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This story is startling in its duplicity ... some people get the all the perks, and some people just get all the pain ...


Opinion today:  Citizens misled by hydrofracking leases
by The Post-Standard, Syracuse.com -- February 09, 2012

[...]
In 2006, the huge oil and gas companies started sending land men into the Southern Tier and the Finger Lakes to entice the current natives {residents} to sign drilling leases. They had only good things to say. They would give you a price per acre and a percentage of the profits. They did not mention that the wells would be drilled by a procedure called hydrofracking, with possible contamination of our water and a complete disruption to our countryside with truck traffic, drilling rigs, compressor stations, wastewater pits, etc.

They leased the land for as little as $5 per acre, and sold the leases as five-year leases. Chesapeake Energy Corp. described its aggressive lease acquisition program as the “gas shale land grab of 2006-2008.”

Meanwhile, the gas companies had to disclose to their shareholders the operating risks of hydrofracking. One company’s disclosure included:

- Well site blowouts, cratering and explosions.

- Equipment failures.

- Uncontrolled flow of natural gas, oil or well fluids.

- Fires.

- Formations with abnormal pressures.

- Pollution and other environmental risks and natural disasters.

[...]

One audience gets the tall tale.  The other audience gets the short list of economic risks they're taking ... can you tell which is which?


Why is it investor interests, always trump individual interests?

Chalk it up to the unregulated Free-Markets, I guess.


What exactly is in the "bill of goods" that gets sold to land owners, who blithely lease away their land rights to the Natural Gas extractors anyway?

Is it really a case of "found windfall money" ... or is it more like a case of "buyer beware"?


Learning Too Late of the Perils in Gas Well Leases
by Ian Urbina and Jo Craven McGinty NYTimes -- Dec 1, 2011

[...]
Energy company officials say that standard leases include language that protects landowners. But a review of more than 111,000 leases, addenda and related documents by The New York Times suggests otherwise:
[...]

-- Fewer than half the leases require companies to compensate landowners for water contamination after drilling begins. And only about half the documents have language that lawyers suggest should be included to require payment for damages to livestock or crops.
[...]

-- In the leases, drilling companies rarely describe to landowners the potential environmental and other risks that federal laws require them to disclose in filings to investors.
[...]

-- Most leases are for three or five years, but at least two-thirds of those reviewed by The Times allow extensions without additional approval from landowners.

[... even more common lease "exemptions" ]


If it's a lease with a "corporate person" -- be very careful about what you are signing away. Because what they don't say, can hurt you.


However all that "creative legalese" can cut both ways -- especially if you have reps on the local city council who decide to protect the interests of the locals, over the interest of the "far removed."

The locals in this small town in New York, decided enough was enough.  They used their own Zoning Laws to prevent the Corporate Frackers from tapping their area's mineral rights, through some creative "legal restrictions" of their own:


New York Town Gets Court OK to Ban Hydraulic Fracturing
community.nasdaq.com
posted by Pierre Bertrand from International Business Times -- 2/22/2012

[...]
A New York State court has turned back a natural gas company's bid to stop towns from banning horizontal hydraulic fracturing, potentially boosting local opposition to the controversial gas drilling procedure.

In a case that began in August 2011, the supervisor of the Town of Dryden, in upstate Tompkins County, N.Y., attempted to use the local zoning law to prohibit oil and natural gas companies from drilling within the town. Dryden has drawn interest from companies that do hydraulic fracturing, or fracking.  
[...]

"What this says is the Oil Gas and Solution Mining Law does not trump zoning laws," said the town's attorney, Mahlon Perkins.
[...]

"By upholding Dryden's fracking ban, Judge [Phillip] Rumsey has brought a renewed sense of hope to the many cities and towns concerned with fracking," Katherine Nadeau, Water and Natural Resources program director for the Environmental Advocates of New York, said in a statement.
[...]


Chalk one up for the little guys.  For the good guys.  For the human-people, fighting back against the corporate behemoths, who promise the world, only to take the money and run.

I hope this is a sign of a brand new trend:  a people-powered trend. That of towns standing up and saying Hell No were not gonna to take it anymore.  Enough of the Corporate land-grabs -- they need to get the Hell out of OUR Aquifers!   We have "a rule" for that.


Before they -- the locals -- find out the "hard way" -- what was NOT said in those NG Leases -- are precisely the undisclosed risks that they alone are taking on ... by signing on that corporate dotted-line.




Originally posted to Digging up those Facts ... for over 8 years. on Sun Feb 26, 2012 at 10:18 AM PST.

Also republished by DK GreenRoots.

