WV Surface Owners’ Rights Organization, February 10, 2018

Improved “Co-Tenancy” Bill Clears House Judiciary Committee

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Dear Friends,

After yesterday’s public hearing on the “co-tenancy” bill (HB 4268), the House Judiciary Committee took up and passed an improved version of the bill that, most importantly, addresses the problems we raised regarding surface use and the need to require surface owner’s consent.

If version of HB 4268 that came out of the House Judiciary Committee passes, if the driller uses the statute to get the right to drill into the mineral tract beneath a surface owners’ land or into any neighboring mineral tract, the driller will have to get the agreement of the surface owner to locate the well pad on their surface, regardless of whether the surface owner owns an interest in the minerals.

Requiring the surface owners consent is very important, and a significant improvement that makes it worth supporting the bill.

Why? Let’s start with the legal background.

Current law says that the mineral owner/driller has the right to make “reasonably necessary use” of the surface if that use was in “in the contemplation of the parties” at the time of the severance (or at the time of the lease IF the lease was before the severance) in order to get his minerals out (otherwise the minerals are useless – at least until horizontal drilling).

But does the driller have the right to the use the surface to drill horizontal wells bores into neighboring mineral tracts that were not part of the surface at the time of severance? We say no.

The drillers say yes. They say that the only economical way to drill and produce the Marcellus under a surface owner’s land is to drill horizontals that extend into neighboring mineral tracts, so it is a “reasonably necessary use” of the surface to do so. And they say that the “contemplation of the parties” only applies for radical new surface uses like strip mining vs. shaft mining, not horizontal drilling.

We say the drillers are wrong because there is no need at all to use our surface if they can develop the mineral tract under our surface from 1-2 miles away. And we say that the horizontal drilling is like cases that ruled our way for surface owners on the contemplation theory.

That question of who is right, us or the drillers, will soon be decided by the West Virginia Supreme Court on the appeal of a case where a Doddridge County Circuit Court judge agreed with WV-SORO that a driller cannot use a surface owner’s land to drill wells horizontally into neighboring mineral tracts without the surface owner’s consent.

We are worried that the Supreme Court might decide for the drillers.

However, if the version of HB 4268 that came out of House Judiciary passes, then if driller uses the statute to get the right to drill into the mineral tract under a surface owners land, or any neighboring mineral tract, the driller will have to get the agreement of the owner of the surface to locate the well pad on their surface. Many, if not most, of the wells they drill will use the statute. So if it passes in its current form, in most cases the surface owner’s consent will be needed even if the Supreme Court decides against surface owners.

We believe this requirement is an important enough, that it is worth supporting the bill. This inclusion of these provisions is key to our support. It’s unclear if these provisions will stay in the bill as it works it’s way through the process, and we will only support it if the Senate agrees to leave these surface owner protections in.

House Judiciary Chair, Delegate John Shott (D-Mercer) deserves special thanks for listening to our concerns and making sure these provisions were included in the bill.

In addition to surface owner’s consent, the bill provides that if missing and unknown mineral owners do not show up after seven years, the millions of dollars that would go to them during that time will be used to plug some of the 4,000 orphaned wells out there that need plugged. After that, the surface owner can go to court and get title to whatever share of the minerals the missing or unknown person had, and get future royalties. This reunification of surface and minerals is also a good thing.

The version of the bill that passed the House Judiciary Committee, also strengthened the protections for the non-consenting mineral owners. We need to take a closer look at these provisions, but some of these protections include royalties paid being based on no deductions, and no storage/injection/arbitration/or venue clauses. For our members who are mineral owners we would have preferred a due process hearing before the Oil and Gas Commission, so that they can get better terms rather than be stuck with what their cousins got talked into by the drillers, but balancing what the bill does for surface owners, we can live with what is in the bill for mineral owners.

The Legislature believes that the 75% of owners who want development and royalties etc. should be able to do so and it is unfair for the minority co-tenants to block all the others from the benefits of their land ownership. We believe the Legislature will pass some bill to that effect, and for that reason and the reasons outlined above we worked to improve the bill to get better protections for surface owners, but we support it if and only if these provisions stay in.

We hope this clarifies our position on the bill. Please reply to this update if you have questions or concerns. (info@wvsoro.org)

We appreciate your support and value the trust you put in us to represent your interests at the Capitol! We’ll continue to keep you posted.

