Unatego Area Landowners Association



Otego - Unadilla - Butternuts Area Residents

                                 Meeting Schedule

 

NEXT MEETING:

 

To Be Announced

 

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        UALA  BULLETIN     FEBRUARY 16,  2011   GENERAL MEETING

It was a good meeting. 135 people attended including folks from other coalitons and leased landowners.  There was a presentation by the Joint Landowners Coalition of New York (JLCNY) followed by a Q & Å with representatives of the Sidney, Bainbridge, Tri-Towns (Schenevus), CNY Area #6 and the UALA fielding questions, joined by Orville cole of Gastem USA.

THE  JLCNY:  It’s mission:  to foster safe, responsible drilling in New York with proper compensation for landowners and protection for the community.  The organization arose from a need to represent landowner interests on a local and state level.  Industry and antidriller concerns are certainly well represented.  The featured speakers, Dan Fitzsimmons, President of the JLCNY and a farmer, and Brad Chubb, an engineer and JLCNY Board Member, both volunteer an enormous amount of time promoting the interests of 38 independent landowner coalitions. 

The UALA has been a member since early 2009.  Early concerns were gas driller tactics and weak protections under boilerplate leases.  Over time new concerns arose  --  the DEC (we came to respect Commissioner Grannis), the growing power of the antidrillers, the upstate/downstate imbalance, and our somewhat ambivalent local and state legislators.

The JLCNY is our political  and intelligence gathering switchboard.  In that capacity Dan and Brad  told us it looks like Cuomo/Martens will release the SGEIS in June, allowing a month for review and comment.  Interest in the Southern Tier is mounting.  The small, independent gas companies are stirring;  venture capitalists are gathering; the majors are consolidating, acquiring new partners. The antidrillers are revving up their engines of ban/obstruct/delay to full throttle.  The JLCNY has to guide 38 independent  coalitions through some rough seas.  They do this with volunteers and little money. A webmaster gets paid and a political consultant works month-to-month.

Dan and Brad stressed the need for communication followed by action.
The best source of information is the JLCNY website at WWW..JLCNY.COM  Then we have to act  --  attend town and county meetings, speak up, write Letters to the Editor, contact our political leaders, speak up at antidriller meetings (politely), join planning boards and road use committees, communicate with neighbors, put up the yard signs, defend our rights and  counter the hysteria.

It works.  According to reliable intelligence, without our barrage of e-mails to Governor Paterson’s office, Executive Order #41 would have put a moratorium  on drilling until June, 2011 rather than a limitation.    Only through actions will we be heard

THE Q & A:.   Some items of interest were:

  >>    SIDNEY  PIPELINE:  Roy Straka of Sidney reported on a Village of Sidney Meeting where there was a petition to lay pipe through the Village..   Leatherstocking Pipeline (a Mirabito/Corning Pipeline entity) wants to pipe gas from Coventry to Sidney .  The two “anchor” end users will be MeadWestvaco and Amphenol.  In a gradated expansion process, local gas will be available  to the residents of Bainbridge and Sidney.  Benefits will be cheap, local gas for local use plus increased taxes for the towns and villages.  Qualified local labor will be hired to do the work and there will be a permanent local supervisor.

  >>  WINDSOR PIPELINE COALITION:  A subgroup of the Windsor coalition negotiated a pipeline lease at $55 a foot, strong environmental protocols, and ANNUAL RENT.  The annual rent changes the permanent easement problem from a liability to an asset.  Windsor will share their experiences with other coalitions.,

  >>  FORCE MAJEURE:   While most gas company leases are unbreakable, company claims of “force majeure” are questionable.  Force majeure can be claimed to extend the term of a lease if circumstances arise preventing a driller from drilling.  Chesapeake and others are claiming that NYSE's extended SGEIS study period and “moratorium” are such a circumstances.  UALA Attorney Scott Kurkosky,  (607) 584-5820, disagrees and will fight this in court.  MOST IMPORTANT FOR THOSE WITH LEASES  --  DO NOT SIGN ANY FORCE MAJEURE  AGREEMENT  OR  ACCEPT ANY “REENLISTMENT”  MONEY WITHOUT THE ADVICE OF AN ATTORNEY.