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Comment Preferences

  •  some related gas-land issues (2+ / 0-)
    Recommended by:
    Glen The Plumber, Puddytat


    What is necessary to change a person is to change his awareness of himself.
    -- Maslow ...... my list.

    by jamess on Sun Feb 26, 2012 at 10:47:09 AM PST

  •  individual consumers, and water-drinkers, Beware (3+ / 0-)



    larger


    There's a fracking drill, with your town's name on it, out there somewhere.


    What is necessary to change a person is to change his awareness of himself.
    -- Maslow ...... my list.

    by jamess on Sun Feb 26, 2012 at 10:50:08 AM PST

  •  You May Misunderstand Gas Leases... (3+ / 0-)
    Recommended by:
    jamess, Glen The Plumber, Puddytat

    I am not familiar with the laws in your state, but in Texas, if you don't sign the lease, the company can still drill their well.  The lease only makes an agreement between the parties concerning the financial distribution from the leasing company and the mineral owner

    If the mineral owner doesn't sign the lease, they lose the lease payment which they get regardless of whether the well is successful.  It also sets the royalty payments rather than using statutory regulations to determine payments.

    •  I'm not a lawyer, or a land owner (2+ / 0-)
      Recommended by:
      Puddytat, Glen The Plumber

      just reporting the info I found in those links.

      But I do trust the New York Times to get to the bottom of most issues like this.

      I encourage you to read their Lease analysis.

      thx for the additional info, in the Trees


      What is necessary to change a person is to change his awareness of himself.
      -- Maslow ...... my list.

      by jamess on Sun Feb 26, 2012 at 11:08:05 AM PST

      [ Parent ]

    •  PS. (2+ / 0-)
      Recommended by:
      Puddytat, Glen The Plumber

      the pre-eminent domain thing is a travesty

      of corporate rights trumping individual rights.


      Kind of makes you wonder how the Town of Dryden NY,
      has gotten as far as they have,

      in re-claiming their domain.


      What is necessary to change a person is to change his awareness of himself.
      -- Maslow ...... my list.

      by jamess on Sun Feb 26, 2012 at 11:23:17 AM PST

      [ Parent ]

    •  do you mean to tell me (3+ / 0-)
      Recommended by:
      jamess, Puddytat, Glen The Plumber

      that if you own the mineral rights somebody else can drill anyway? How does one owner/lessor of mineral rights defend against another?

      Scientific Materialism debunked here

      by wilderness voice on Sun Feb 26, 2012 at 11:31:40 AM PST

      [ Parent ]

      •  Worse than that (2+ / 0-)
        Recommended by:
        jamess, Glen The Plumber

        If you don't sign, they can still drill underneath your land from a neighbors property that does sign.  

        And, even if you don't agree and sign, your water and environment will be just as damaged.  And the higher taxes you pay for additional infrastructure for the frackers and road repairs from the immense damage those trucks inflict will impair your bottom line, too.

        Privatize the profits, socialize the losses is standard operating procedure for Corporate America.

        There already is class warfare in America. Unfortunately, the rich are winning.

        by Puddytat on Sun Feb 26, 2012 at 12:07:04 PM PST

        [ Parent ]

        •  that's the American Way apparently (2+ / 0-)
          Recommended by:
          Puddytat, Glen The Plumber


          Pamper the Billionaires.


          thx Puddytat


          What is necessary to change a person is to change his awareness of himself.
          -- Maslow ...... my list.

          by jamess on Sun Feb 26, 2012 at 12:22:48 PM PST

          [ Parent ]

        •  I'm not so sure. (3+ / 0-)
          Recommended by:
          wilderness voice, jamess, Puddytat

          The landowner owns the minerals in place underneath his surface, at least in Texas. No one can take the minerals from you without your permission anymore than they can take the surface. If someone does takes your oil or gas by drilling next to your property, they are liable to you for this taking even if their drill never touched underneath your property but is nonetheless exploiting a reservoir underneath your land.

          "I never met a man I didn't like." Will Rogers - American Redneck

          by chuco35 on Sun Feb 26, 2012 at 02:23:58 PM PST

          [ Parent ]

          •  You need to watch the (1+ / 0-)
            Recommended by:
            jamess

            documentary Gasland.  It's discussed in there.

            There already is class warfare in America. Unfortunately, the rich are winning.

            by Puddytat on Sun Feb 26, 2012 at 11:44:48 PM PST

            [ Parent ]

          •  You Are Mistaken... (1+ / 0-)
            Recommended by:
            Puddytat

            Landowner is generally used to describe the "surface" owner who does not own all the minerals.

