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Caution urged in signing leases for tapping natural gas
|FRANKLINVILLE — With more than 900 oil and gas well permits expected in New York State this year and booming interest in the Marcellus shale deposit extending across West Virginia, Ohio, Pennsylvania and New York’s Southern Tier, local landowners could soon be talking like Texas oil men. |
But minerals experts signal caution and urge landowners to get educated, learn how to negotiate and think about forming a cooperative of landowners before signing the first lease offered by a natural gas company.
A group of people with experience in Central New York’s two largest natural gas booms told a crowd of more than 150 gathered Wednesday night in the Franklinville High School auditorium that the past five years’ 20-fold increase in well permits will soon bring the “world-class Marcellus gas play” into Cattaraugus County.
They described how a new horizontal drilling technique boosted gas output from shale in Texas, causing companies to look toward Appalachia for similar geology. Reserves of 50 trillion cubic feet, enough to fuel the entire U. S. for two years, have been identified in the Marcellus shale that was once thought to yield only nuisance puffs of natural gas.
Thicker deposits than those suspected in Cattaraugus and Allegany counties have been found in Central New York and are bringing $1,400 to $2,000 or more per acre, but observers say the wave of speculation is headed this way. The message of Wednesday night’s program, “Leasing Your Land for Gas and Oil,” is that despite the potential, landowners should not to rush into a lease despite offers of a bonus signing.
“Bonus money is what they use to glaze your eyes over and get you to sign,” said Lindsay Wickham, Farm Bureau field representative for Broome, Chemung, Chenango, Steuben and Tioga counties.
As one of the panel of presenters, Wickham said royalties are most important in the gas-lease speculation wave. He suggested that competition should be encouraged in Western New York to drive up the prices.
The Farm Bureau, sponsor of the program as an educational effort for members and the public, supports farmers and rural landowners with legislative initiatives and lobbying efforts. The organization has been working with legislators in Albany to update state law regulating vertical drilling to accommodate the new horizontal methods and the size of permitted land units.
Two of the speakers, Christopher Miller of the state Department of Environmental Conservation and Mike Saviola, an agricultural resource specialist with the state Department of Agriculture and Markets, told the audience how their oversight responsibility offers landowner protections during natural gas permitting and well and pipeline construction.
Dave Colligan, of Watson and Bennett of Buffalo helps solve old lease problems and makes decisions in new gas lease offers. He reminded the audience that once a landowner gives up any of his property rights, they are difficult to get back.
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