SUSQUEHANNA COUNTY, Pa. – If you want to see John Benscoter smile, ask him about the royalty checks he receives from Chesapeake Energy.
The Auburn farmer leased the natural gas rights on the 105-acre farm which has been in his family since 1837 to the multi-national energy company in the spring of 2006 for the paltry sum of $47 an acre.
“We’d never heard of Marcellus (Shale),” he said. “We had no idea.”
Chesapeake has yet to drill on his property, but that doesn’t mean Benscoter’s not benefiting from the Northern Tier’s natural gas boom. The farm – a working beef cattle operation – is part of not one, but two spacing units from active wells on adjacent properties.
“We received our first check in late June,” Benscoter reported, breaking into a grin which widens as he explains the checks grew larger in November, when the second well started producing.
This new-found wealth doesn’t mean Benscoter is planning to quit his day job. (Either of them, since he also works for the Susquehanna County Soil Conservation District.) Nor does he expect other agricultural producers to do so.
“Nobody is going to quit farming,” he said. In fact, he says it has allowed him to invest in new equipment and modernize his operation. According to him, his neighbors are doing the same.
“Once you start getting royalties, the weight is off your shoulders.”
Natural gas isn’t a threat to agriculture, he and others involved with advocating for the industry say. They see it as something of a salvation for the region’s long-struggling farmers.
“It’s sparking up the ag industry down here,” Benscoter said. “It saved it.”
He considers natural gas development as a form of ag preservation – and Marlene Bailey, who administers Pennsylvania’s state Agricultural Land Preservation Program for Susquehanna County, agrees.
According to Bailey, who works out of the USDA’s Natural Resource Conservation Service’s Montrose field office, a total of 27 farms representing a total of 5,711 acres of farmland are being preserved through the program.
“Every one of them has a gas lease,” she said.
Bailey said natural gas drilling is one of the few types of development allowed on properties in the land preservation program, the goals of which are to keep land in agricultural production and preserve the area’s “rural nature.”
“It doesn’t hurt the ag viability of the property,” she explained.
There is disruption while wells are being drilled, she said, but the area around the well pads can still be used to pasture animals, once everything has been reseeded. In some cases, this may actually improve the land.
According to Benscoter, landowners need to take an active role in determining where pipeline will be laid, etc.
“Don’t assume anything. The more you talk to them, the better off you’ll be,” he said, explaining that, in his experience, the companies will work with farmers to minimize disruptions.
Bailey and her colleagues, including NRCS District Conservationist Ain Welmon, all say they have seen an influx in the number of farmers taking advantage of soil and water conservation programs.
“(They are) more environmentally conscious about their farm, because they can afford to be,” Benscoter explained.
Have there been some farms which have chosen to go out of production? Yes, according to Jim Garner, who heads the Susquehanna Conservation District.
“I see some guys who have sold their cows,” he said, but he qualified this by explaining that those who have were already contemplating retirement before the gas boom. Conversely, he added, some former dairymen have gone back to milking cows.
There have been other consequences of the natural gas industry’s presence in the area, some of which have been beneficial to local ag producers and some which have not.
According to Benscoter, some farmers have been able to boost their income by selling hay to the companies laying the pipeline to be used in the reseeding process. Anyone with a commercial drivers license can easily find full- or part-time work. And, according to Bailey, college students with an interest or background in environmental sciences are in high demand to take samples.
Because of the influx of rig-workers from out of state, rental prices have skyrocketed. According to Jason Pontillo of the Farm Services Agency, who only recently moved to the area, rents have climbed to $3,000 or $4,000 a month for a single family home. And good luck finding a vacant rental unit.
“There are very few vacancies,” said NRCS’s Bob Wagner. “It’s made it almost unaffordable for local people.”
Land values have spiked as well. A couple of years ago, land in the area was valued at $1,000 to, at best, $2,000 an acre. Now, at $8,000 to $10,000 an acre, it’s comparable to Lancaster County, according to Benscoter. And, with the value of the natural gas deep below the surface, there isn’t a lot of it changing hands right now.
The need for housing is a cause of concern for some, who fear farmland will be taken out of production and developed to fill this need. But so far, Susquehanna County hasn’t seen that happen, according to Wagner.
Well pads, impound ponds and the like do take acreage out of production, Garner said, but so far it has not had a significant impact. The conservation expert does concerns about the amount of pipeline being laid, however.
“The cumulative effect could be an issue,” he said, explaining that underground water migration along the pipes could impact existing wetlands and at the same time create new ones. “That’s the kind of thing we think about, that other people might not think about.”
Easements through woodland areas will also have an impact on storm water run off, Wagner added, as woods provide the highest level of erosion protection. Grassland, which these swaths will become after they are reseeded, are the second best.
And more pipeline is an inevitability.
“What’s stopping a lot of other people here from receiving royalties is the lack of pipeline and pipeline capacity,” Benscoter said.
For each new well drilled, miles and miles of gathering pipelines are laid.
“The spiderweb is just going to be crazy,” Garner said.
Notably absent from their concerns is fear that water contamination like that widely reported in Dimock will become a more common occurrence. While they sympathize with the misfortune of those living on or near Carter Road, they believe the impact was isolated.
“Bad water is nothing new,” said Benscoter, who lives close to Dimock township.
According to the USDA’s 2007 Census of Agriculture, Susquehanna County had 1,008 farms, encompassing 158,218 acres and producing close to $49.3 million in agricultural products. By comparison, Chenango County 908 farms encompass 177,267 acres and produced just shy of $65.8 million in agricultural products in the survey year.
With the importance of agriculture to Chenango’s economy, it is no wonder local ag advocates have been paying close attention to the impact of natural gas development in Pennsylvania’s Marcellus region.
Cornell Cooperative Extension of Chenango Executive Director Ken Smith has reached out to his counterparts in both Susquehanna and neighboring Bradford counties.
Garner said he believes some of the problems the gas companies have encountered could have been avoided.
“I wish these companies had come in and asked our outfit a few questions,” he said, and taken advantage of the resources and knowledge they have about the area’s soils. “It might have stopped some of the problems.”