NORWICH -– Chenango County still isn’t in the natural gas business.
While all eyes were focusing south of the county line this week at a $16 million offer to lease land owned by Broome County for natural gas drilling rights, yet a third opportunity for Chenango County to negotiate royalty payouts on Bullthistle land is coming and going.
Section 215 of County Law prohibits non-chartered counties, those without an executive form of government, like Chenango’s, from entering into leases that extend for more than five years. Because the lifespan of most gas wells ranges between 30 and 40 years, the county is only eligible to be what’s called ‘a non-participating owner’ and receive the state-set standard of 12.5 percent of production value.
Legislation that would amend Section 215 and allow the county to extend leases out longer is currently sponsored in both the New York State Senate and Assembly. The bills have not been passed yet, however.
Senator Thomas Libous, R-Bighamton, said Tuesday that the proposals are being held up because opponents of hydraulic fracturing view them as pro-drilling measures.
“They see it as giving people who want to drill a leg up,” he said.
The senator, speaking from his Albany office, said the proposed legislation is also incorrectly interpreted as being applicable to every non-chartered county in the state, not just Chenango County. There are 35 other non-chartered counties.
Unfortunately, representatives, particulary those from downstate, according to Libous, don’t realize that the only game in town here is natural gas exploration into sandstone formations, such as the Herkimer and Oneida. For almost two years now, the New York State Department of Environmental Conservation has been reviewing public comments and redrafting the environmental quality review regulations for the water-intensive drilling technique needed to extract natural gas from shale formations, such as the Marcellus.
“They just see that as pro-drilling (the bill to amend 215). There are about 20 bills out there asking for moratoriums (on drilling) and a whole bunch of people trying to kill it,” Libous said, adding that he joined with only about six other representatives in the state who are trying to communicate “to allow the DEC to take its proper course and regulate this thing like it should be.”
Chenango County Board of Supervisors Chairman Richard B. Decker had expected the bills to fly through a midnight budgeting session this summer. “But obviously we are not important enough for that,” he told county supervisors attending this month’s board meeting.
“It’s been six months and nothing’s really been done on 215,” said Preston Supervisor Peter C. Flanagan, who also chairs the county’s Natural Gas Advisory Committee. “Once again, we still do not have the opportunity to do anything but take the 12.5 percent, or low rate. The legislature has ignored our request. Our opportunity to improve taxpayers’ return is not there.”
A small parcel of property the county owns off Road 10 in Preston is being compulsory integrated into the spacing unit of a Norse Energy, Inc. Herkimer well. The same property was integrated when the Norwegian company drilled into the Oneida strata well back in 2008. Chenango County faced another integration order on Preston Manor property off of county Road 4.
A well in the latter spacing unit, called the Maynard, was supposed to be drilled this spring, but Norse allowed its permit to expire. The move effectively put Preston out of the gas business as well. The town had successfully leased 7.1 acres of surplus property to Gastem, a Canadian-based energy company, in a Norse Energy compulsory integration contract that would have yielded 18.75 percent in royalties.
Chenango County owns about 1,500 acres that might be of interest to energy corporations in the future, including a reforestation parcel in Preston, Cook Park in Greene and the airport in North Norwich. There are also 47 county roads that represent 308 miles.
Supervisors Ross Iannello, unaffiliated-New Berlin, and Richard Schlag, D-German, have suggested that wording in Section 215 and a 1992 Attorney General’s opinion allows for leases to be renewed after every five year period if need be. Chenango County Attorney Richard Breslin, however, has advised against interpreting it that way.
While the forecast for wells to be drilled in Chenango County keeps changing, Norse Energy originally estimated 30 for 2010, which would bring the number in Smyrna to 42 natural gas wells created since 2008.
Also at the county board’s July meeting, Flanagan pointed out that Norse purchased 9.99 acres for $7,700 in the Town of Smyrna at the county’s delinquent tax sale. The acreage was part of a Norse proposed spacing unit.
“I just wanted to point out that Norse bought property at the county’s tax sale to protect their interests,” said Flanagan. The gas advisory committee has suggested stripping the mineral rights from properties taken for back taxes before putting them on the chopping block at the annual tax sale.
Not only does Broome County’s government structure enable it to lease its land to energy companies offering to drill, but the county has also decided to retain the mineral rights on properties taken for back taxes.
Inflection Energy LLC of Denver was poised to pay $3,000 an acre for 5,300 acres of property at the Broome County landfill, the Greater Binghamton Airport and other county properties for drilling rights. The offer was pulled off the table yesterday, however, because both environmentalists and landowners opposed the deal – the former for water safety reasons and the latter because the offer wasn’t enough.