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Dreams of gas riches fading for NY landowners

By Mary Esch

Associated Press

Published: Tuesday, Feb. 26 2013 7:40 a.m. MST

Some New York landowners signed lucrative leases with energy companies before the market and the state's regulatory climate soured. About 50 landowners in Broome County received signing bonuses of $5,500 per acre under a deal negotiated jointly with hundreds of Pennsylvania landowners in 2009. New York's landowner coalitions are still trying to market leases but fear low gas prices will make large signing bonuses unlikely.

"New York landowners will never recover the revenue that's been lost," said Nick Schoonover, a retired engineer who owns a 75-acre tree farm and heads the Tioga County Landowners Group. "Back in 2009, the market was supporting leases at $4,000 to $5,000 an acre and royalties of 20 percent. That wave has passed. You're never going to see that again."

Kevin Frisbie, a livestock feed producer in the town of Spencer who makes frequent trips across the state line to Pennsylvania, said farmers there who were getting $10,000 a month in royalties are now getting a mere $1,500 because of the lower wholesale price and reduced production. But that's $1,500 more than he's getting from the shale beneath his 120 acres.

"The part that really bothers me is, I'm afraid my 80-year-old father isn't going to live to see it," Frisbie said, his voice quavering with emotion. "He's worked his tail off all his life. I'd like to see him and my mother benefit from this."

In the economically depressed southern half of New York that sits atop the Marcellus, steadily rising operating costs and low milk prices have pushed some dairy farmers to the edge of bankruptcy while they wait for a fracking decision.

"With the cost of grain, fuel and fertilizer so high, and taxes, just in the last year I know of three friends who have sold their cows and their farms stand abandoned," said Judi Whittaker, who has a 550-cow dairy in Whitney Point. She sees gas leasing as a way to ensure her farm's future.

"We've been hoping somebody would come and help sustain our farm, not only for us but for our grandchildren, so they don't have the struggles we've had to face, not knowing where the money's coming from," Whittaker said.

Schoonover fears bankrupt farms will be sold to outside investors from Colorado and other states who have been shopping for land with mineral rights in the region.

"They won't care about protecting the land like the local farmers have for generations," Schoonover said. "They're in it strictly for the money."

While anti-fracking groups depict Pennsylvania's shale gas region as a wasteland of contaminated well water, poisoned cows and an industrialized landscape, members of New York's landowners groups say those claims are greatly exaggerated.

Frisbie said he recently drove through Pennsylvania and talked to 17 dairy farmers. "Not one of them was unhappy that gas had come to their property."

Still, Binghamton apple grower Johnson has taken a cautious approach, banding with other landowners to draw up a model lease with 45 pages of environmental and financial protections. Turning a quick buck is not as important to him as preserving the hilltop farm that's been in his family for 150 years.

"I'm looking forward to drilling," he said. "This could be a good thing to carry on our farms, because I don't know anybody who's not struggling."

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