  >>  THE DEC:  The DEC received over 13,000 comments on the SGEIS and promised to reply to all.  They will probably “bundle”  similar comments instead of making individual replies to each person.

  >>  GETTING THE MESSAGE OUT:   JLCNY is considering a bulk mailing system since not all members of all coalitions have e-mail addresses,  The  problem  --  money.  Kim More suggested fact sheets for legislators with personal delivery.  Likewise a fact sheet for neighbors was suggested.  Brad will get back to all on this.  He also mentioned another Albany rally in the early planning stage.

  >>  GO TO MEETINGS;    Orville Cole of Gastem , USA noted that the antidrllers jam the town and county meetings with spectators/participants  who now claim they represent the majority.   (COMMENT: This is true.  They are at every meeting, true believers, dedicated to their cause.)

More problematical is a situation noted by Jarrett Cannistra of Bainbridge.
By joining Town  Planning and Road Use Committees, antidrillers craft legislation that, in essence, excludes drilling.  Jarrett cited the Afton Road Use laws, particularly Section 11 (b):

No road use permit shall be granted wherever the applicant proposes to transfer hazardous or toxic materials, solvents or wastes over a proposed route of travel upon a town road located within 1,000 feet of a school, hospital, health care facility  or  five or more houses or dwelling units.

These exclusionary clauses slip by unsuspecting Board Members and paralyze future development. 

(COMMENT:  Individual town  road use ordinances also tend to Balkanize regulation, making it a difficult  environment in which to legally work.  Ideally, there should be ONE, STRONG, ENFORCEABLE SET OF RULES throughout the county.  Otsego County has contracted with Delta Engineers to establish such a set of rules.  9 of the 24 towns within the county are on board.   The primary purpose of local road use ordinances set up by the antidrillers is not to provide safety but to harass drillers.  We who favor development have to join Town Planning and Road Use Committees to ensure equity.  Better yet, our towns should join with the County to assure uniform standards.)

  >>  $  TO  SCHOOLS:  Jarrett Cannistra further noted  Sherbourne Earlville CSD will receive about $400,000 in taxes from Norse Energy.  Ad valorum taxes provides more local support than severance taxes which go up to Albany to disappear into the General Fund.  (COMMENT:  With Albany 10 billion dollars in the hole, don’t expect them to pass up a  severance tax.  Doesn’t change the truth, however.)

  >>  A SIMPLE QUESTION:  Alan Springett asked a simple question.  He asked the audience, “How many of you farm?”  About half the audience raised their hands.  He continued, “You care about your land, more so than the so-called environmentalists.”  He spoke about the family farm and what it means.  He then spoke about the experience of a young lady who works in his office in NYC who comes from Tioga County , PA.   She noted that all the kids her age had left Tioga years ago (No jobs.  Sound familiar?) but when she goes home now for holidays she sees a lot of her friends returning to Tioga to work in energy development or related fields.  Barbara Dulkis of Schenvus spoke of her experience.  Three generations on the farm and she is telling her children they have to leave.  Three farms in the Schenvus area have “dropped out” over the last year.  People tell us there is no future in farming.  However, gas development can offer a second crop.  This is a hidden story that has to get out to the general public.

  <<  READING MATERIAL:  Alan suggested Tim Considine’s  study of  economic development entitled An Emerging Giant:  Prospects and Economic Impacts of Developing the Marcellus Shale Natural Gas Play.
(COMMENT:  Considine’s study has been criticized by the antidrillers because it was sponsored by an industry group and argues against a  severance tax.  Fair enough.  Read it with that in mind.  Then google  Dr. Jannette Barth’s Unanswered Questions About the Economic Impact of Gas drilling In The Marcellus Shale: Don’t Jump To Conclusions.   Compare the two studies on the grounds of bias and scholarship.  Think for yourself. 

