NORWICH – Chenango County’s special committee charged with monitoring the natural gas industry laid out a plan of action at a meeting Tuesday.
First on the agenda was a discussion of the potential liabilities of leasing the county’s approximately 15,000 acres of land.
Natural gas companies, with Norse Energy’s Nornew, Inc. being in the forefront, have been leasing drilling rights to much of the county’s land over the past five years. More recently, property owners are being presented with lease offers to bury the gas company’s pipeline.
At the going rate of $1,000 to $2,000 per acre bonuses for drilling rights and continuing royalties upwards of 15 percent, the four town supervisors present and handful of invited guests decided to investigate the idea of leasing further. The county has already been forced into a compulsory integration lease agreement with Nornew, Inc. due to land within proximity of a gas well drilled in Preston this spring.
“We have a responsibility to taxpayers to treat this land as if it were our own, and to be more circumspect. Because we can be integrated on any property the county owns, I can’t see any property that we couldn’t lease,” said Committee Chairman Peter C. Flanagan, D-Preston.
The county owns forest land, park land and highway right-of-way land, including 90 acres of land boardered by Whaupaunaucau State Forest. The committee charged the county’s planning and development and highway departments to identify and map the parcels of land.
Farm Bureau President Bradd Vickers said New York State, which happens to own 85,000 plus acres within Chenango County, has “really fallen down on the job here” by not leasing.
No state land in the county is currently up for lease. A representative in the state’s Department of Environmental Conservation office said there were “nominations” for land, but no lease offers were being sought.
In a reference to the amount of land the state owns within the abundant and highly desired Marcellus Shale play, the large population centers in the northeast and the high demand for alternative energy sources to oil, Vickers said, “If anybody could break the royalty (increase it) here, it would be New York State.”
“Royalties could go from 15 to 18 to up to 30 percent. We, the people, need to push the state to do this right,” he said.
Entrepreneur Steven Palmatier, who owns one of four wells in Preston, told the committee that Nornew, Inc. had accepted all liability for his gas well, including the insurance should an accident occur.
“Do we want to expose taxpayers to potential liability?” said George G. Coates, Town of Columbus Supervisor.
“Any enterprise is going to have accidents. It’s a construction site,” Vickers said. “All potential liabilities can be addressed within a lease.”
The committee discussed leasing only subsurface rights, the need to map pipelines and ensure that they are buried deep enough, and the need for more expert-level, legal representation.
“We are talking about $3 million here, hypothetically. How do we get our arms around the litany of liabilities we need to be prepared for? The lease would be a book,” Coates said.
Both Coates and Town of Bainbridge Supervisor Rick E. Chase questioned whether the county’s three-member planning department was capable of identifying each parcel piece by piece. “There might be parcel or portions of parcels that we might not want to lease,” Chase said.
“We need to get our county attorney together with a legal expert to come up with this document,” he added.
“There’s new news in this subject every day and I’ve read more and more of the research. How do we get comfortable that we’ve covered everything?” Coates asked.
Vickers suggested following other county’s leads, such as Chemung County and Sullivan County. The former, for example, has separated surface from mineral rights on properties offered in annual tax sales. The latter is currently hosting information gatherings with Colorado land owner coalitions.
“We don’t need to reinvent the wheel,” Flanagan said.
The Preson supervisor commented that New York’s environmental conservation commission has been in the business of permitting gas wells for years, but the recent interest in the Marcellus Shale has “overwhelmed’ them. “It’s a sea change for them,” he said.
Palmatier pointed out that there were only six geologists in the country who are experts in the Oneida, Onondaga and Herkimer formations in the region. Nornew has been actively drilling horizontal wells into these substrata.
The special committee agreed to ask County Attorney Richard Breslin whether Cook Park property could be leased.
They also agreed to ask City of Norwich Public Works Director Carl Ivarson to discuss water-related issues at the next meeting.