Julie Archer, Executive Director
WV Surface Owners’ Rights Organization
1500 Dixie Street, Charleston, WV 25311

info@wvsoro.org 304 346 5891

Forced pooling like a bad penny keeps showing up

Public Hearing on “Co-Tenancy” Friday, February 9th at 8:30AM

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Dear Friends,

The House Judiciary Committee will hold a public hearing on the ”co-tenancy” bill (HB 4268) this Friday, February 9 starting at 8:30AM in the House Chamber. Anyone who would like to travel to Charleston to speak out against the bill and share their concerns will have the opportunity to do so. However, considering the high level of interest in the bill and the limited amount of time, speakers will likely have only a minute or two to make their comments.

If you plan to make the trip: Arrive early to sign up.

Prepare your remarks ahead of time and keep them brief. If you have more to say than you can share in a minute or two, you can submit additional written comments to the committee.

If you can’t make it to Charleston, please make some calls and send some emails to House Judiciary Committee members and your Delegate(s).

Click here for a list of committee members with their phone number and email address, followed by a ‘list’ of emails for all members that can easily be copied and pasted into the ‘To’ field of your email.

For your convenience, here is our list of problems with HB 4268:

First, in order to drill a horizontal well the driller has to start on one surface tract, drill down to the mineral tract underlying that surface tract, and then drill horizontally a mile or more through many neighboring surface tracts. Under current law, if the driller while drilling horizontally for that mile or more runs into that mineral tract where the driller only has leases from, say, 90% of the mineral owners, the driller has to stop.

If this bill passes the driller will be able to keep drilling even longer horizontal well bores through those neighboring mineral tracts. This means more time on the first surface owner’s land, more trucks, more noise, more light, more dust, and other air pollution to drill the longer horizontal.

As the bill is currently drafted the surface owner’s consent is not needed if they use the bill to drill through that neighboring mineral tract. The current bill only requires surface owner consent if the bill is used for the one mineral tract directly under the surface owner.

The bill should require the driller to get the surface owner’s consent if the bill is used to drill not only the mineral tract under the pad, but any mineral tract being accessed from the pad. If they use this statute to drill longer laterals to develop other mineral tracts they should be required to get your consent!

Second, the bill contains a loophole that would allow a driller with an existing surface use agreement or other valid contract that pre-dates horizontal drilling to be used to locate well pads for horizontal drilling on a surface owner’s land. Surface use agreements should be for development methods and technologies contemplated at the time of the agreement, not agreements that contemplated conventional drilling.

Last but not least, the bill requires that non-consenting cotenants be paid the highest royalty in leases signed by the consenting owners. This is an improvement over the earlier bill. A knowledgeable mineral owner still might be able to negotiate a better deal but if 75% of their out-of-state cousins sign bad leases with low bonuses, with low royalties, with clauses that allow disposal wells to be drilled on the property, or other bad lease provisions, then they are stuck with those terms.

The bill lacks due process (right to appeal, etc.) for non-consenting owners. Those mineral owners who do not like their cousins’ leases should get a due process hearing before the existing Oil and Gas Conservation Commission to try to get better lease terms.

Julie Archer, Executive Director
WV Surface Owners’ Rights Organization
1500 Dixie Street, Charleston, WV 25311

info@wvsoro.org 304 346 5891

WV State Capitol

WV Surface Owners’ Rights Organization: Final Legislative Update

From an Article by Julie Archer, WV SORO, April 9, 2017

Today is the last day of the 2017 legislative session. You’ve probably heard that the industry’s re-branded forced pooling legislation (SB 576) was officially declared dead earlier in the week by the chair of the House Energy Committee. With the session coming to a close, the other bad bills we alerted you about previously, including the “right to trespass” bills (SB 245 and HB 2688), have also met their demise. This is good news.

Unfortunately, this also means that the various bills on WV-SORO’s legislative priorities list did not make it through the process in time to become law. Although we are disappointed we weren’t able to see these policies passed and implemented this session, we’re pleased to report that our “land reunion” bill (SB 369), which would begin to reverse the trend of separate ownership by giving surface owners a first chance to own any interest in the minerals under their land that are sold for non-payment of property taxes, made it further than it ever had before, having passed the Senate 33 to 1. We are especially grateful to the WV Food and Farm Coalition for their support of this initiative and helping to make the progress we made this year possible.

However, most importantly, we want to thank all of our members and supporters who have took action over the past 60 days. Your calls, emails, and letters to legislators, as well as your letters to the editor made a tremendous difference. Thank you speaking out and making your voices heard. We couldn’t have done it without you.

We also want to thank everyone who renewed their membership in response to our recent newsletter. Your support keeps us going! If you haven’t renewed your membership we hope you’ll continue your financial support of WV-SORO by sending your dues to 1500 Dixie Street, Charleston, WV 25311.

If you didn’t receive a copy of the newsletter in the mail, please email julie@wvsoro.org with your mailing address and other contact information so we can update our records. Thanks again for your continued support.

