Risky Business

Marcellus Shale Topics of the WVU Extension Program

West Virginia is home of one of the largest Marcellus Shale natural gas deposits on the East Coast. As landowners and community members began asking questions of  WVU Extension agents about this topic, we began our work to learn more, gather experts and create the resources to respond.

Upcoming Programs [Internet Site]

Planning for Financial Success and Managing Windfalls When They Come

Fred A. Scheeren, CFP, Managing Director-Investments, Wells Fargo Advisors, LLC

Farmers who have recently received financial windfalls in the form of agricultural product sales, land sales, natural gas leasing, lottery winnings, or inheritance, may find it a challenge to manage those funds. While the first impulse will either be to save all the money in a bank account or spend at will, both of these strategies are not effective ways to manage your good fortune. To help make your money work for you, Fred will provide information on avoiding financial predators and their money making schemes; choosing a competent financial advisor; avoiding investment and spending mistakes; creating an income stream for the rest of your life; making money without undue risk; and ways to pass it on.

These programs are part of the WVU Extension Services’s Winter Educational Dinner Meeting series. You must register by calling the contact listed to attend.

January 15: Belington Volunteer Fire Department, 301 Watkins St., Belington, WV, @ 6:30 p.m. Contact: Josh Peplowski, 304-457-3254

March 23: Doddridge County Park, Snowbird Rd., West Union, WV, @ 6:00 p.m. Contact: David Snively, 304-873-1801

March 24: Roane-Jackson Tech Center, Cunningham Hall, 9450 Spencer Road, Leroy, WV @ 6:30 p.m. Contact: Brandy Brabham, 304-927-0975 or John Johnson, 304-372-8199

March 25: Fort Boreman Room, Judge Black Annex,, Wood County Courthouse, 1 Courtsquare, Parkersburg, WV @ 7:00 p.m. Contact: JJ Barrett, 304-424-1960

>>>>>>>>>> SAVE THE DATE – May 20, 2015

4th Annual Enhancing Public Understanding of Natural Gas Issues Conference

Wednesday, May 20, 2015, Bridgeport Conference Center, Bridgeport, WV

For more information, contact Georgette Plaugher, WVU Extension Service Natural Gas Team Coordinator at 304-329-1391 or via e-mail Georgy.Plaugher@mail.wvu.edu.

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WVU Extension Service’s Goals and Objectives — WVU Extension Service’s oil and natural gas team will enhance programming to provide the expertise and knowledge that the citizens of West Virginia need to make informed decisions about the oil and natural gas industry.
View a complete list of goals and objectives

Additional Publications & Information — View a list of publications and web links to information surrounding Exploration and Natural Gas Development, Economic Impacts of Natural Gas Exploration, Environmental Issues and Impacts, Regulation, Agenda and Locations of Educational Programs

Educational Programs & Presentations

Educational Programs — WVU Extension Service hosts educational programs within counties and communities across the state. For a listing of upcoming sessions, view the Oil & Natural Gas Calendar on the right side of this screen or view them on the Educational Programs page.

Presentations — View reviewed and approved PDF versions of Presentations from expert speakers on a variety of topics.

More pipelines to cross WV

Commentary on “Dealing with Pipelines”

By S. Thomas Bond, Retired Chemistry Professor and Resident Farmer, Lewis County, WV

An article in the Toledo Blade quotes Dale Arnold, director of energy services for the Ohio Farm Bureau Foundation, saying “About 38,000 miles of pipeline are expected to be built or replaced across the state in the next decade.” Assuming the right of ways built are 75 feet wide on the average, any high school student who has Chemistry or Physics (because that’s where you learn “dimensional analysis”*) should be able to calculate that it amounts to 511 square miles, considerably above the average of Ohio’s 88 counties. How much do you think that will affect agricultural production?

True, the right of way will be “paid for.” But does that reflect the loss over several years? Hardly! There will be loss of crops, extra fertilizer and seed to reestablish the use, silting off the right of way into local streams (minimized at some considerable expense by the contractor) and inconvenience to the land owners. How does acquisition work? Costs have nothing to do with it, it is a kind of poker game. They pay what they can get it for.

The company maintains or hires a corps of land men and appraisers, or a company that does this work, who establish the “present value,” by using “comparables.” usually three or four properties within a few miles that have recently been sold. Such things as house value, quality of road access, slope, land use (pasture, forest or meadow) and general upkeep are considered. Then they value each particular property, or part of it, to be condemned in relation to the comparables. The “trick” (I use that word in the colloquial sense, meaning the right balance to achieve a desired end) is for the appraiser to establish a “present value” at just the level it will not pay the owner to take it to condemnation. No consideration is made for sentimental value, nor other higher uses in the future, but the neighborhood is a factor.

