PA Researchers ask: Will increased family income from gas leasing benefit child-wellbeing?

A couple days ago Penn State University announced that a team of sociology researchers received a grant to study family income and well-being of children in the Marcellus shale region of Pennsylvania and New York. The burning question: is there a difference in the quality of life and academic achievement in children growing up in families that receive gas drilling money compared with those in the same area who receive no money?

According to PSU, the project is supported by a $150,000 grant from the Russell Sage Foundation. Molly Martin, associate professor of sociology and demography at Penn State, is leading the team of researchers who plan to review and analyze data from Pennsylvania and New York school districts located above the Marcellus Shale region. Using Geographic Information Analysis (GIS), they will be able to merge annual maps of Marcellus Shale wells and gas pipelines and locate them within school district boundaries. They will be able to study individual data in various categories by school district, analyzing differences in such things as health outcomes, academic achievement, obesity, teen pregnancy, high school graduation and juvenile delinquency.  

You would think this sort of research – the “do kids do better in families with more money” – has already been done. And you’d be right. In the 2002 Winter/Spring issue of the journal Children and Welfare Reform, Sheila Zedlweski writes, “It is well documented that children in families with greater incomes do better across a wide range of indicators. Economically secure children tend to be healthier and do better in school; they are less likely to be involved in criminal behavior and are more likely to graduate from high school and to earn higher incomes as adults. In contrast, poorer children tend to have fewer opportunities for success.”

Nearly a dozen years later Duncan, et al revisit the issue in the Sept. 2011 issue of Dev Psychol (vol. 47, no. 5). After reviewing the literature and data they suggest that “…a $1,000 increase in annual income increases young children's achievement by 5%–6% of a standard deviation. As such, our results suggest that family income has a policy-relevant, positive impact on the eventual school achievement of preschool children.” Their study, “Does Money Matter?”  – along with loads of links to other similar studies – is posted here in the US National Library of Medicine at the National Institutes of Health.

So do we really need one more study about the effect of income on children’s wellbeing? Dr. Martin she sees this as a “rare opportunity for a natural experiment,” as she told the PSU reporter. “Some families will receive a significant number of royalty checks while others will not,” she said, “because of two factors – one determined by a geological formation created over 300 million years ago (Marcellus Shale) and the other by government policies decided in Harrisburg, PA and Albany, NY.

A more interesting question might be whether the wealth created for a few through gas royalties creates income inequality that affects the well-being of children in those communities.

Does a Lease give Gas Company the Right to Keep Friends off your Property?

When a gas company leases land, exactly what do they "own"? It's understood that they've got the right to extract gas from under the surface - and if they've leased surface rights, they can build access roads and other structures.

But does a lease give the company the right to dictate who comes on the surface - even for properties where the company has no active drilling operation? What about properties for which the company only has subsurface rights?

Cabot Oil & Gas Corporation thinks so - and they have gone to great lengths to keep an individual from stepping foot on property they don't even own. Last fall a judge ruled in Cabot's favor, giving them an injunction that bars local resident and citizen-journalist Vera Scroggins from Cabot-owned properties. That injunction also bars her from any property in the county where Cabot only has a lease to extract gas from under the surface, with no surface rights. Those properties include: the grocery store where Scroggins does most of her shopping, her bank, the recycling center, the hospital, and many friends.

What sort of dastardly act has Scroggins committed to deserve such a ruling? The retired nurse aid and grandmother happens to be one of the more vocal opponents to gas drilling in her town. For the past few years she has acted as a citizen-journalist, documenting the activities of gas companies operating in the area, and giving tours to visitors to show them what industrialized gas drilling looks like. She has testified before state regulatory officials, and asked questions of gas company employees - too many questions, apparently. Her "crime": attempting to hold the gas drillers accountable for their activity.