Fracking Permit Guide and Webinar

Our friends at the WV Rivers Coalition (WVRC) have created a Citizen’s Guide to Fracking Permits in West Virginia to help citizens submit meaningful comments to the WV Department of Environmental Protection on the various permits the agency issues for activities related to natural gas development. This includes well work permits, construction permits related to pipelines and other infrastructure, and permits related to waste disposal (injection wells and landfills).

WVRC and Downstream Strategies will be hosting a free webinar on the guide on Wednesday, April 12 at 1PM.

Citizen involvement helps to hold permitting agencies and companies accountable to the law. It’s also an important way to speak up for the value of our land, our waters, and the well-being of our communities. Click here to register for the webinar.

• >  >  >  >  >  >  >  >  >
• West Virginia Surface Owners’ Rights Organization
  1500 Dixie Street, Charleston, West Virginia 25311
  304-346-5891
  Join WV SORO

Hello, Everyone: Date: September 11, 2015

Many people have been approached with contracts for easements, roads, pipeline rights of way, and other legal documents for access to property. Bear in mind, these contracts are written for the benefit of the company, not the landowner.

It is up to each landowner to read these and decide what they want in the contract – that is, IF they wish to sell. But IF you must, you also MUST be armed with information. If you can’t afford a lawyer, at least read up.

Please see, attached and below, the list of recommended additional specifications to be added to Right of Way offers to protect landowners.  Pay special attention to points 8 and 22. Please feel free to forward this to others who may be or may know land and/or mineral owners.  Besides the ones contained herein, you can add your own. 

Too many landowners have been made to feel that they have no choice in whether or not they should sign a contract for the use or sale of their land for pipelines. Companies have been illegally citing Eminent Domain as a reason to give up claim or sign for less than the property, or the LOSS of it, is worth. Do not be taken in by this argument.

If you do not wish to sign, there is no compunction to do so at this time, because, and THIS IS IMPORTANT, the interstate pipelines ACP and MVP have not yet been approved by FERC, and this approval is required before ED can be applied. And if you do hold out, the rewards could be greater if you are forced into court. 

With a pipe this large (42″) going through, your property will be devalued up to 75% by what will soon be an outdated piece of infrastructure, when you might have instead put in some solar panels that would increase your property value. Not to mention a life-changer. Interestingly, the ACP is at one point less than half a mile from Buckhannon-Upshur High School, straddling route 20. Can you imagine the mayhem in our county if that line exploded? Promises are just that: words.  How smart is it to trust a for-profit company with our lives?

If you have already signed and you feel that it was done under duress, fraud, or misrepresentation, you may have legal grounds to revoke the contract (so don’t spend that money yet!). Contact a lawyer who handles Eminent Domain Abuse, such as Joe Lovett, Isak Howell, or Chuck Lollar.

As landowners and citizens in this time of taking private property for corporate gain, we must stay abreast of information which keeps the power in our hands. The future of our families and our state depend upon it.

>>>>>> April Keating, Concerned Citizen, Buckhannon, WV

………………………………………..
Pipeline Easement and Right-of-Way Agreements - 
A Landowner’s List of Terms to Negotiate

From the Blog posted by Attorney Eric C. Camp on December 9, 2013 

The following article (blog) discusses terms a landowner should consider when negotiating a Pipeline Easement or Right-of-Way Agreement (collectively called “Easement Agreement”). This list is not exhaustive; each situation is different, as are the laws of each state. This list is not legal advice. When negotiating an Easement Agreement, a Landowner should seek independent legal advice at the outset of negotiations, not just before signing the Easement Agreement or condemnation proceedings.

In this list, the terms “easement” and “right-of-way” are interchangeable. Also, the Grantee is called the “Pipeline Company” and the Grantor is called the “Landowner.”

You can View Blog here.

Drill pads anywhere (and everywhere)?

Oil and gas industry aims to get its way

Guest Commentary by William R. Suan, Morgantown Dominion Post, March 1, 2015

The Marcellus shale once sounded like a financial opportunity that I wanted to be part of; however, it seems we now have an industry out of control using its money, lobbyists and political muscle to bully West Virginia property owners. The issue of forced pooling, fair pooling or lease integration, or whatever the industry wants to call it, is the taking of personal property rights to benefit profits of private corporations.

The industry argues that they cannot develop some mineral tracts because of lost and unaccounted for heirs. West Virginia has a statute addressing the issue, and it is a fair law. When there are missing and unknown heirs, the driller can lease that interest and put royalties in escrow for seven years. After the time is up, the property and royalties go to the surface owner.

