Tuesday, June 5, 2012

Gas leases take rural Ohioans from rags to (relative) riches

The New York Times ran this feature yesterday about the latest boom area for natural gas extraction:  the Ohio River Valley.  Keith Schneider reports from Caldwell, Ohio, where natural gas concerns are buying up mineral leases.  Here's the lede:
The energy boom has swept into the rural counties of the upper Ohio River Valley, producing a torrent of investment in mineral leasing that is jolting the economies of small towns and swelling the bank accounts of some working-class families. 
Here in Noble County, where vehicle repair and convenience stores are economic mainstays, Eclipse Resources, a Pennsylvania company, mailed $16 million in oil- and gas-leasing checks last month to 70 households whose property has been found to sit atop oil and and gas reserves.  Working with a lawyer in nearby Marietta, the residents are able to band together to negotiate an unusually lucrative deal with the company that paid $4,000 an acre and 19 percent royalties on oil and gas production, and included safeguards to protect water and land.  (The standard has been $10 to $30 an acre, one-sixth royalty rates, and no protections for water and land.)  
As Schneider points out, this buy up (or sell out, as one might see it) is having an enormous economic impact in the region, where the median household income is about $33,000 (though I note that in Noble County in particular it is $39,500).  This is, after all, Appalachia.  Schneider's story features quotes from several families--mostly working class, who have been cash poor but "land rich"--that have received checks in the $200K to $300K range for their leases, and who are anticipating even more in royalties as production gets underway.

Schneider also emphasizes the good deal these landowners got by banding together to bargain with the oil and gas concerns.  That was a theme in this 2008 story out of Wyoming, regarding neighbors who collaborated regarding leasing for wind farms, even though it forced them to share with one another financial information they might have wished not to share.

Caldwell's population is 1,956, and it is the county seat of Noble County, which has a population of 14,645.  This multi-media feature accompanies the story.

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