February 11, 2012
October 19, 2011
New York State Office of Parks, Recreation
and Historic Preservation
POLICY ON THE DEVELOPMENT OF OIL AND GAS
RESOURCES IN STATE PARKS AND HISTORIC SITES
June 22, 2011
Browse other people’s fortunes at new Marcellus website,
Pittsburgh Business Times – by Anya Litvak
Date: Thursday, June 16, 2011, 2:43pm EDT
Searchable Marcellus Database of Leases: https://www.marcellususa.com/LeaseLibraryMapping.aspx?AspxAutoDetectCookieSupport=1
June 14, 2011 1 Comment
Hydrofracking drilling leases may violate fine print on mortgages, title insurance
A group of Tompkins County residents believe they have found a troubling new consequence of “hydrofracking” gas drilling in New York—not environmental but financial.
Reading the fine print on residential mortgage and title insurance requirements, they found many New York properties have tight technical restrictions on the size and location of drilling structures.
That means homeowners who lease their drilling rights to the oil and gas industry for hydrofracking may no longer be covered by their title insurance. They may not be able to take out second mortgages on their properties. In the worst case, they may not even be able to sell their land as long as a drilling lease is in effect.
“Economic development is expected to be the upside of this activity,” said Carol Chock, a Tompkins County legislator who headed a local committee reviewing how gas drilling would affect property assessments.
“The understanding is that if we’re willing to take the risk, the reward will be economic,” Chock said. “But are we sure that’s true?”
Gas drillers say the worry is overblown, but it has made its way to the governor’s office.
Assembly Member Barbara Lifton arranged for Chock, two local mortgage lenders and a real estate agent to meet in Albany last month with three aides to Gov. Andrew Cuomo—Anthony Giardina, Jim Malatras and Tom Congdon—as well as with officials from the Department of Environmental Conservation (DEC).
The DEC is scheduled to release a detailed blueprint for gas drilling in New York by July 1, but the Cuomo administration has not said whether land financing will be addressed.
While landowners in economically depressed regions across the state are generally open to leasing their drilling rights, the Assembly recently passed a year-long moratorium on the controversial practice, because they fear hydrofracking will contaminate the water supply.
“Natural gas locked within the Marcellus Shale isn’t going anywhere. We’re not going to lose it,” Speaker Sheldon Silver said last week. “There’s too much at stake not to err on the side of caution.”
Though the shale isn’t going anywhere, cash-strapped New Yorkers in struggling areas of the state are going bankrupt. Some are going into foreclosure. Others are hanging onto their homes a month at a time, waiting for the state to allow drilling.
This friction between upstaters who support and oppose fracking is on vivid display in Tompkins County, home to the city of Ithaca, one of the only growth hubs in a region marked by poverty. Ithaca has insulated itself from its neighbors’ economic problems with the help of its 25,000 college students. Yet like the conservative farming communities that border Tompkins County, Ithaca sits atop 500 trillion cubic feet of natural gas.
Tompkins County discovered the potential mortgage and insurance pitfalls of hydrofracking after it formed a task force last winter to consider the impact of gas drilling.
At Chock’s request, Gregory May, the vice president of residential mortgage lending at Tompkins Trust Company, began digging into the assessment and valuation issues. His four-page report, issued in March, stunned county officials.
One problem he found: New York environmental regulations require a 100-foot setback between a drill and any dwelling. But the secondary mortgage market, including Fannie Mae, Freddie Mac and the State of New York Mortgage Agency, requires a 200-foot separation.
If a setback falls short of 200 feet, May wrote, a prospective buyer may not be able to get financing, and sellers may find fewer purchasers for their land.
Another problem: To qualify for title insurance, properties with gas leases in New York must not be used for any commercial purpose, have structures taller than 35 feet or store gas-drilling equipment on site.
If a property owner or a gas company that has leased the owner’s drilling rights violates those terms, May wrote, the title insurance on that land could be invalidated—blocking a homeowner from taking out a home-equity line of credit.
“The inability to sell loans to the national secondary market could potentially impact property values because of the lack of competitive mortgage financing available in the marketplace,” he wrote.
The Independent Oil and Gas Association of New York, which represents drillers, calls that fearmongering. Randy Hansen, a spokesperson for the group, said no permanent gas-drilling structures are taller than one story, and he believes 200-foot setbacks are standard on most New York leases.
“I think common sense needs to be brought to bear in interpreting these regulations,” Hansen said.
There is no way to easily check setbacks and other provisions, because drillers aren’t required to file the full terms of a lease publicly. Tompkins Trust Company’s law firm, however, says it has seen plenty of problems caused by lease requirements—and that homeowners affected by them are simply stuck.
“If the gas companies would simply terminate a homeowner’s lease on request, or release the surface rights, this wouldn’t be an issue,” said Randy Marcus, a partner at Barney, Grossman, Dubow, Marcus & Orkin, which specializes in real estate transactions and finance. “The gas companies are absolutely intractable. They want to hang onto these leases.”
The state mortgage agency declined to comment, saying it is reviewing the potential problems. But as lawmakers become aware of the issue, nearby landowners who want to tap into gas-lease revenue are becoming impatient.