In response, Cabot hit her with a lawsuit and then obtained this outlandish injunction that bars her from driving on local roads, spending money in local shops, or taking a casserole to a sick friend. To say that this injunction is "overbroad" is an understatement. It violates her constitutional rights and the rights of any other individual - including journalists - who might stop on a public road to take a photo of gaswell activity.

This ridiculous injunction should also give landowners pause: just what rights are they losing when they sign a gas lease? Even if they only allow subsurface rights (gas company has no rights to any surface activity) are landowners signing away their freedom to invite who they want onto their land? And in a state like NY, where compulsory integration allows landowners to be forced into drilling units against their wishes, does that mean gas companies can dictate who they can invite to hunt on their property?

As for Scroggins, Cabot did not give her a map of all the leased land in her home town. It is up to her to determine which roads she is allowed to drive down, how close she can get to the public school, whether she can deposit a check (no) or buy a candy bar (no) or get her car fixed at the local garage (no) or go to the emergency room (no) ... heck, even the local jail is off limits should she accidentally step onto leased property! And should a friend knowingly invite her over for lunch , they could both end up in the hoosegow. (clarification: Vera says she can drive down any road; she just can't stop and "alight on the properties" that are leased)

A hearing to vacate the injunction is scheduled for Monday, March 24 in Montrose, PA. Fortunately, public interest attorneys are going to bat for Scroggins, and you can read their "Brief in Support of Motion to Vacate Preliminary Injunction" here.

PA Landowners Feeling Cheated out of Gas Royalties

Some landowners here in New York's Southern Tier look across the border with envy. They see farmers putting a new roof on their barns, buying new equipment, or retiring altogether. When they return from a drive down Route 220 through Bradford County they loudly proclaim: "Everything is fixed! You can't see the wells and the gas companies have fixed the roads better than they were before."

What they don't see are the farmers who are losing their livelihood because drilling has made farming untenable. They ignore the reports of water contamination, writing such complaints off as "anti-fracker lies" and reminding people that "flaming water from faucets is nothing new - we've had methane in water in these parts for years".* Not true for everyone - as I don't have flaming water at my house. Yet.

While they see the "for sale" signs, they don't see the losses in property value; homes once worth more than $250,000 made nearly worthless by lack of drinkable water. They don't see the folks made homeless when rents tripled during the boom, nor the hotel and motel rooms left vacant by roustabouts headed off to Ohio to extract for the newest bestest gas.

They don't see the jobs that didn't pan out, the jobs that lasted for three months, towns wondering where their promised gas taxes went - and they don't see the landowners, who signed leases in good faith, wondering where 30% of their royalties went. It's so bad that Bradford County commissioners are complaining to the state legislature. Gas companies are deducting a whole bunch of post-production costs, including transporting the gas to market, compressing the gas to put it into an interstate pipeline, and dehydrating the gas.

Even the head of the Pennsylvania chapter of the National Association of Royalty Owners is getting hot under the collar, claiming that "landowners are being saddled with a deduction for transporting gas to market that is far higher than what their fair share of the cost should be". To make matters worse, some landowners can't even figure out what the deductions are for.

*actual quotes from people at meetings.

Chesapeake in the News Again

Here in NY, Chesapeake has had its run-ins with the Attorney General over the misguided use of "force majeure" to extend leases. Meanwhile, down in PA it looks like they've been taking more cookies from the cookie jar than they're entitled to - at least according to the leases they wrote . Residents have been grumbling about this for months, and now it looks like the lawyers are gonna step up to the plate and see if there are enough cookies left to go around.  Grab your milk and gather 'round the table ...

BLM Backs off some Proposed Leases in CO

Since last year, organic farmers, outdoors enthusiasts, and local businesses dependent on tourism have been trying to get the federal Bureau of Land Management to reconsider thousands of acres proposed for oil and gas leases in the North Fork Valley of Western Colorado. Yesterday the BLM removed 20,000 acres in Delta County from the Feb. 14 lease auction.

