you dare drill in the Catskill watershed” for fears of contaminating New York City’s water supply. The stated reason is this:

New York is one of five big cities not required by the federal government to filter its water, and revocation of that waiver would necessitate a filtration plant costing $10 billion to $20 billion.

It seems Crain’s New York Business is a bit behind the eight ball. Chesapeake Energy, the only leaseholder with land in the Catskill watershed, has already said they won’t drill there. Makes no difference, this particular political issue is just too juicy to not use–even if it’s no longer an issue.

We learn from this article that Hess is New York’s largest energy company, and that Chesapeake Energy and Fortuna Energy are the most active leasing companies (so far) in the Marcellus Shale in New York.

Overall, some good info in this article, but as always with mainstream media, be sure to read between the lines.

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Vestal Landowner Group Shops for a Drilling Contract

Binghamton Press & Sun-Bulletin (Oct 28):
Vestal landowners offer lease plan for gas drillers

The Vestal Coaltion, a group of landowners in Broome County, NY, has created a draft lease agreement on behalf of its members and is now shopping it, looking for an energy company to sign the lease. According to the Press & Sun-Bulletin:

A coalition of Vestal landowners has a deal for you: Roughly $46 million and 20 percent royalties for mineral rights to about 8,000 acres.

A group of about 400 property owners signed a lease that would make it attractive for energy companies to do business with them, said Marty Leab, a coalition organizer. They have commissioned Dean Lowry and Llama Horizontal Drilling to find a taker in 90 days or less.

Specifically, the lease would pay landowners a minimum of $5,750 an acre, plus 20 percent royalties, for a five-year lease of mineral rights, and a three-year extension, according to a copy of the lease obtained by the Press & Sun-Bulletin.

According to the website for the Vestal Coalition, they’re still accepting new landowner members. Visit their site: www.coalitionconnection.com.

Also, this tidbit of older news from the article, but still valuable to know:

The market heated up as natural gas prices rose in spring 2007, and XTO bought mineral rights to land in the Deposit area for about $2,500 an acre. Since then, offers in the region have shot up to between $3,000 and $6,000 an acre and 20 percent royalties

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First NY DEC Meeting on Proposed Drilling Regulations Held in Sullivan County

Middletown Times Herald-Record (Oct 29):
300 folks pack Sullivan fracking forum

The first scheduled meeting for public comments on the draft Supplemental Generic Environmental Impact Statement (SGEIS) held by the New York DEC happened yesterday in Sullivan County, NY. According to the Middletown Times Herald-Record:

Most of the speakers in the standing-room-only, mostly anti-drilling crowd of more than 300 at Sullivan County Community College said the proposed Department of Environmental Conservation rules for drilling of the Marcellus shale fall short.

The anti-drilling standard tactic is to delay drilling in hopes of building support to get it banned altogether. This was evidenced at the meeting. With regard to extending the DEC’s public comment period (which would further delay the start of drilling):

Paul Rush, deputy commissioner of the New York City Department of Environmental Protection, called for 45 extra days.

Joe DiPane of Callicoon called for six months, since the shale “has been formed underground for eons,” he said.

There are two more scheduled meetings, Nov. 10 in New York City and Nov. 12 in the Binghamton area. A third meeting is yet to be arranged in the Elmira area. (See Public Hearings on the New York Draft SGEIS for Marcellus Shale Drilling for details.) Landowners need to attend and make their voices heard!

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Hess Offering 20% Royalties and Deal Worth $66.5M to Conklin Landowner Group

Binghamton Press & Sun-Bulletin (Oct 16):
DEC hearings to allow public comment on natural gas regulations

In an article about the upcoming hearings being held by the New York DEC about draft drilling regulations, we have this tidbit of interest to landowners negotiating with drilling companies:

Others are eager for the state to complete its review so Marcellus permits can be issued early in 2010. Among them is Dan Fitzsimmons, an industry supporter and owner of about 180 acres in Conklin, who said extending the comment period would create unnecessary delays.

“They have to stick with their timetable, or they are going to have a lot of angry residents,” said Fitzsimmons, who leads a coalition of landowners in the towns of Binghamton and Conklin. Hess Corp. has offered the group a deal worth about $66.5 million, plus 20 percent royalties on production.

We also have this obligatory anti-drilling paragraph from the P&SB anti-drilling writer Tom Wilbur:

Marcellus development has the potential to produce several thousand wells in Broome County and change the physical and economic landscape. Unlike traditional wells, which are vertical, companies use larger equipment, more water and more chemicals to drill horizontally through bedrock to release gas in the Marcellus.

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Public Hearings on the New York Draft SGEIS for Marcellus Shale Drilling

New York Dept. of Environmental Conservation (Oct 13):
Press Release: DEC Schedules Public Hearings on Marcellus Shale Drilling Draft SGEIS

Landowners will want to attend the public hearings being held by the New York DEC on the draft regulations for drilling in the Marcellus Shale. The regulations are called the Supplemental Generic Environmental Impact Statement (SGEIS). Why attend? To educate yourself on the regulations, and (if you’re so inclined), to offer your comments of support. You can be sure the anti-drillers will be out and vocal–so you need to be out and vocal too if you’re interested in ever seeing drilling commence in New York State. Here are the dates for hearings so far:

  • Wednesday, Oct. 28, Sullivan County Community College, E Building, Seelig Theater, 112 College Rd., Loch Sheldrake, NY 12759.
  • Tuesday, Nov. 10, Stuyvesant High School, High School Auditorium, 345 Chambers Street, New York, NY 10282.
  • Thursday, Nov. 12, Chenango Valley High School, High School Auditorium, 221 Chenango Bridge Rd., Chenango Bridge, NY 13901.
  • Elmira – Corning, TBD.

The doors will open at 6 p.m. for individual questions and speaker sign up (first come, first called for commenting on the record). The public comment session will start at 7 p.m. Check the DEC web site for possible changes in time or location.

From the press release:

DEC staff will be available prior to the start of each session to answer individual questions about the format and contents of the draft SGEIS. The following procedures will guide the public hearings:

  • To accommodate as many people as possible, there will be a five-minute limit on oral presentations.
  • Speakers may supplement their oral presentations with written comments. Written and oral comments receive equal consideration.
  • Formal presentations (PowerPoint, etc.) cannot be accommodated.
  • Individuals intending to speak will be required to sign-in upon arrival and will be called in the order registered.

To view (or download) the 809-page draft SGEIS, go to this page: www.dec.ny.gov/energy/58440.html

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Fortuna and Hess Royalty & Signing Bonus Numbers

Elmira Star-Gazette (Oct 17):
Slow down in gas drilling activity allows chance for consideration

A generally anti-drilling “article” by the business writer for the Elimra Star-Gazette. But he includes some helpful and interesting information for landowners:

I’m also watching how Fortuna and Hess are slugging it out for leasing rights in the counties to our east. What started here as a 12.5 percent production royalty and signing bonuses of a few hundred dollars per acre has morphed into the 20 percent royalty figure and signing bonuses of several thousand dollars per acre being offered in Broome and the surrounding counties on either side of the border.

Landowners and landowner groups take notice! Be sure you’re getting the best prices you can from your contracts.