Dr. Barth will be appearing at the Unitarian Universalist Church in Norwich on Thursday, February 24th at 7 pm.  The meeting is open to all.)

 
ECONOMIC DEVELOPMENT:   In conjunction with the Otsego County Planning Department, UALA member Marie Lusin-McLaughlin is preparing a Directory of businesses and service providers who can provide needed supplies and services for drillers on a local level.  When completed, this directory will be  the outgrowth of activities of UALA members, industry reps, and others to best serve the business and workforce needs of our county and the new industry. 

If you feel your business or service could be part of gas development, contact Marie at: 
         DRILLING.DIRECTORY@STNY.RR.COM

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                  Otsego County

Natural Gas Advisory Committee (NGAC)

     "The purpose of the Otsego County Natural Gas Advisory Committee (NGAC) is to address public sector impacts and opportunities related to natural gas industry activities proposed or underway in Otsego County.  The NGAC will limit its agenda to matters for which county and local governments have jurisdiction.  The NGAC recognizes that some environmental concerns, including water quality, are appropriately directed at New York State government agencies.  Similarly the NGAC will not address individual legal or lease-holder concerns.  The NGAC will report directly to the Otsego County Solid Waste & Environmental Concerns Committee."

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             Agricutural Development & Gas Drilling

NYS Dept. Ag. & Markets - Matt Brower, Field Agent

Scott Frickbohm, S.W.C.D.

June 30, 2010

Guidelines for Construction and Restoration at Natural Gas Well Drilling Sites in Agricultural Areas

The following guidelines shall apply to the construction and restoration of natural gas well drilling pads and access roads constructed on agricultural land. The project sponsor should coordinate with the New York State Department of Agriculture and Markets (Ag. and Markets) to develop an appropriate schedule for inspections to assure that the goals of these guidelines are being met. The project sponsor should also hire an Agricultural Monitor to oversee the construction and restoration of well drilling sites in agricultural lands.

SITING GOALS

Minimize impacts to normal farming operations by locating well pads along field edges and in nonagricultural areas where possible.

Avoid dividing larger fields into smaller fields, which are more difficult to farm, by locating access roads along the edge of agricultural fields (hedgerows and field boundaries) and in nonagricultural areas where possible.

Locate access roads, which cross agricultural fields, along ridge tops and following field contours, where possible, to eliminate the need for cut and fill and reduce the risk of creating drainage impacts.

The permanent width of access roads in agricultural fields should be no more than 16 feet to minimize the loss of agricultural land.

All existing drainage and erosion control structures such as diversions, ditches, and subsurface drain tile lines shall be avoided or appropriate measures taken to maintain the design and effectiveness of the existing structures. Any structures disturbed during well pad construction shall be repaired to as close to original condition as possible, as soon as possible, unless such structures are to be eliminated based on a new design.

CONSTRUCTION REQUIREMENTS

The surface of access roads constructed through agricultural fields shall be level with the adjacent field surface.

Culverts and waterbars shall be installed along access roads to maintain natural drainage patterns.

All topsoil must be stripped from agricultural areas used for vehicle and equipment traffic and parking. All vehicle and equipment traffic and parking shall be limited to the access road and/or designated work areas such as well pads. No vehicles or equipment will be allowed outside the work area without prior approval from the landowner and, when applicable, the Environmental Monitor. Topsoil stockpile areas shall be clearly designated in the field and on the on-site "working set" of construction drawings.

A level and stable surface is required for the drilling rig at the well site. Construction of the well pad can require significant grading of the existing surface. Topsoil should be removed from the drilling site and stockpiled separate from subsoil and other material. Topsoil and subsoil graded from the drilling site should not block natural drainage.

Subsurface drainage can be damaged during the grading of the well site. Provisions for drain tile repair should be included in the easement agreement.

During the drilling operation, water with a high salt content may be removed from the hole and pumped into a brine pit. Brine pits should be covered with several feet of subsoil to prevent salt damage to vegetation after reclamation. Original topsoil must be placed over the surface of the brine pit during reclamation.