The decision follows months of sometimes raucous public meetings and more than 100 protest letters from organic farmers, vineyard owners and tourism businesses. Their argument: oil and gas drilling would jeopardize the vibrant and growing economy, and fail to protect the environment.

The BLM oversees oil, gas and mineral leasing on all federal lands. Under 90-year-old laws, companies and people can nominate public lands for drilling. BLM reviews the proposals, checking for other land uses including wildlife habitat and wilderness uses. Then, if there is no overriding conflict, the government is obliged to auction them - after some months of review and public comment.

What drew the ire of organic farmers and others in Delta County was the secrecy surrounding the nominations. Who chose those particular parcels, they wanted to know. A local activist group, Citizens for a Healthy Community, has a lawsuit pending under the federal Freedom of Information Act to find out the name of the nominator.

Residents also objected that the lease sale was being conducted using a 1989 resource management plan – a plan that ignores the dynamic growth of organic agriculture and other economic changes.

Monday Opinion Page

A new song from Itaca-based Burns Sisters. Sung on location at a well known falls pouring over layers and layers of naturally-fractured shale.

Federal Judge Tosses "Force Majeure" Out the Window

Just because you can’t “frack” doesn’t mean you can't drill. That’s what U.S. District Court Judge David Hurd told Chesapeake Appalachia the other day. In a decision posted November 15, Hurd rejects force majeure as a reason to hold onto expired leases. Leases, he explain, terminate at the end of their primary terms. His reasoning:

“… The purpose of the leases is to explore, drill, produce, and otherwise operate for oil and gas and their constituents.” And the fact that New York State is still reviewing regulations for high volume horizontal hydraulic fracturing (HVHF) does not stop oil and gas companies from exploring, drilling, producing and otherwise operating, says Hurd.

Even though the state does not allow fracking, “… drilling permits for conventional drilling methods have, and continue to be, issued in the area of plaintiffs’ lands,” wrote Hurd. He clarified that the leases signed by landowners did not limit Chesapeake’s right to drill to a specific type of drilling or a particular formation.

The whole force majeure argument was based on the illusion that the state was preventing the gas companies from drilling. But, notes Hurd, “While defendants submit evidence demonstrating that horizontal drilling combined with HVHF is the only commercially viable method of production in the Marcellus Shale and drilling using conventional methods is impractical,"[m]ere impracticality . . . is not enough to excuse performance." The gas companies “…contracted for access, exploration, and the right to drill for a set period of time.” Not for a specific technique or formation.

This decision brings a sigh of relief to more than 50 landowners in Broome and Tioga counties who were trapped in leases that should have expired years ago.

You can read Judge Hurd's decision here. Read previous posts about the force majeure cases here.

Too much Gas + Low Prices = Lease Shenanigans

As gas prices fell, drillers headed west from the dry Marcellus shale region to Ohio where the gas is "wet". Gas containing ethane and propane was, for awhile, bringing in more cash. But now that market, like the gas market, is saturated, notes a report in the Pittsburgh Post Gazette. This might be what you'd expect from an industry that is mired in continuous boom-bust cycles.

So maybe it comes as no surprise that one of those companies - Chesapeake - is withholding royalty payments in blatant disregard of the leases they signed. In January the company notified Pennsylvania landowners of its intent to deduct the costs of production from royalty payments. Those costs range from 70 cents to $1 per 1,000 cubic foot (mcf) of gas produced. Given the all-time low gas prices, that means that some royalty owners have seen their payments slashed by 90 percent or more this year, notes a recent report in Bloomberg.

Which leads me to wonder why Governor Andy Cuomo would be in a rush to allow hydraulic fracturing into the Southern Tier of NY.

Poetry Break

Every now and then we need to take a break from reading the reports and the news and the regulations and opposing views... so here's a poetic break by ... Dr. Frackenseuss.

You couldn’t have known or you wouldn’t have leased.

The rights to your land have effectively ceased.

As well as your rights to clean water and air.

And also your neighbor’s. 

