Wednesday, December 10, 2014

Hard Times in a Boom Town: Pennsylvanians Describe Costs of Fracking

Sharon Kelly, DeSmogBlog
Waking Times
If you’re looking for the shale gas boom, northeastern Pennsylvania is the place to start.
The Marcellus is the largest and fastest growing shale gas play in the U.S. and more than half of its 50 most productive wells were drilled in Susquehanna County in the northeast. Susquehanna and neighboring Bradford County produced 41 percent of all Marcellus gasthis June.
While drilling is down in other shale gas plays across the US, with major oil companies selling off their stakes and CEO‘s expressing regret for buying in, the Marcellus has bucked some of the downward trends so far.
A recent report from the Post Carbon Institute, “Drilling Deeper: A Reality Check on U.S. Government Forecasts for a Lasting Tight Oil and Shale Gas Boom,” has grave warnings about the Energy Information Administration’s figures nationwide, concluding that two-fifths of the shale gas the agency expects to be produced between now and 2040 will likely never materialize. While many high-profile shale gas plays have already peaked in terms of gas production per well, the Marcellus appears to be an outlier in terms of productivity, researcher David Hughes concludes.
Enormous amounts of shale gas are being produced in Pennsylvania. In the first six months of this year, drillers here pumped 2 trillion cubic feet of gas. And much of this gas came from the Marcellus shale’s twin sweet spots, in the Northeast and Southwest corners of the state.
In the whirlwind of activity, some locals in here struck it rich – those who owned large tracts of land and negotiated their deals at exactly the right moment. Driving through the county, it seems like every back road has a red-and-white permit sign marking a shale gas well, a water impoundment, or other Marcellus-related infrastructure.
New drilling sites are a common sight in northeast Pennsylvania’s Marcellus shale region.  © 2014 Laura Evangelisto
Expectations ran high when the boom first began. In 2010, 60 Minutes introduced a new word to the national media – “shale-ionaires,” or landowners who made millions simply by leasing their land for drilling.
“Once a well is built and producing, royalty checks start popping up in the mailbox,” explained 60 Minutes anchor Leslye Stahl. “It can last years and add up to many more millions.”
But even in the most productive shale play in the country, these early hopes have often been dashed, with some landowners reporting that leasing has already wound up costing them money.
In Litchfield Township, Glenn Aikens, a member of the Bradford County Planning Commission, also has three shale gas wells on his land. Signing a lease brought a host of unexpected costs, Aikens says : $22,000 to set up an L.L.C. to make sure that his children could inherit the farm’s suddenly valuable acreage in spite of estate taxes, pre-drilling water testing for the farm’s seven wells (“He charged me $14,500 dollars, but I wouldn’t have had a leg to stand on had I not,” says Aikens. “If they ruin the water, what do I do with this farm?”), and perhaps most painfully, the permanent loss of a valuable tax credit for farmland, now that the leased land is considered commercial property instead. Land that was assessed at $500 an acre was now assessed at $2,500 – and taxes were due retroactively.
Litchfield Township’s Glenn Aikens was paid $0.10 in royalties by a division of Chesapeake Energy, after the company deducted costs from his royalty check.  © 2014 Laura Evangelisto
Aikens pulls a tattered photocopy of a ten cent check from his wallet, emblazoned with the logo of a division of Chesapeake Energy. It’s the royalty check for the gas produced on his 359 acre farm, after post-production expenses were deducted from the check. Under state law, property owners are supposed to be guaranteed a minimum of 12.5 percent of the value of the gas produced on their land, but a 2010 state Supreme Court ruling opened up a loophole. Gas companies started deducting a broad variety of costs – at times retroactively.
“I signed a contract and I’ll live by it, but I want my 12.5 percent,” said Aikens. “It’s been an ongoing battle with them and not getting paid.”
Even without post-production deductions, many landowners have found that oil wealth falls far short of the millions they first hoped. Property owners in the U.S.get an average of less than $500 a month from oil and gas wells that have been drilled on their property, David Sikes, a past president of the National Association of Royalty Owners, told the Wall Street Journal.
For Aikens, the calculations are unforgiving.
“It really wasn’t worth it,” Aikens says about his own lease.
The boom has brought other hidden costs, not only environmental but also economic for Northeastern Pennsylvania’s counties and their residents.
“Most people are still poor, most people are still struggling,” explained Vera Scroggins, an opponent of fracking from Susquehanna County, adding that even large landowners “complain to me privately, ‘people think we’re millionaires, but we’re not.”

© 2014 Laura Evangelisto
Driving down the streets of Montrose, PA (popualtion 1,500), Scroggins points out what’s changed (a new hotel, the warehouse for an oilfield services company) and what hasn’t – the empty store fronts, the “for rent” and “for sale” signs.

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