Published: August 01, 2008 11:40 pm         

More than 1,500 sign gas leases

Local rush largely in Chenango, southwest Delaware

List of signed leases in Otsego, Delaware counties



By Tom Grace

Cooperstown News Bureau

COOPERSTOWN _ The gas rush continues.

More than 1,500 property owners in Otsego, Delaware and Chenango counties have agreed to let firms prospect for natural gas on their land, even as calls come from some quarters for a moratorium on drilling.

The excitement comes as geologists predict that much of the central New York area is sitting on rich gas deposits, trapped in shale deep in the ground.

Gas has been found in Springfield, and firms are betting big money they’ll find it throughout the area, as they have in northern Pennsylvania.

Two months ago, New York state geologist Richard Nyahay told a crowd of 700 at Unadilla Valley Central School in New Berlin that on a scale where 1.00 is an ideal drilling prospect, this area rates ``.98 or .99.’’ Last month, Nyahay quit his state job to go to work for GasTem USA, a Montreal-based firm that plans to drill in upstate New York, according to the Reuters News Service.

The boom has been building for a few years. At first, landowners typically were offered $2 an acre to sign leases that would permit wells to be drilled. State law guarantees landowners a 12.5 percent royalty on producing wells, and with this incentive, some signed up.

In the interim, energy prices spiked, drilling techniques improved, and the dollars per acre shot up.

About three months ago, Fred and Anna Schoellig of New Lisbon leased 800 acres for $50 an acre.

But on Wednesday, Elmira attorney Christopher Denton, who represents the landowners’ cooperative Central New York, said it’s not uncommon now for land in the Southern Tier to be leased for more than $1,000 an acre.

When leases are recorded in county clerks’ offices, the amounts paid to landowners often are not included. Companies that acquire the drilling rights are free to assign them to a different entity, usually a drilling firm.

For example, on July 21, the Elexco Group, which has been active in Otsego County, transferred many of its leases to Covalent Energy of Arlington, Va., a firm that has drilled wells in Cherry Valley, Springfield and plans to drill soon in Maryland.

According to records, more than 150 leases to drill have been signed in Otsego County, and in Delaware County, where activity is concentrated on the Pennsylvania border, the number tops 200.

Otsego County Clerk Kathy Gardner said Tuesday, ``The rate these leases are coming in is unprecedented in my experience.’’

About 35 miles away in Norwich, the sign-up rate has been faster, and one firm, Nornew, has already acquired nearly 1,300 leases in Chenango County. Records indicate Nornew and other firms have been concentrating on the western half of the county and have few leases yet in New Berlin, Columbus or Guilford.

``Those people are holding our for big bucks,’’ a Chenango County Clerk’s Office employee said Wednesday.

Far bigger bucks will be involved if the wells produce, but costs to municipalities will soar as well, according to Ramsay Adams, executive director of the Catskill Mountainkeeper.

In late June, the environmental group held a hearing in Walton, where people from Colorado and Wyoming talked about contaminated wells, roads ruined by 30-ton rigs, and areas scarred by drilling.

On Wednesday, Adams said his group favors a statewide moratorium on new permits for drilling until the Department of Environmental Conservation rewrites its generic environmental impact statement, or GEIS, to reflect the consequences of modern drilling. The agency was ordered provide a supplement to include such technologies as horizontal drilling last week by Gov. David Paterson.

``We’re worried about what will happen between now and next spring, when we’re supposed to have the new GEIS,’’ Adams said. ``The answer is have a moratorium on new permits to drill until we know the state is ready to protect our interests.’’

In Otsego County, the environmental group Sustainable Otsego plans to ask the county board to institute a county-wide moratorium on new drilling, according to member Adrian Kuzminski of Fly Creek.

However, county attorney James Konstanty said Otsego cannot comply.

``I know of no legal authority for the county to pass a moratorium on gas drilling,’’ he said Wednesday.

``You can’t put a moratorium on free enterprise.’’

Gas drilling is regulated by the state DEC, not the county, Konstanty said.

Afton attorney Mary Jo Long disagreed, saying that she has found cases where counties have imposed moratoria.

Long, a former Green Party candidate for state attorney general and a current member of the Afton Town Board, said she will attend Wednesday’s county board meeting to ask representatives to impose a moratorium on drilling.

``Municipalities have to be able to protect themselves, and a moratorium is a way to help do that,’’ she said.

On Thursday, James Powers, Otsego County Board chairman, said he will oppose the measure.

``I don’t think we need a moratorium,” he said, “and I don’t want to see one.’’



Energy companies seeking leases in this area

Covalent Energy, (703) 899-7325 or www.covalentenergy.com

Nornew Inc., (800) 217-3342 or www.nornew.com

XTO Energy Inc., (800) 299-2800 or www.xtoenergy.com

Chesapeake Appalachia, (405) 848-8000 or www.chk.com

Penn Virginia Corp., (610) 687-8900 or www.pennvirginia.com

East Resources Inc., (724) 772-8600 or www.eastresourcesinc.com