I’m sure you must care

That because of your signature, there will now be

Thousands of truckloads of toxic debris,

Right past your neighbor who lent you his plow.

What can you possibly say to him now

That his health is at risk because you chose to sign? Air doesn’t stop at your property line!

And his deeded land value has greatly decreased.

You couldn’t have known or you wouldn’t have leased.

Is this what you pictured? An eight acre zone

With tankers of water and sand and crushed stone

And pipelines and access roads, chemicals stored?

Radioactive waste products ignored?

Is this what the ads meant by “Clean Natural Gas”?

Those promises made with such charm and such class,

Pretending that high volume drilling’s the same

Drilling we’ve done -- with a different name!

Lying that this will make our country free

From depending on those with whom we don’t agree.

With the lure of big money, you bought Corporate Rule.

You said, “Bring on a future of more fossil fuel!”

With your formal consent, our democracy ceased.

You couldn’t have known or you wouldn’t have leased.

Chesapeake Foists Bad Leases (again) on NY Landowners

photo by Tim Ruggiero

Chesapeake Energy is at it again. They recently mailed hundreds of letters to landowners in the Tioga County Landowners Group, letters that contained a “Notice of Force Majeure” and an “Offer of New Lease”.

The force majeure letters should really be called “farce majeure”. There is nothing stopping Chesapeake from drilling in NY. The company could exploit Oriskany and Medina and any number of hydrocarbon-bearing layers. But they don’t want to; they have decided that the only thing worth drilling is Marcellus shale, and maybe Utica, and the only technology they can possibly use is high-volume horizontal hydraulic fracturing.

Then there’s their new lease terms: $500 per mineral acre with a 12.5% royalty – the basement bargain rate. Furthermore, these punitive terms make it possible for Chesapeake to extend the lease indefinitely.

“Chesapeake has been playing the game of holding by production or using delay rental payments to hold the leases in PA,” Nick Schoonover wrote to members of the Tioga County Landowners today. “This is a terrible lease with no serious money for years.”

Oil and gas attorney Chris Denton weighed in on the matter. The new lease is much worse than their old lease he said. Why?

• The new lease has an Arbitration Clause which, in their old leases, they are using to try hold our members into expired leases.   This clause is one of the more egregious provisions in the lease.
• The new lease specifically declares that Chesapeake does not have to drill, prevent drainage, develop or even market the gas during the lease term.  In other words they are effectively "warehousing the landowner".  If they don't drill, then there are no royalties.
• The lease gives Chesapeake the right of first refusal on any top-leasing or renewals.  How many offers is a landowner likely to receive if the offeror knows that someone can outbid him?  This provision takes away the landowner's right to better economic opportunities.
• The Chesapeake lease has an incredibly broad Force Majeure Clause, effectively allowing Chesapeake to extend the lease for a host of bumps in the road for them.  They even require the landowner to waive any damage claims against Chesapeake.  Chesapeake is currently trying to tie up your lease with a weaker Force Majeure claim.  The new clause is worse for the landowner.
• The lease allows gas storage, which likely will effectively bar the landowner from developing and recovering any gas or oil if gas is stored.
• There are no surface rights protections of any substance.  There is no base line water testing.  There are no restrictions on open pits or on site waste disposal.  There are no drainage protections and no pipeline specifications.  There is no audit provision and the royalty is paid after deductions.
• The lease allows Chesapeake to construct compressor stations on the property and to place as many pipelines as it deems convenient.  Also this lease gives Chesapeake exclusive rights to your property, preventing you from measuring or testing your own gas and oil.
• Worst of all, Chesapeake's lease can never be forfeited by them for violating any terms in the lease.  You can never evict them for violating any terms of the lease.  In other words, they can stay there no matter how many times and no matter how large the violation occurs.

“This is a lease that no one should sign,” says Denton. “There is not one good element in this lease for the landowner. It shifts the economic risks and burdens to the landowner when they should instead be borne by Chesapeake.”