Said Bradd Vickers, president of the nearby Chenango County Farm Bureau: “We have faith in the DEC.”
Susan Arbetter reports from the Capitol in Albany for Central New York’s PBS station, WCNY in Syracuse. She hosts a daily live radio show, “The Capitol Pressroom,” and produces “The Capitol Report,” broadcast daily on television across New York State.
May 19, 2011
May 18, 2011
Landowners dispute gas lease extensions
Seminar details tactics energy companies use to extend leases beyond original durations
By CATHERINE WILDE
Energy companies are employing more and more tactics to extend expiring natural gas leases, landowners learned at an informational meeting Tuesday.
County Clerk Elizabeth Larkin told a crowd of about 60 that she is rejecting hundreds of lease extension documents gas companies are attempting to file, because they lack the landowners’ signatures.
Whether the sought after extensions are valid, remains to be seen as many landowners are arguing that they do not want their leases extended.
Larkin said she will continue to reject the extensions.
“If you’re going to convey an interest in real property, real property law says that the landowner has to acknowledge the lease, has to sign the lease,” Larkin said.
But the lease extensions continue to flow into the office without the landowners’ signatures.
Larkin was part of a three-member informational panel at the Cortland County Office Building auditorium. Onondaga Nation Lawyer Joe Heath and a Virgil landowner Mike Bosetti, who successfully terminated his lease, also sat on the panel.
Some residents were surprised by what they heard, unaware until the meeting that their gas leases may not simply expire at the end of the term, and may actually provide loopholes where landowners are trapped into leases they wish to end.
One such loophole occurs when residents, seeking to terminate their leases, contact the gas companies and actually open a window for the gas companies to then extend their leases.
According to the state general obligations law, which governs how gas leases are terminated, the landowner must notify all gas companies with an interest in the land, within 30 days after a lease termination date, calling for the lease to end. But doing so opens a 30-day window for the gas company to file an affidavit in the county clerk’s office stating the lease is not terminated.
The news that a lease could be so easily extended by gas companies, came as a surprise to Homer resident Patricia Martinez de la Vega Mansilla.
Mansilla said she is trying to get out of a lease on her property that she recently acquired. Since Mansilla is not the original landowner, she had to contact the gas company with a copy of her deed to show she is the person to contact regarding the lease.
Mansilla has since responded to a “force majeure” letter to contest the company’s claim the lease is extended, but now she worries the lease will not end in December as she hopes.
“I didn’t realize they could file an affidavit with no conditions, to automatically extend the lease,” Mansilla said.
Mansilla will wait until the lease ends at the end of the year and hopes to have a legal opinion by then about whether she should send the letter within the 30-day timeframe.
Heath is awaiting an opinion from the state Attorney General about the best way to end gas leases.
“We are trying to get an opinion from the Attorney General whether it is safe to do nothing when the lease is over, or whether or not they have to take that risk,” Heath said after the meeting.
Heath detailed a list of what he calls fraudulent practices on the part of gas companies that he has brought to the attention of the state Attorney General in an attempt to get laws written that would protect landowners.
Heath pointed to the tactics gas company representatives, known as ‘landmen’, use when trying to get leases signed. For example, landmen will deny that the process of hydraulic fracturing, the method of injecting high quantities of chemically-treated water into the shale to extract gas, can increase the radioactivity of groundwater, even though that has been documented to occur, he said.
Heath also pointed to force majeure letters which the gas companies are sending out to landowners to effectively extend their leases, saying these letters are, in the opinion of many lawyers, not valid.
The force majeure letters contend that the moratorium placed on high volume hydraulic fracturing last year and endorsed by Gov. Andrew Cuomo this year, was a force outside the industry’s control that effectively ceased gas exploration. Therefore, the companies argue for a right to extend leases beyond their agreed upon termination dates.
Most in the audience Tuesday had received such letters.
Binghamton residents Jack and Sonja Stanbro, who own leased land in Cortland County, left Tuesday’s seminar planning to send a reply contesting the force majeure letter they received.
“As far as I’m concerned, we don’t have a lease because they never paid us,” Jack Stanbro said, adding Chesapeake promised him $3,000 an acre before the moratorium went into effect but he was never paid.
The Stanbros said if sending the letter through the proper channels does not end the lease, they may have to seek legal counsel.
Town of Caroline resident Edie Spaulding came to the seminar to learn more about her options for ending a lease. Spaulding said she has received a delay rental check, a check that comes close to the lease termination date that, when cashed, automatically extends the lease.
The sum is considerable, over $4,000, she said.
“Those checks will not be cashed,” Spaulding said, adding she wants “out of” the lease because her property is in the Ithaca watershed.
Heath said landowners must respond to force majeure letters, and he urges people to understand their leases are “complicated legal documents that don’t necessarily end when the date says they do.”
Heath directed people to the website for the local group Gas Drilling Awareness for Cortland County: https://gdacc.wordpress.com, which defines examples of standard lease terminology and also provides sample letters for people to use when responding to gas companies.
Bosetti said he was surprised to hear of so many different issues landowners have been faced with.