At least one energy firm has voted with its pocketbook that drilling will come, eventually, to New York State. Inflection Energy has just paid landowners in the Town of Maine (Broome County), NY $1,000 per acre to not bail out of the previous deal they signed.
In 2010, Inflection signed a deal that Maine landowners would receive a $6,000 per acre signing bonus over eight years plus 20 percent royalties. The initial payment was $1,000 per acre, the rest due after New York starts issuing permits for drilling. Problem is, those permits have not been issued and under the terms of the deal, landowners would have the right to vacate their leases and find a better deal later. So to keep them in the deal until permits are finally forthcoming, Inflection paid an additional $1,000 per acre (one-time payout) stipulating the landowners will not cancel their leases.
A Denver-based energy firm paid more than $3 million to landowners this week in a deal that solidified its hold on drilling rights for approximately 3,500 acres of land in Broome County.
Inflection Energy renegotiated its leases with about 150 property owners in the South Maine Millennium Coalition, according to an attorney for the coalition, paying $1,000 per acre in exchange for lease renegotiations that cancel the landowners’ ability to terminate their leases.
"Checks are in folks’ hands right now," said Robert Wedlake, a partner at Hinman Howard & Kattell, which represents the coalition.
The original leases, signed in February 2010, gave landowners $1,000 per acre upon signing and called for an additional payment of $1,000 per acre in 2011 that could be deferred by Inflection if the state’s moratorium on hydraulic fracturing continued.
But deferring the second payment would have opened the door for landowners to vacate their leases.
With drilling in New York’s swath of the Marcellus Shale still on hold as the state Department of Environmental Conservation continues a review of its permitting guidelines, Inflection decided to renegotiate the leases rather than run the risk that landowners would leave the table.
"Rather than walking away from the Southern Tier, Inflection has invested an additional — it’s probably going to be close to $3.4 million by the time all is said and done — in gas development in Broome County, which is a positive sign if you are in favor of gas development," Wedlake said.*
*Binghamton Press & Sun-Bulletin (Nov 3, 2011) – Gas firm locks in Maine landowners