The industry complains that the unwilling mineral owners who refuse to sign a lease are stopping them from developing mineral tracts to their full potential. Against unwilling owners who have a partial interest in a mineral tract and are unwilling to sign a lease, the industry can bring a partition action to settle the issue. Another issue is the industry saying we already have forced pooling in the Utica shale. This is a misleading statement. This law was passed before horizontal drilling and was passed for well-spacing purposes.

The gas industry has thousands of acres held by production (old leases) that they are not drilling. The industry says they can drill multiple wells on one Marcellus pad. Why are they not drilling more wells on existing pads? The gas industry has enough acres and leases to drill for many years.

The industry will use a forced pooling law to bully West Virginia property owners. Land men already use the tactic, “If you don’t sign this lease, we will just take it.” I have been threatened this way.

The oil and gas industry can come onto a person’s property, take acres of it because the minerals have been severed and owned by another party. Try to imagine owning property and being helpless when this industry shows up with its equipment and takes whatever it wants. They now want to lay pipelines by using eminent domain and can lay pipelines on property according to terms of an old lease. Now the industry is asking lawmakers to give them the right to come and take the mineral rights you own and tell you what you will be paid for them. This will be used to bring down the price of leases and eliminate negotiation. The mineral owner would have to make his or her case to not be “forced pooled” to the industry-friendly oil and gas commission.

The natural gas industry is a long way from running out of leased mineral tracts to drill. There is no need for a forced pooling law. The industry wants forced pooling to benefit its profits and investors, not West Virginia’s workers and mineral owners.

The industry has pushed this issue in past legislative sessions and it has failed. With the new “business friendly” leadership, I am sure the industry feels this is an opportunity to get its way.

If you want to protect private property rights, contact your legislator and tell them to vote “no” on the forced pooling law.

>>> William R. Suan is a mineral and farm owner near Lost Creek, in southern Harrison County, WV.

Elise Keaton & Joe Lovett speaking

Jackson’s Mill Meeting – Appalachian Mountain Advocates stands ready to help landowners

From S. Tom Bond, Retired Chemistry Professor & Resident Farmer, Lewis County, WV

Mountain Lakes Preservation Alliance held meeting concerning the complaints of rural residents regarding the numerous planned pipelines in West Virginia and surrounding states Saturday, January 10. It was held in the West Virginia Building at Jackson’ s Mill 2:00  to 5:00 pm.

The presentation was made by the Greenbrier River Watershed Association. which has held over a dozen such meetings previously. The first speaker was Elsie Keaton, Outreach and Education Coordinator. Her talk involved the location and character of the four main pipelines, three of which are 42 inches in diameter and one 36, and several smaller ones which lead to and supply them.

The pipelines will require 75 foot rights of way and will go through numerous streams, both causing siltation. They must be kept cleared for the life of the project, an unspecified time. Some companies say they will not use herbicide to keep them clear, but most observers think when the cost mounts, they will resort to herbicide, which will drift off the right of way, injuring surrounding forest or farmland.

The resistance is very high in the Southern end of the Atlantic Coast Pipeline, because of the specialized agriculture there (vineyards, etc.) and relatively dense population. Many of the pipelines center around Doddridge County and Lewis County, in the center of West Virginia. Timber on rights of way is largely wasted, piled up and burned.

The next section was conducted by Joe Lovett, a lawyer employed by the Greenbrier River Watershed, a specialist in representing property owners. He pointed out that in a negotiation, such as for a right of way, it is “human nature” for each party to try to get all they can. The company is not excepted. The property owner must think about his own interest, but recognize what the company must have to make a deal.

Some of the things one must try to get for him/herself is that the route must be completely identified, not just access their land. Some things that must be prevented by the lease are (1) changes in location of the pipe over the property; (2) only one line, no additional lines parallel at later date; (3) no additional uses, such as a connecting road between wells, or a road and a well, or communication lines, or facilities beyond what are necessary for the original pipeline.

Some things you might want to get into a right of way are: Be sure the right of way returns to the surface owner at the end of use of the pipeline. Will you allow it to be converted to some other use? What happens to the pipe at the end of its useful life? Is it to be left in the ground, or removed for salvage? If salvage, whose pipe is it, theirs or yours? How is the surface to be reclaimed?

What about your fences? Will they have to be changed? Who will pay, who will do the work? Will gates be needed for access by the company? Who will pay? Who will replace, since gates don’t last as long as pipelines may be used? Remember customs can change, and likely will, during the life of the pipeline. Get it in writing!

What about leaks and possible explosions? These should not occur in a properly constructed pipeline for several decades. If infrastructure is allowed to deteriorate in aged pipelines it can happen. Several do occur each year, and standards are not as high in rural areas as they are in urban areas.

