Giant Gas Fields in Eastern U.S. Spark Land Debate Geologists have long been aware of a natural gas reservoir called the Marcellus Shale Formation. New technology suggests it may be big enough to double the U.S. output. Now people in small towns from New York to West Virginia face a rush to tap their land.
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Giant Gas Fields in Eastern U.S. Spark Land Debate

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Giant Gas Fields in Eastern U.S. Spark Land Debate

Giant Gas Fields in Eastern U.S. Spark Land Debate

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For years now, geologists have been speculating about the existence of a massive natural gas reservoir under a deep layer of rock in the eastern United States called the Marcellus Shale Formation.


But drilling deep enough to reach the gas has been way too expensive. Now, new technologies are making it more feasible and new research suggests that the potential reserve may be bigger than previously thought. Some estimates say it's large enough to even double the nation's annual output of natural gas.

The Marcellus Formation is believed to stretch from upstate New York to West Virginia, and as far west as Ohio. The possibility has natural gas companies jumping over each other to secure leases for mineral rights to that gas. It's become a modern day land grab akin to what happened during the oil boom of the early 1900s, depicted in the film "There Will Be Blood."

(Soundbite of movie "There Will Be Blood")

Mr. DANIEL DAY-LEWIS: (As Daniel Plainview) I assure you, ladies and gentlemen, that if we do find oil here, this community of yours will not only survive, it will flourish."

MARTIN: Hm, that sounds familiar. Small town residents, some of who live along this potential formation, many of whom they've been neighbors for generations, but they're now finding themselves on opposite sides of what's become a heated debate over what to do. Joining us now is Sarah Thomas. She's a staff writer for the Wayne Independent, in Wayne County, Pennsylvania, and she covers one town, she's covered it, one town in particular, where the debate has become pretty passionate. Hi, Sarah.

Ms. SARAH THOMAS (Reporter, Wayne Independent): Hello.

MARTIN: Thanks for joining us. So, as we've mentioned, it's an issue that has taken root in towns up and down the Eastern Seaboard. You've covered it from one town in particular, in Pennsylvania, Damascus. When did this whole prospect of natural gas leases, when did it surface there in Damascus?

Ms. THOMAS: Well, we at the paper started hearing about it close to the end of last year, the end of 2007. Our paper is the paper of record for Wayne County, Pennsylvania, which covers areas all the way up to the very, very northern part of the state, by the New York border. And we started hearing about it from northern communities up there, but we had a big problem finding research, finding information, finding people who were willing to go on the record to talk about it.

The first we found who would talk about it were people in my beat, which was Damascus. The one thing that I've noticed in covering that township is it's got an electorate which is very unusually civically minded, and we did find people there on both ends who were willing to talk about it - probably right at the very, very end of 2007, beginning of 2008.

MARTIN: Sarah, what's so controversial that's made people not want to talk about this?

Ms. THOMAS: Well, I think in nearly any community, there's going to be a significant amount of controversy over something that has as many potential environmental and economic ramifications as the beginning of a potentially extensive natural gas drilling operation. The one thing that keeps on coming up in debate in the community is people comparing the state of Damascus to the state of Fort Worth, Texas, before natural gas was begun drilled there.

MARTIN: Let's talk about the pitch. There are - apparently, gas companies have been approaching people in these communities, offering them leases. What specifically are they offering people, residents, landowners?

Ms. THOMAS: That really depends on how good the landowners are at negotiating, and how much information they have going into the process.

MARTIN: So, it's not a pat offer that they're offering everyone. It's a specific to that individual land owner?

Ms. THOMAS: To a certain extent, yes. The people are approached by what are called "land men." They are representatives of the natural gas companies, who come with a standard lease, and signing that lease is extraordinarily dangerous for the landowner and for the people surrounding them, because the standard company lease doesn't always have the protections in it for the environment and for neighbors necessary - that is part of a well-negotiated lease.

The problem is, we found people at the very, very beginning of the prospect who didn't know this, and who were signing these leases, and were occasionally signing for some things like 25 dollars an acre, and other terrible things like that. Now that there's more debate, and there's been more focus on it, people know a little bit better how to protect themselves.

MARTIN: Sarah, explain why 25 dollars an acre is such a bad deal.

Ms. THOMAS: OK. Basically, what we're talking about is something, I mean, the one thing I thought was interesting was that you compared it to "There Will Be Blood," which is a movie about a gentleman who became filthy rich over this, and 25 dollars an acre isn't filthy rich kind of money.

