About Air and Water

Monday, March 7, 2011

Natural gas fields have provided a fount of cash for Texas cities Second of two parts Read more: http://www.post-gazette.com/pg/11066/1130239-84.stm#ixzz1Fw4LbYBB

By Bill Toland - Pittsburgh Post-Gazette - Monday, March 07, 2011
Note by Faith Chatham: I have read a lot of coverage on gas drilling in the Barnett Shale. Mr. Toland's 2 part series is the best articles I have read in years and can serve as a primer of what resident's need to know when the land man starts showing up in their neighborhood. I am excerpting some of his second article below but recommend that you click on the READ MORE LINK and read the entire article.


Talk of the town
Despite success stories, people remain wary about urban gas drilling, and it's hard to overstate the degree to which gas drilling dominates the news cycles.

The local newspaper, the Fort Worth Star-Telegram, runs a weekly report on all the newly active rigs in the 24-county area -- usually there are several dozen new rigs put up each week. In a three-day span three months ago, the newspaper and TV news reported on the city school district's ongoing gas lease negotiations, city council's long-debated air quality study, lawsuits over polluted water wells, and an early morning gas leak (and resulting vapor cloud) at an XTO Energy well site north of Fort Worth.

Some in Fort Worth object to urban drilling notionally, concerned about long-term water quality and health effects. But others object to the way they've been treated by the industry and its "landmen" -- the free-agent real estate negotiators who gather signatures on behalf of drillers, bundling them and then selling the waivers, titles and leases to energy companies.

The process sometimes pits neighbors against one another.

"I would describe myself as very pro-drilling, pro-oil, pro-gas," said Laura Reeves, a Fort Worth resident who lives in an impeccably decorated townhome and can't remember the last Democrat she voted for.

"I have friends who work for Chesapeake. I know people who need their jobs. I don't disagree with drilling for gas. I disagree with drilling for gas in the middle of a (populated area)."

Chesapeake Energy wants to drill on a vacant tract of land to the immediate south of her new, gated townhome community. Her complex, and that empty tract --being called "Westridge" by Chesapeake -- are just a few hundred yards west of Como, a historically black neighborhood. Mrs. Reeves says the industry has tried to take advantage of the poverty levels in Como.

The landmen wanted Mrs. Reeves and neighbors to sign waiver agreements, allowing Chesapeake to drill within Fort Worth's prescribed setback radius if city council subsequently approves the variance request. The "setback" is the minimum distance that a well must be from the nearest home; in order to drill inside the city's 600-foot setback radius, an energy company has to get enough neighbors to sign waiver agreements, and it often sweetens the pot with waiver bonuses.

The waiver payments are thank-you notes written in cash, because the people who sign the waivers -- townhome residents, renters, business owners -- often won't see any other money from the drilling. They won't get royalties, because most don't own any mineral rights, and they won't receive a surface lease payment, because the drilling isn't happening on their property.

The first offer that Mrs. Reeves received from the landman that knocked on her door in autumn 2009? Sign the waiver and she gets $74.

Small potatoes to her -- but more attractive to those living in poverty, she said. Waiver bonuses can increase dramatically if you live closer to a drilling site, or if you live in a more well-to-do neighborhood, but generally landmen want to get the best lease and waiver terms, at the lowest price, for the companies they represent.

"You may as well sign," the landman told her, because "78 percent of your neighbors have signed." Turns out only three of her 70 fellow townhome owners had signed waivers, she said.

But because landmen aren't employed by the energy companies, and because there is no state board that licenses or regulates these middlemen, punishing them for misrepresentations is difficult, according to foes.

"I realized some of them had signed the waiver and didn't have a clue what they signed," said Mrs. Reeves. "They felt stupid because they just believed what the landmen told them."

When Mrs. Reeves and others tried to fight off the Chesapeake project -- organizing community meetings, attending city council hearings, going door-to-door in Como -- she says she was caricatured by some in the energy industry as a bored, blonde housewife.

"I was insulted," she said. "They were counting on me, the white blonde, not [setting] foot in a black neighborhood."

But she did, and for a time, it appeared that the drilling project near Como would be rebuffed; Chesapeake withdrew its drilling request last August. In February, though, landmen made headway with one of the neighbors to the west of the Westridge site, a prominent businessman, and Chesapeake now intends to drill a few hundred feet to the west of its original location.

Ms. Knowles, the master's student -- whose boss, state Rep. Lon Burnam, called for a moratorium on new Texas drilling permits -- said the landmen are often accused of misrepresenting the degree of neighborhood unanimity as well as the scope of the drilling projects. They say that the rigs will be up for only a few months, which is often true.

What they don't say is that the rigs can return again and again to drill new wells, as long as they have an active lease. Or that a "few months" of disruption can turn into a few years, or that your home value could decline.

"Nothing can be done if they lie, cheat or steal," she said.

Gas lines another issue
Another thing that landmen may or may not bring up is the issue of gas lines. To get the raw gas to market, the energy companies or subcontractors will also eventually have to build "gathering" lines from the pads to the nearest processing plant.

In Texas, energy companies and private pipeline owners are treated more or less like public utilities, and they have the ability to condemn pieces of private property, if need be, in order to lay the gathering lines.

"That creates a whole new issue," said Democratic state Sen. Wendy Davis, a former Fort Worth city councilwoman.

"You get lines crisscrossing all over your city ... and once you've laid a line that's carrying natural gas, you can't develop it" or put other utilities beneath it, like electric or sewage. "The most you can do is put a surface parking lot on it."

And that's just the lines they know about. Pipeline maps and surveys have proven unreliable, and records from the Texas Railroad Commission, which issues the operating permits for the raw gas lines, are often incomplete, critics say.

"There are lines all over the place that really no one at the city levels were ever told," Ms. Davis said. "And we may find that it inhibits" future development -- or, worse, could cause an accident when someone tries to dig a backyard swimming pool and finds that the gathering line is not where the pipeline company thinks it is.

Add the 360,000 miles of gathering line in Texas to the 20,000 Barnett gas wells, all of it being monitored by just a handful of state inspectors, and people have good reason to worry. "Who can feel safe [when] that's the way it's functioning?" Ms. Davis said. "You can't trust these companies to self-police."



Read more article part 2: http://www.post-gazette.com/pg/11066/1130239-84.stm#ixzz1Fw5uh7LH

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