CARS HOMES JOBS
DIM PROSPECTS?

Land leases for gas drilling expiring

Glut, regulations make extensions unlikely, say owners

January 28, 2013
Updated 8:32 p.m.
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DIM PROSPECTS?


A 25-acre parcel of farmland alongside the Schoharie Creek, seen here beyond the fishing access site in Central Bridge, is among several parcels of land with natural gas exploration leases that are set to expire this year in Schoharie County. A flurry of leasing activity that started in 2008 has dwindled, with hundreds of acres of leases cancelled since then.
A 25-acre parcel of farmland alongside the Schoharie Creek, seen here beyond the fishing access site in Central Bridge, is among several parcels of land with natural gas exploration leases that are set to expire this year in Schoharie County. A flurry of leasing activity that started in 2008 has dwindled, with hundreds of acres of leases cancelled since then.

— When word got out that the Marcellus Shale beneath New York and other states held billions of dollars worth of natural gas, landmen inundated Schoharie County looking to secure leases on properties in anticipation of a new energy boom.

By late 2008, leases for gas exploration were signed for roughly 5,700 acres of land in the towns of Sharon, Schoharie, Carlisle, Richmondville, Seward, Cobleskill, Middleburgh and Esperance in Schoharie County, the northernmost reach of the Marcellus formation.

Data compiled by the Schoharie County Planning Department indicate that the boom is apparently over. Since 2008, leases by the handful were summarily canceled by land companies holding them, leaving 36 parcels totaling about 2,000 acres covered by leases.

Many of those, signed with a five-year expiration in the absence of oil or gas extraction, will expire this year.

Some say New York state’s slow review of Marcellus Shale hydrofracturing regulations is to blame; others believe successful drilling elsewhere caused a glut, putting Schoharie County on a back burner.

Cobleskill resident George Puro signed a lease with Mid-Central Land Exploration Inc. in 2008. Because there has been no drilling, the lease is set to expire in May.

Puro said his land, consisting of 100 acres on a mountain in Richmondville, drew speculators from the wind energy market years ago as well, and he’s seen none of the financial benefits he’d hoped for.

He said he’s unsure if Mid-Central intends to seek an extension.

“I haven’t heard a thing. It’s been four or five years,” Puro said.

Edward Sisson has active leases on more than 350 acres of land in Carlisle and believes chances of drawing revenue from leases signed in 2008 are gone.

He suspects the massive amounts of gas being extracted from other places like Pennsylvania has driven down the price of gas so much that it isn’t profitable for companies to pursue drilling in Schoharie County.

The 74-year-old farmer said it’s still possible, but “not, probably, in my lifetime.”

In Sharon, Alfred Santillo initially agreed on leases for several parcels, believing hydrofracturing entailed a small disruption of land.

He learned later the scope of a gas drilling operation and decided to get out, succeeding in removing leases on his property.

There’s been no further activity, nor knocks on the doors from landmen, Santillo said. He suspects the dropping price of natural gas, because of increasing supplies being drawn from the ground elsewhere, make Schoharie County a less-likely candidate for hydrofracking if it’s approved by New York state.

Lost opportunity

Jack Norman, president of The Elexco Group, blames state regulators for what he sees as a lost opportunity other areas are taking advantage of.

His company provides land consulting and land administration services for energy and telecommunication industries. It handles land acquisition negotiations, right of ways and oil and gas leasing, among other services.

During the boom in 2008, Norman said there was optimism that a new energy boom could surface in New York State.

Those hopes have gradually been dashed as New York state began lengthy studies under a hydrofracking moratorium.

“Prior to 2008, we had close to 250 people working for us in New York state. Now we’ve got about 15,” Norman said.

The other employees are working in Pennsylvania, Virginia and Ohio now, he said.

“Fundamentally, from an unconventional gas exploration standpoint, New York is not open for business, and it’s really that simply said,” Norman said. “Prior to 2008, there was excitement as to some of the various things that could happen with the tight shale projects.”

Drilling is still possible under traditional means, but tight shale such as exists in the Marcellus doesn’t produce much gas unless it can be drawn with the horizontal, high pressure method called hydrofracking.

Norman said he believes it’s still possible gas companies could eye Schoharie County in the future, but not right away.

If New York state eventually allows hydrofracturing, it will likely take place not far from where it’s already happening in Pennsylvania, Norman said.

Moving hundreds of miles from active Marcellus Shale wells into Schoharie County is less likely because of the risk, he said.

“I think once everything is in place which allows the industry to move forward, initially you’re going to see companies become very active in New York state,” Norman said, adding that the activity will be in counties like Broome and Tioga in the region across the border from Pennsylvania where drilling has already proved successful.

“We’re extremely eager to see the government open up New York for business and to allow us to go back to work,” Norman said.

 
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