The first offer made to the land owner is well below the present value, defined above. It is for suckers the unwary who just might bite. There will be a series of increasing offers, perhaps two or three before arriving at the “present value” determined by the appraisers. Increasing psychological pressure will be applied. “This is more than it is worth.” “Your neighbors have sold.” “We are not going to offer any more.” “We will have to take you to court and condemn it,” knowing most people fear or hate to go to court, even in their own interest. Finally they will take you to court.

And, court activity will involve costs you. You have to have a lawyer and trips must be made to see him and get him clued in to your property, and trips made to court. Considerable nervous strain is involved for many people, and you have to pay the lawyer anyway, win or loose. You can pay him by the hour if you have the money, or you can have him work “pro bono,” meaning he gets a third to 40% if you win, but it costs nothing if he looses.

When the Corps of Engineers took land for the Stonewall Jackson Dam project, I studied what had happened at the Burnsville Dam project. The Corps had a number of appraisers and land men that were independent but almost “inhouse,” since they were used over and over for Corps of Engineer Dam projects. The offer by the company and the settlement after the court decision are a matter of record. Condemnation must be decided by a jury which sets the amount. Our forbearers who wrote the law understood that without a value set independent of the judiciary, there would be too much chance for corruption.

Most of the awards at Burnsville were above the offered price. I had no way of knowing what the lawyers got from each case. I’m sure it was good work for them. Whether it was good for the landowners is another story. The lawyer has to charge a lot, because his share must pay not only for the overhead on cases which he wins, but also on the cases he loses. I always wondered how all those land owners came out.

The author has never seen an estimate for how much of pipeline will be built in West Virginia, but surely it will be similar to the amount built in Ohio, because, although Ohio has more area, the Marcellus and Utica is along the Eastern part of the Ohio, with only long distance lines in the Western part of the state.

Now, here are some ideas. Just as it is the practice to lease not only the layer that is the drilling objective, but all gas and oil under a particular tract, they will try to get everything they can. (1) Do not accept verbal agreements. Everything must be written down, to bind all parties. (2) Try to limit them to keeping the right of way free of herbicides. They will sincerely tell you they use a brush hog and will never use herbicide. But when the crush comes after a few years they will decide they cannot afford to brush hog. Herbicide is not bad if it is done every year with ground equipment, but if it is done from a helicopter or with high volume sprayers because they let the brush get big, it will drift off the right of way into surrounding forest land. You’d be better off to do it yourself yearly.

(3) Limit them to one pipeline. There are many cases where they come back and lay another adjacent to the first one for free. (4) Require them to build fences to control your cattle if new fences are needed. (5) Require them to let you supply the lock and key. If they supply the locks, they will be “keyed alike” locks and everyone in the neighborhood will have a key to your land as well as all your neighbor’s land. (6) Take pictures of the right of way before the work is done and after. (Always document changes on your land when dealing with others working on your land.) Get an agreement to provide subsurface drainage of wet spots which develop due to water following the pipeline, a frequent occurrence. (7) Write in that they will come back in and correct slips and settling.

(8) Be sure that the width of the “take” is specified in the contract and the location of the pipeline itself. (9) Specify whether the pipe is to be yours or to be taken out when the line is no longer in use. It is now the law that it becomes yours when abandoned, but that can be changed and the way things are going, it may. (10) Don’t allow any use for the pipeline except the original use – gas or oil. Many contracts allow telephone lines, power lines, water and/or sewage lines, regular vehicle traffic (they need access to work on the pipe lines, and keep the brush down, but don’t need daily traffic) and other uses. Some gas lines have been converted to carry other, non-hydrocarbon, or manufactured products – a particularly horrible example is hydrogen sulfide. (11) Make sure it is specified that the land reverts to your property when use stops. You may not care but your grandson will.

These people are experts at applied psychology. They do it every day. Never agree to sign anything the first time they come. You need some time to think about a proposal and talk about it with other people who have experience. You may feel good to pull off something by yourself, but remember the old saying, “Two heads are better than one, even if one is a sheep’s head.” Sometimes you understand something better just by talking about it with someone else, even if they don’t contribute much.  Good luck on all this, you will need it!

<<< *Dimensional analysis takes advantage of the fact that units (such as feet/mile or inches /foot) cancel, just like you learn to do in fractions. Keeping track of them makes sure you use the right conversion factors. >>>