NORWICH – If the geologists are correct about what’s in the ground here, it’s time to start keeping up with the Joneses - or at least talking to them.
That’s the message from the Chenango County Farm Bureau and many landowners. And after a decade of educating and lobbying government regulators on the subject of mineral rights, Farm Bureau President Bradd Vickers said, “It looks like people are finally getting it.”
People are finally paying attention to the rich source of natural gas found in the Marcellus Shale strata that stretches from West Virginia, through Ohio and Pennsylvania and ends in central New York. Estimates vary as to how much gas this field holds, but one estimate from Fredonia State College put the number at 500 trillion cubic feet - more than twice the country's current proven reserves. Actual production will be far more modest, but nonetheless significant.
Experts have known about natural gas in the region for years, and wells have been drilled in any number of shale beds here in Chenango County. But, it’s only been a few years since new horizontal drilling technology has made extracting what’s being called the “super-giant” Marcellus gas field possible and cost effective.
Horizontal drilling technology was first used by natural gas exploration companies in 2001 in order to reach what was considered the rich Barnett Shale strata in Texas. About 3 million cubic feet of the energy source was found. That can be compared to the 7 million cubic feet discovered in the Marcellus bed in Western Pennsylvania more recently.
If the experts are correct, just tapping into 10 percent of what’s in the Marcellus Shale would be enough to power the entire country for about three years. And if the geological mapping and research available online are accurate, the Marcellus in eastern Chenango County has a huge store of some of the Appalachian regions’ cleanest, richest and purest natural gas.
“We are standing at the door of an economic boom. It will mean economic development for Chenango County like you’ve never seen before,” said Richard Jorgensen, a Town of Norwich landowner. “It will make what Procter & Gamble Pharmaceuticals brought to the area pale in comparison.”
National economists say the Barnett Shale production in Texas resulted in 83,000 new jobs near the Dallas/Ft. Worth area.
Like a handful of other landowners, Jorgensen has been talking to his neighbors. They are actively seeking others to join together to create a unit of land that would be more attractive to larger natural gas companies. The group has about 800 acres already, but Jorgensen said they would talk to anyone, anywhere, with any amount of land.
“We would like property owners to cease and desist leasing their land,” the local dentist said. “If we step forward with a block of land, there is greater appeal to them to give us the best price.”
Some officials say close to two-thirds of the land in Chenango County has already been leased or sold out-right to natural gas exploration companies.
Jorgensen’s neighbor, Brian Conover, said he has been “swimming” in natural gas information for the past month. “Good things come to those who wait,” he said. “It’s better for our community to band together, financially.”
A handful of coalitions are currently forming in Chenango County. And, their theory is proven. Just this past weekend, a consortium of 300 neighbors who banded together in Broome and Delaware counties agreed to a $90 million offer from two large natural gas companies. Each participant will net $2,400 an acre with 15 percent royalties.
Vickers said he still receives daily calls from people all over the county asking whether they should take $50 to $70 an acre. “It’s shocking to know that they can get a whole lot more than that,” Vickers said.
“The smaller, less reputable gas companies are capitalizing on the state of the economy here. I can’t tell you how many people told me they signed the lease for this amount because I needed the money to pay the taxes.”
Jorgensen said he would simply like to stop people from “signing away their souls” - and their offspring’s inheritance - because they are creating what’s called a checkerboard map of the county. Larger companies might choose to bypass areas that are checkerboarded in favor of purchasing larger tracks of available land that they can purchase as a unit.
Small companies, like NORNEW (a company with offices in the Eaton Center in Norwich), don’t currently have the technology to drill horizontally. However, they are actively leasing land and drilling wells in other shale strata in Otselic, Smyrna, Plymouth and Preston and could - if the lease says so - turn around in about 10 years and sell the well to a larger company that can.
Jorgensen said there are currently only two Marcellus strata drilling permits authorized by the Department of Environmental Conservation in New York, both in Chemung County.
The minor, smaller companies who are “preying on landowners” in Pennsylvania and New York, he said, are offering only $2,000 an acre versus up to $5,000 per acre being offered by big name companies in Texas, Kentucky and Ohio. Some of the larger companies are: Chesapeake of Oklahoma, Range Resources, of Texas and North Coast Energy, Inc. of Ohio. The record price paid in Dallas was $25,000 per acre for 4,100 acres.
Jorgensen and Conover believe that Chenango County is not long from those types of offers. They say the colder temperatures and greater population density of the northeast means better market prices for gas companies.
“It’s more lucrative for companies here in New York than in Texas. The giant well rigs are already heading north as we speak,” Jorgensen said.
“This is already changing the economy of Chenango County. It’s going to impact us for years to come,” Vickers said.
Jorgensen and Conover’s group is called The Central New York Landowners Coalition. Those interested in joining should mail their name, phone number, tax map number and acreage to P. O. Box 295 in Norwich. Or, call the Chenango County Farm Bureau at 334-6061 for the names of others currently joining together large tracks of land.
The Farm Bureau also has a complaint form available to anyone concerned about gas companies with whom they may have already signed. Vickers said it is “imperative” that landowners contact a lawyer before leasing their land because there are “so many variables.”
For example, asking the company to pipe the natural gas directly from the well to power your home or farm is actually an attractive negotiating tool that companies use. “If you end up getting several millions of dollars from your royalties, you can always spend several thousand for your house,” Vickers said. “They will gladly negotiate that into the price.”