            The surface estate owns minerals such as gravel, coal, etc. go down to 200'.  The owner or leaseholder of these minerals can use stripmining methods to remove the minerals.

            The mineral estate owns minerals such as oil and gas, etc. below 200'.  The owner or leaseholder of these minerals can use any method that does not damage the surface estate.  Oil and gas are in a "pool" that is similar to a lake.  Anyone that owns a portion of the "pool" can drill and sell the oil or gas.  Of course they have to pay the other owners of the "pool" for their respective percent ownership of the "pool".

            An owner of the "pool" can drill and remove the oil and gas WITHOUT the permission of the other owners.  The reason that most drilling occurs after they have gotten all or most of the owners to sign leases is because generally the lessee is  paid less for oil and gas removed than owners that have not signed the lease and the administrative costs are significantly less.  The reason that most people sign leases is because they get a lump sum "up front" regardless of whether they hit oil or gas.  And you also have a large number of similar people to sue as a class if the drillers screw you at a later time.

            •  A landowner does own all (0+ / 0-)

              of the mineral estate at all depths under his surface estate. He can divide and sell his mineral estate, in which your analysis is correct. He can also lease the right to exploit his mineral estate, and gets a cut of the action plus an up-front signing payment (and other stuff). If you hold out, and every one around you leases their property, and it all sits over a common reservoir, your observation that the whole reservoir is exploitable is correct, but it does not change that it is your property being diverted, to the extent that your share is diverted in the process, and you are entitled to compensation as the owner.

              Interestingly, the shale plays are not reservoirs in the classic sense, which is why explosions are used to free the gas and oil. This generally allows the hold out surface owner, whose mineral estate has not been divided and sold, the ability to prevent what belongs to him from being exploited by simply holding out, as the vertical frakking lines cannot touch his mineral estate.

              "I never met a man I didn't like." Will Rogers - American Redneck

              by chuco35 on Mon Feb 27, 2012 at 12:22:50 PM PST

              [ Parent ]

              •  In Texas... (0+ / 0-)

                the surface and mineral estates have been separated on most property.  I have worked with timberland for 30+ years.  Beginning in the early 80's most tracts of land were sold without minerals.  In the 80's many people who could buy land for a fair price "with" the minerals would retain the minerals and would be willing to break even on the purchase and subsequent sale.  They envisioned the day, today, when oil and gas would be found in areas that no one anticipated.

                What is correct is that the owner of the original Grant, who acquired the property from either Mexico or Texas, that landowner, owned all the minerals.  Subsequent landowners may or may not own the minerals.  They do own the surface down to 200' however.

  •  Do I have the scenario right? (3+ / 0-)
    Recommended by:
    jamess, Puddytat, Glen The Plumber

    A corporate suit with a wide smile presents a thick stack of papers loaded with small type to a landowner and asks him/her to sign the document without reading it but assuring them that "everything is all right". Only later, when things start to go dreadfully wrong, does that same suit or one of his corporate associates inform the landowner that they signed his/her rights away and they have no recourse over the drilling companies malfeasance.

    Come to think of it, this scenario is eeerily reminiscent of what happens when new home buyers are asked to sign a mortgage.  

  •  My first diary was about how... (3+ / 0-)
    Recommended by:
    jamess, wilderness voice, Puddytat

    how they manipulated people to gain NG leasing rights using...

    some of the same tactics to convince "low-information" voters to vote against their own self-interest"
    ...as they used to manipulate people to sign the lease...great to see the big corps getting some push back.

    We are not broke, we are being robbed.

    by Glen The Plumber on Sun Feb 26, 2012 at 11:04:21 AM PST

  •  I understand that a lot of people (2+ / 0-)
    Recommended by:
    jamess, Glen The Plumber

    who signed these leases discover that it's next to impossible to sell their property. You have to disclose the lease and many buyers pass on properties that have mineral leases on them.

    Honesty pays, but it doesn't seem to pay enough to suit some people. Kin Hubbard

    by Mr Robert on Sun Feb 26, 2012 at 12:29:06 PM PST

  •  It seems to me that if one lets an oil company (0+ / 0-)

    drill on their land, and they have not done enough research to know that the drilling might ruin the land, I have little sympathy for the landowner.

    It is pretty hard to make a law against stupid.  

    I would have more sympathy for water tables and such, not landowner rights.

    •  but the leases (0+ / 0-)

      are not written to protect the land-owner,

      but protect the gas-oil company,

      at least according to the NY Times.


      What is necessary to change a person is to change his awareness of himself.
      -- Maslow ...... my list.

      by jamess on Sun Feb 26, 2012 at 05:58:31 PM PST

      [ Parent ]

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