Joe Lovett answered questions from the floor for half an hour or more. The most important thing for a landowner, he said was to NEVER SIGN A PAPER THE FIRST TIME IT IS PRESENTED TO YOU. Take time to think about it, do research, and discuss it with people you trust.

Joe Lovett pleaded for surface owners to get a lawyer familiar with pipelines, so the important features of a right of way will be covered. (This author reminds the reader that lawyers are specialized in our time, just like doctors. Ask around and find one who does this sort to work! Any layer can legally do your work but all are not trained or experienced in pipeline rights of way. A good choice would be to contact the Greenbrier River Watershed Association.)

The final presentation was by Pamela C. Dodd, Ph. D., a hydrogeologist. She informed us an hydrologist was trained in how water moved on the surface, and a hydrogeologist is trained in how it moves both on the surface and in the subsurface.

First she explained a few concepts such as ground water, water table and water shed. Then she showed how water moves from the tops of a hill or mountain underground to the stream in the valley. Next she emphasized how vegetation affected this flow. When there is forest and litter at the top it retains water for a more uniform flow in the stream below. If the vegetation cover is reduced at the top, more run off occurs and the stream rises. Since less is retained, so the flow in the dry season is less. Removing vegetation near the top of a mountain causes the stream flow to be greater when it rains and less in a dry time.

She also explained how a leak in a gas well near the top of a hill or mountain would be carried in the aquifer downhill toward the valley, polluting the water table as it went.

The audience of about 125 was very attentive. Meetings will be held by the various companies in the next few weeks.

>>>>>>>>>>>>>

From MetroNews … The organization is planning a similar meeting in Craigsville on January 29 and is in talks to play host to events in Buckhannon and Harrison County.

For a pro-pipeline perspective, Dominion is putting on its own informational meetings for the ACP with open houses January 21 at the Elkins Gandy Conference Center from 5 p.m. to 7:30 p.m. and January 22 at Jackson’s Mill at the same time. For the Supply Header project, a January 26 open house will be held from 5 p.m. to 7:30 p.m. at the Doddridge County Park.

EQT will be putting on an open house meeting, providing information on the Mountain Valley project, January 27 at the Progressive Women’s Association building from 5:30 p.m. to 8 p.m. in Clarksburg.

Landowners at WV Building of Jackson's Mill

>>>>>>>>>>>>>

“Groups opposed to natural gas pipeline projects hold informational meeting in Lewis County”  by Aaron Payne, WV Metro News, January 17, 2015

“Landowners learn about gas pipelines”  by Roger Adkins, Inter-Mountain, January 19, 2015

Frack Fluids Storage Tanks

Fracking vs. Real Estate: Are home value declines near wells another multi-billion dollar subsidy for oil and gas industry?

From an Article By Joel Dyer, Boulder (Colorado) Weekly, December 12, 2013

New research indicates that many of the 15.3 million Americans living within a mile of a hydraulically fractured well that’s been drilled since 2000 may have lost or be in the process of losing a good portion of their wealth as a result of this drilling activity.

So just how big of a loss are we talking about cumulatively? If the research is correct, it’s billions upon billions of dollars. As a matter of perspective, recent research indicates that drilling wells within just one mid-size community such as Longmont could, in a worst-case scenario, trigger a drop in home values of more than 15 percent. And a 15 percent drop in Longmont real estate values, a town with a population of only 88,000, would equal somewhere around a $1.2 billion loss.

The losses of those living near wells is due to the diminishing values of their homes and property as a result of the fact that an increasing number of buyers have become hesitant to purchase real estate near fracked wells and their accompanying industrial production platforms. It also doesn’t help that fracking/oil and gas shale development is also threatening the primary and secondary mortgage markets. No buyer, no sale. No mortgage, no sale. It’s that simple.

The fracking/real estate conundrum will not be easily solved. It is not so simple as identifying the fact that most people won’t buy a home if it’s sited near oil and gas activity that they believe could be harmful to their health or negatively impact future property values. That part of the equation is just common sense and is indirectly linked to the ongoing scientific health debate over fracking.

Because perception is reality in the real estate market, informed buyers and qualified real estate agents are beginning to steer clear of houses and properties near oil and gas shale plays unless they are at a substantial discount to similar properties that are not threatened by such drilling activity. And if buyers and agents are aware of fracking’s impact on real estate values, you can bet that banks are also well aware of their potential exposure when lending money in those same areas.

If housing prices in an area fall because of the fear of fracking, then lenders stop lending in areas where fracking may occur, and when that happens, prices in those areas fall still further. Like many ups and downs within the investment community, it is a chain reaction triggered entirely by perception, but the results are all too real.

Small towns near shale plays all across the country, including Colorado towns like Rifle and Trinidad have already experienced the boom and bust cycles attributable to shale gas.