The other thing that is often done is the rate of return on any potential natural gas is set at eight percent, which if you go to communities in Texas, people have negotiated successfully upwards of 30 to 35 percent of a return on their natural gas. Basically, these standard company leases exist to give the maximum amount of protection, obviously, to the natural gas companies that are trying to lease the rights.

MARTIN: And so, how much are people being offered now? If they agree to accept one of these leases before, and we should make clear that gas has not actually been extracted yet from this formation in this community, so people are making a wager. They're saying we will accept this lease with the potential that you'll find gas, is that correct?

Ms. THOMAS: That's correct, and because haven't found gas, and there's not as much of a culture of mineral prospecting in Pennsylvania as there are in other states like Texas, a lot of times the offers on the table are still pretty low. The thing that raises them up is when people successfully negotiate.

MARTIN: Now, how has this affected these communities that you've covered? Are people getting the information they need now? Are there city and state agencies that have kind of stepped in to say, OK, this is clearly something a lot of landowners are going to have to face, we want to arm you with the information you need to negotiate your own lease?

Ms. THOMAS: The last people to step into the debate were state agencies. In, I want to say the end of February, beginning of March, was the first we heard from anybody on the state level. That was when our representative, Mike Peifer, and the Department of Conservation of Natural Resources had a meeting that was open to the public about natural gas drilling, and what their rights were. City agencies, particularly in the township of Damascus, were much quicker on the draw because it's a smaller place, and they could be. And...

STEWART: Is this...

Ms. THOMAS: What?

MARTIN: Go ahead, Sarah.

Ms. THOMAS: Oh, I was just going to say what I found was that people on both sides of the debate, people who are both for and against the natural gas drilling, became very vocal, and formed a lot of civic organizations.

MARTIN: And just a follow up question to that, has this become divisive? I imagine if this is about land and neighbors, I mean, if someone agrees to a lease, and all of a sudden a big drilling expedition goes in there, that's going to affect the property value, I would imagine, of their neighbor's property.

Ms. THOMAS: That's pretty much at the heart of how this has become a socially divisive issue in Damascus. The one thing that Wayne County is known for is that it's a place that people from, say, New York City will go on the weekend to experience the country. We have a lot of antique shops, and a lot of day trip possibilities, and Damascus itself is a town of great natural beauty.

Another problem is that many people in Damascus get their water from ground wells. So there's the concern on the people who are suspicious of natural gas, A, that it's going to destroy the scenery, that this is going to destroy what has been traditionally a big draw to their town, and B, that this is going to contaminate the water table that everybody uses to drink.

MARTIN: And how are - are they being pressured to accept these leases? Or how are they being approached, finally?

Ms. THOMAS: I've heard anecdotal evidence that some people have been pressured. I've heard anecdotal evidence of people who have been physically intimidated. I've heard anecdotal evidence of people who have been harassed, and I've seen people in the township, on both sides, become very, very passionate, almost to the point of shouting at each other at township meetings.

MARTIN: Why is it - what is at the heart of this? I mean, is it the potential wealth, Sarah? I mean, it is - potentially it could be a boon for these communities.

Ms. THOMAS: I think the potential wealth is at the heart of it for the people who believe that it's a good thing. I think that they see the fact that this is something that can turn Damascus around, this is something that can turn Wayne County around. There's a public instruction project called the Millennium Pipeline, which is going to go straight by Damascus on its way to New York City, bringing natural gas to the people of New York City, with the potential of carrying millions and millions of gallons.

And the people who believe this is a good thing say we want to be part of that. We want Damascus to benefit from that the same way other communities are going to benefit from that. What I think is at the heart of it for the people who are suspicious of it is the communities who, you know, were maybe Pied Piper-ed into a similar conclusion in 2001, 2002, up in the Finger Lakes in New York, and whose citizens have not, in fact, seen those huge economic gains but who have seen social changes, environmental damage, other things like that.

MARTIN: And they haven't seen payout yet from those leases.

Ms. THOMAS: Uh huh.

MARTIN: Sarah Thomas, a staff writer for the Wayne Independent in Wayne County, Pennsylvania. Hey, thanks, Sarah, very much, interesting story, and we might follow up with you on this.

Ms. THOMAS: Thank you very much for having me.

MARTIN: We appreciate it.

Ms. THOMAS: Bye-bye.

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