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Consol Tries to Answer Landowners’ Questions
BOARDMAN, Ohio – People brought questions and their concerns about drilling for natural gas in eastern Ohio to the Holiday Inn Thursday. Some 25 employees of Pittsburgh-based Consol Energy Inc. answered them candidly and at length during the three-hour open house.
Geologists, engineers, land men, site planners, road supervisors and staff, and a company spokeswoman met with all who walked into their hall in the hotel where they welcomed their questions and comments, including from landowners who had leased their mineral rights to other energy companies.
Some admitted they were unhappy with agreements they struck and hoped to elicit information about getting out of those leases or restructuring them. Others are yet to sign as they watch, or have watched, their neighbors sign leases as they seek more information. They speak about the “research” they’ve done, sometimes devoting as much as two years, and won’t be rushed.
In the end, those interviewed declared themselves pleased with Consol’s efforts to answer their questions. No one walked out with all the information he came for but all gave Consol high marks for reaching out.
Consol, founded a century and a half ago as a coal mining company, owns considerable acreage in western Pennsylvania and eastern Ohio. The company is interested in acquiring the mineral rights to more land, and right now is looking to fill in the gaps.
The general manager of Consol’s Utica shale operations with Hess Joint Venture, Harry Schurr, related his company has a 50-50 agreement with Hess where Hess takes the lead in four counties, Harrison, Jefferson, Guernsey and Belmont. Consol takes the lead in the remaining 84 Ohio counties, which includes Trumbull, Mahoning and Columbiana.
Consol has acquired the rights to 10,000 acres or so in both Mahoning and Trumbull counties, he said, which “is enough to get started and evaluate the acreage to see how we progress from there."
“We’ve drilled our first well in Tuscarawas [County],” Schurr reported. Consol is pleased with the progress to date. It’s on course to drill 16 wells in Ohio this year and is working to get its wells hooked up to pipelines where appropriate. “I’m very excited,” he said.
Consol will open an office in Leetonia in about a month, Schurr reminded a reporter. Seth Rodriguez, supervisor of site planning, will be one of the initial employees in that office, Rodriguez said.
“We’re trying to be transparent,” Schurr stated, about all aspects of drilling and hydraulic fracturing, or fracking. Indeed, an eight-minute video about fracking ran and reran throughout the open house.
Candor was the theme of the open house, the fourth Consol has held in eastern Ohio, and if the Consol engineer or geologist didn’t know the answer, he did his best to direct the guest to a reliable source.
At the Consol open house in Tuscarawas, said geologist Adam Smith, a woman wanted to know the escape route from her daughter’s school -- even though Consol has yet to build a well there.
Concerns about upgrading roads so they can withstand the heavier trucks and heavier volumes of traffic were addressed by roads supervisor Hugh Turner and two subordinates, Steve Quinn and Bruce Burnfield.
Consol has reached road-user agreements with the county engineers in Mahoning and Trumbull, Quinn noted. The company has rebuilt Western Reserve Road in southern Mahoning County, removing four inches of asphalt, rebuilding the base and adding six inches of asphalt atop that.
In Tuscarawas County, Consol added 1½ inches of asphalt to a county road and in Noble County 4½ inches of gravel to a township road.
“You have to maintain the roads on a daily basis,” Quinn said.
Three residents of Lowellville, Greg and Janice Hohloch, who own 52 acres, and Ingrid Lyras, have watched as their neighbors sign leases but feel they still need to learn more before they follow suit. Lyras owns 73½ acres, she said.
“We’re interested in leasing,” said Janice Hohloch, a science teacher at Poland Middle School. “We think we’d be better off getting incorporated into a drilling unit. … Greg’s been doing a lot of research. He’s had leases in front of him he could’ve signed.”
Said Lyras, “Most farmers around me signed leases two years ago,” leases since “signed over to larger companies.”
Lyras has “mixed feelings” about signing a lease, she said, based in part on watching “Gasland,” a movie notorious for the falsehoods it contains on fracking and the harm drilling has inflicted on the environment.
Regardless, she’s thinks the economic growth that drilling has brought to the region “is a good thing for the area.” She wants to be sure it’s done safely. She, too, has conducted considerable research, including poring over the contracts others have signed.
Lyras is concerned about the taxes that will result from signing a contract – she intends to consult an estate planner before doing so -- because she fears the government will take an unfair share of any agreement she reaches, including royalties.
As a former real estate agent, Lyras is concerned that “Leases may be a detriment to selling real estate,” that is, that house values will not appreciate because the residences are near wells.
Tom Logan of Greenford has 25 acres (four he lives on) of which he leased the mineral rights to Chesapeake that Consol subsequently acquired. Consol is building a pad nearby, he said, and “Chesapeake told us we’re not in the unit,” that his land sits 180 degrees opposite the direction the horizontal drilling will occur.
“There are a lot of unknowns on leases,” Logan said, a sentiment nearly all landowners shared. He wanted to know how the gas companies determine royalties when landowners are part of a unit. He wanted to know how a landowner could be sure the gas company is paying all it should. “You have to do your homework,” he said. “It’s a whole new game for people and this is an area few people understand.”
Sharing many of his sentiments was Paul Hendricks of Ellsworth Township. Hendricks, who runs an engine repair business, owns 160 acres and Consol is near completion of the well pad it’s building on his property. “I wanted to look at the maps and talk to the people here,” he said.
(Many who approach the map table inform the Consol geologist, “This is where my house is,” Adam Smith said, and want to know whether they’re sitting directly atop a pocket of natural gas.)
Hendricks thinks Consol will extract wet gas. His concerns are, “How do they meter it? How do I get compensated?”
Although the answers weren’t immediately available, Hendricks said of Consol, “They’ve been fantastic!”
Frank Zimmer, who lives on a 20-acre farm in Mahoning Township in Lawrence County, Pa., is giving careful study to leasing his land, he said. He belongs to New Castle Landowners, which collectively controls more than 2,000 acres, he said.
He attended yesterday to relay the information he gathered to the landowners and “spoke to a [Consol] land man.” While he was favorably impressed by what he saw and learned yesterday, “I think we’ll research them deeper,” he said. “We’re looking for best and safest deal.”
Zimmer believes fracking “is a safe process,” he said. “My farm has been in the family five generations.”
While most of his 20 acres are rented to other farmers --“Farming is a hobby,” Zimmer said -- he wants to ensure the land continues to remain a farm and his descendents can continue to live there.
Copyright 2012 The Business Journal, Youngstown, Ohio.