The housing additions that were new and promising a few years ago are today bank-owned eyesores. The new restaurants, hotels and businesses that came have mostly gone. Today even the businesses that existed before the wells came are struggling to hold on now that the oil patch has shifted to the next unsuspecting, ill-prepared community.

It seems hardly an honest position for the oil and gas industry to point to such boomtowns as examples of oil and gas shale development’s positive influence on real estate values. Industry folks know that, for the most part, the benefit to real estate values only occurs during a drilling boom phase of development due to severe housing shortages for workers in less populated corners of rural America.

In most areas where a larger population exists before the rigs move in — areas such as Colorado’s Front Range or similarly populated parts of Pennsylvania, New York and Texas — researchers have found that fracking has a substantial and negative influence over real estate prices.

In these more populated, more developed areas there is no upward pressure on housing prices when the drilling comes because there is ample housing and other businesses to handle any short-term influx of the drillingrelated workforce.

So the real, long-term impact on housing values for most Americans living near oil and gas shale development is to the downside due to the perception, right or wrong, that drilling and fracking may contaminate the air and water, create a visual/noise nuisance and threaten public health, at least that is what the research is finding.

A recent study titled “A Review of Hydro-Fracking and its Potential Impacts on Real Estate” which was conducted by the University of Denver’s Ron Throupe, a professor in the Daniels College of Business, along with his DU colleague Xue Mao and Robert A. Simons of Cleveland State University, found that the term “fracking” is having an influence on public opinion, and that when it comes to real estate, that influence is likely causing people to not buy or at best pay less for homes near such oil and gas activity.

The study surveyed homeowners in Texas, Alabama and Florida. The homeowners were asked if they would buy a home under certain conditions, which included that “an energy company had bought the rights to inject a pressurized mixture of water, sand and chemicals into a lower groundwater aquifer to recover natural gas under the property they were considering buying.”

In Texas, where residents have had a long relationship with the oil and gas industry, only about a quarter of those surveyed said they would be willing to purchase the house. Of those who said they would still purchase the home, the best offers were around 6 percent below what should have been the home’s market value.

While just over a third of those surveyed in Alabama and Florida said they would be willing to buy such a home under the set conditions, those still willing to purchase the property discounted the property more heavily than the Texans, claiming that they would only buy if they could pay 15 percent below what should have been market value.

The DU research also found that other factors near drilling operations, such as whether or not a home was on well water or city supplied water, also influenced potential purchasers’ willingness to buy and pricing.

Throupe and his colleagues are currently working on another research project examining the oil and gas industry’s impact on Colorado real estate specifically by actually mapping oil and gas wells and then analyzing the real estate nearby. That study will be completed in a few months.

In 2004, another study titled, “The impact of oil and natural gas facilities on rural residential property values: a spatial hedonic analysis” was conducted by Peter C. Boxall and Melville L. McMillan of the University of Alberta and Wing H. Chan of Ontario’s Wilfrid Laurier University. For simplicity this research will be referred to as the Boxall study.

The peer-reviewed Boxall study is believed to be the first actual study of the impact of oil and gas industry activity on real estate values. Because it examined a region on the edge of a significant population center, its findings may well be applicable to Colorado’s Front Range.

The Boxell study looked at the impact of gas wells and other associated industry development such as pipelines and production facilities on the values of real estate located just on the edge of Calgary, a million-plus-population city in Alberta, Canada. So the study looked at a populated area more similar to Colorado’s Front Range or the Barnett Shale’s proximity to Fort Worth, Texas, as opposed to a small isolated town like Williston, N.D.

The Canadian researchers examined how the fear of health risks from gas wells and the perceived lost amenity attributes caused by wells affected real estate values.

It’s also important to note that this study revealed that the oil and gas industry had paid for three prior consulting papers examining the industry’s impact on real estate values, and that those papers had all claimed that no negative impact existed.

However, the peer-reviewed Boxell study researchers found that all three industry-funded papers had serious shortcomings in the processes used to arrive at their conclusions and that the findings were, in fact, in error.

The Boxell study concluded, “The results of this analysis strongly suggest that the presence of oil and gas facilities can have significant negative impacts on the values of neighboring rural residential properties.” The report found that properties located within four kilometers (2.48 miles) of gas wells lost between 4 percent and 8 percent of their value.

Perhaps most importantly, the Boxell study researchers also recommended that the findings of this study and others that would be done subsequently should be used in the U.S. and Canada as a way to help determine proper compensation to homeowners whose property values have been negatively impacted by oil and gas activity.

In many ways that suggestion could be a short-term answer for those communities and counties that are trying to prevent invasive oil and gas shale development while more research on fracking’s impact on public health and the environment is conducted.

If oil and gas companies were legally made to pay proper compensation for surface damages, which logically should include real estate value damages to homeowners, it is likely that much of the proposed drilling near populated areas such as Colorado Front Range communities like Longmont, Lafayette, Fort Collins and Broomfield would be deemed uneconomical, as damages could easily reach into the tens of millions of dollars or more for any well located in close proximity to concentrated housing.

At this point, the only reason that oil and gas companies can drill close to or even within communities is because outdated state laws regarding surface damages which exclude real estate value losses to nearby homeowners are, in fact, acting as a multi-billion dollar subsidy for the world’s most profitable industry.

And this is only the impact that the oil and gas industry is having on real estate values. Next week BW will be examining how oil and gas development is threatening to implode the primary and secondary mortgage markets of the United States. It’s a problem that has thus far stumped some of the best legal minds in the country. But a solution must be found quickly before the next chain reaction starts unwinding more financial markets.

Facts and Fracks:

What You Need to Know Before Signing a Lease

From the Article by Jamie Stover, WBOY, 12 News, Clarksburg, WV, October 7, 2013

Natural gas development has brought hundreds of jobs and boosted the local economy in north central West Virginia, but workers and business owners aren’t the only ones who can cash in. Mineral owners are entitled to royalties for minerals extracted by natural gas producers.  For some families in W.Va., such royalties are like hitting the lottery.

“Some people on a fixed income, this could make a big difference in their lives,” said Tammy Beamer, a mineral owner in Doddridge County. It’s a seemingly solid offer, thousands of dollars and all the mineral owner really has to do is sign on the dotted line. But experts said mineral owners need to do more before they make that binding agreement.

“A lot of the leasing agents don’t even work for the companies they represent. They are really independent contractors. They have an incentive to get you to sign the lease,” said Bill Quinn, a CPA. Some of those who understand what the wording in lease agreements mean said the real winner is often the one who wrote the lease.

“The initial offer, typically, is very advantageous for the oil and gas company and not the mineral owner,” said Luke Thomas, an oil and gas attorney.  Thomas said this is why mineral owners need to do their homework, and seek advice before jumping on board. He said the up-front costs are worth it to ensure that a solid and fair deal is made. He said a good negotiator could triple royalty rates.

Mineral owners could be offered as low as 12.5 percent and as high as 20 percent in royalties. A next door neighbor could get a completely different offer.  ”The variances between what neighbors get is drastic. It doesn’t have to be. One neighbor takes it to an attorney and gets competent assistance and get a very good lease for their family and future generations. But someone who just signs the document may have just cost their family a small fortune by not,” Thomas said.

Tammy Beamer owns minerals in Ritchie and Doddridge counties and has signed more than 15 lease agreements. She also worked in the industry as an abstractor. “It is very easy to get tricked. I get caught up sometimes,” Beamer said.  But experience taught her to watch out for certain clauses. “I don’t ever guarantee title {warranty of title}. Say they came to you and they were mistaken, their person went out and said you owned and you really didn’t and they paid you. Then you would be expected to join in with them if there was a lawsuit,” Beamer said.

She also crosses out post production costs; something Thomas and Quinn strongly support.  ”I ask for well-head price. The difference there is if you have a lease that you’ve agreed to pay post production cost on, you will be charged for the transportation,” Beamer said.

A good rule of thumb: never sign anything you don’t understand.  Quinn said mineral owners should never agree to (natural gas) severance charges or (natural gas) transportation fees either.

Beamer said she has also seen lease agreements that include market enhancement charges. She never signs a contract that includes those fees, as she believes the gas is rich enough without enhancements. Quinn and Thomas said mineral owners need to realize that a contract is always negotiable, until it’s signed. The two have seen a wide variety of lease agreements over the years. “You should get that royalty, by and large, free of all costs and expenses,” Quinn said.

Thomas said the only true standard for oil and gas contracts is a minimum royalty rate, making seeing an expert before you sign all the more important.  ”There are no consumer protections really out there for a mineral holder or a surface owner. It’s not like buying a car where there’s a Consumer Credit Protection Act and those sorts of things. The only really protection, is there is a state minimum of 12.5 percent that they have to pay you by statute,” Thomas said.

Beamer also avoids contract agreements that include storage and adverse claim, but Beamer said she is in the middle of learning a new lesson. “You need, because the West Virginia State Law does not require the producers to begin payment at any certain time, your leases need to include a statement that says how long they will hold the money for payment after the well is on line,” Beamer said.

She started signing lease agreements as a mineral owner nearly five years ago but has yet to receive a check in the mail for royalties. Beamer said she soon learned she wasn’t alone. “I have been talking to people about this non-payment. I have found out that it is more the norm anymore, than the exception. There is a huge delay from the time the well goes on line and the time the royalty owners get paid,” Beamer said.

She’s not taking it lightly. “I own other oil and gas properties. I already put the word out, I am not signing any more payments from the wells that already have,” Beamer said.

According to Antero Resources, it typically takes seven to eight months before a royalty owner starts receiving payments, but it can take close to a year.  Al Schopp, Vice President of Antero Appalachia, said the delay is typically attributed to time needed for a full title opinion. Schopp said this opinion determines all of the heirs and how much their entitled to.

Schopp added that most of the lease agreements date back to past generations, and companies need to verify who the rightful heirs are before payments can go out. “Majority of the people never show up on the name of a lease because the leases were made years ago,” Schopp said. “The lease doesn’t have all of the current royalty owners, the lease may be e generations long and have been passed down.”

Once everyone is accounted for and the math is in check, Schopp said checks start going out monthly. The first check is typically the largest, as it includes earnings from date the well started producing.

But Beamer believes that should have been taken care of before the drilling started. “Why aren’t they sending out checks, who gets the interest in that money?” Beamer said. Her options are limited. “I can either take my money and hire a lawyer and try to fight these huge corporations. I don’t think that’s fair. Or I can sit and wait it out,” Beamer said.

She also contacted the Attorney General’s Office and West Virginia Department of Environmental Protection. She said both agencies told her there was nothing they could do to help. “Our Attorney General’s Office. I see where you can put up hotlines. I think if he put up a hotline for mineral owners that aren’t being paid, or being paid properly, he would find there are more people out there than he really realizes,” Beamer said.

With nowhere to turn, Beamer said someone needs to be looking out for the mineral owners. “There’s no one out here to regulate it. There’s nobody out here to protect the citizens of this state who are getting ripped off,” Beamer said.

{See the WBOY 12 News Video here.  Each individual situation may vary. 12 News is not offering legal advice, so  consult a legal professional if you have questions}

List of the Harmed

# 1208 Entries And Counting:

By Tom Bond, Resident Farmer, Lewis County, WV

The internet site Pennsylvania Alliance for Clean Water and Air is one of the many great sites produced by people living in the Pennsylvania Marcellus area. The area is both heavily populated and heavily drilled which results in so many sites and such good quality. The area has plenty of people articulate enough, with the skills necessary to make themselves heard, and the initiative to actually work on the problems they and their neighbors face. Their “tell it like it is” attitude is something to be proud of.

Early on, PACWA began a “List of the Harmed,” a list of those affected by pollution from shale drilling. It includes the name of the harmed individual, the location, gas facility causing the harm, how they were exposed, and the symptoms, with the source of the information. For example, numbers 1197 and 1198 are Bruce Ford and Rod Law, in McKenzie County, ND. They were seriously burned when vapors from a Statoil well caught fire.

Another is 828, Jodi Borello of Washington County, Pennsylvania. She had six gas wells drilled within 500 yards of her house, with the result of chemical burns to her eyes and bad rashes , and also had to put up with noise pollution and excessive traffic.

The list is compiled by Jenny Lisak, Co-director of PACWA. It has now arrived at 1208 entries, some of them double or groups of people. There are many other references at the end of the list, guidance for more research.

The significance of the list is that everyone connected with fracking knows some several people with complaints. If you have listened to these people it is heart-breaking. Children, pets and domestic animals are affected and sometimes die. There are many published accounts dispersed through articles in newspapers in shale drilling areas and the accounts on the internet. The List is an attempt to gather a large number of these together in one place. Several hundred is hard to shrug off. One thousand plus is impossible to ignore.

As a result of the large number, the List is getting a lot of much- deserved attention. There is a video on YouTube which shows how many are affected graphically. That YouTube page has responses, some showing empathy, some planted by industry sycophants, and some by people who are simply confused. The video leads in to several others having to do with fracking – there are many on YouTube.

Laurel Pelter has also written an excellent article about the List. She points out that no official source tabulates the very considerable damage being done by fracking. The US Energy Information Administration tracks a tremendous range of statistics about energy, but nothing about how it affects people! She quotes Jenny Lisak, the list coordinator, who said “I wonder how long the list will have to get before something changes.”

Laurel also points out a few other related statistics we do know, collected by the EIA:

(1) 40,000+ Number of shale gas wells drilled
(2) 15 states generating shale gas
(3) 11.3 trillion cubic feet of shale natural gas produced in 2011
(4) 40 Percent of U.S. gas production comes from shale
(5) Shale plays are found in 32 states.

Laurel says, ” It is time we asked our government to publish official statistics of how many citizens are being negatively impacted by fracking so that the real costs are out in the open.” We agree.