During the drilling, a slurry of pulverized rock and clay like material is generally removed from the hole and pumped into a pit on site. The landowner should be aware of how this mud or drill cuttings will be disposed of after drilling. Drilling mud should be removed from active agricultural fields. Drilling mud or cuttings cannot be mixed with topsoil.

Farmland soils with an extended seasonal-perched high water table will sustain a chronic state of wetness throughout the mass of buried drill cuttings. The same condition may also lead to the potential leaching of residual salts within the agricultural soil profile resulting in the loss or reduction in soil fertility, and long-term crop loss. When a well pad and associated drilling operations occur on a site that has a shallow depth to the water table, alternative on-site burial techniques shall be employed. These techniques include temporary, raised earthen berm pits with plastic liner to accommodate the removal of both the drilling fluids and the wet drill cuttings from the site before restoration.

In pasture areas, work areas will be fenced to prevent livestock access, consistent with landowner agreements.  

RESTORATION REQUIREMENTS

Following construction, all agricultural areas temporarily used for the well pad must be regarded to restore the original contours to the extent possible.

After the well pad is regraded, all disturbed agricultural areas will be decompacted to a depth of 18 inches with a deep ripper (subs oiler) or heavy-duty chisel plow. In areas where the topsoil was stripped, soil decompaction shall be conducted prior to topsoil replacement.

Following decompaction, all rocks 4 inches and larger in size will be removed from the surface of the subsoil prior to replacement of the topsoil.

The topsoil will be replaced to original depth and the original contours will be reestablished where possible. All rocks 4 inches and larger shall be removed from the surface of the topsoil. Subsoil decompaction and topsoil replacement should be avoided after October 1, unless approved on a site-specific basis by the landowner in consultation with Ag. and Markets. All parties involved should be cognizant that areas restored after October 1st may not obtain sufficient growth to prevent erosion over the winter months. If areas are to be restored after October 1st, necessary provision should be made to restore any eroded areas in the springtime, to establish proper growth.

Where farmland on a soil with a high water table has been inadvertently used as a disposal pit for the wet drill cuttings and potential residual salts, the site can be rehabilitated for farming by the re-excavation of the pit, removal of the materials, and subsequent backfilling with soil materials that is consistent with the native soil profile.

All access roads will be regarded to allow for farm equipment crossing and to restore original surface drainage patterns, or other drainage pattern incorporated into the design.

Lime and fertilizer shall be applied to restored agricultural areas where necessary and such areas shall be seeded with the seed mix specified by the landowner, in order to maintain consistency with the surrounding areas.

All surface or subsurface drainage structures damaged during construction shall be repaired to as close to preconstruction conditions as possible, unless said structures are to be removed as part of the project design. Any surface or subsurface drainage problems resulting from construction of the well pad will be corrected with the appropriate mitigation as determined by the Agricultural Monitor, The Department and the Landowner.

TWO YEAR MONITORING & REMEDIATION

The Project Sponsor will provide a monitoring and remediation period of no less than two years immediately following the completion of initial restoration. The two year period allows for the effects of climatic cycles such as frost action, precipitation and growing seasons to occur, from which various monitoring determinations can be made. The monitoring and remediation phase will be .used to identify any remaining agricultural impacts associated with construction that are in need of mitigation and to implement the follow-up restoration.

General conditions to be monitored include topsoil thickness, relative content of rock and large stones, trench settling, crop production, drainage and repair of severed fences, etc.

Impacts will be identified by the Environmental Monitor through on site monitoring of all agricultural areas impacted by construction and through contact with respective farmland operators and the Department of Agriculture arid Markets.

Monitoring and follow-up should include any necessary mitigation of residual drainage problems with effective installation of AASHTO M252 subsurface drain line systems along the perimeter of the overall site and "horseshoed" around and slightly upslope from the burial pit.

Topsoil deficiency and settling shall be mitigated with imported topsoil that is consistent with the quality of topsoil on the affected' site. Excessive amounts of rock and oversized stone material will be determined by a visual inspection of disturbed areas as compared to portions of the same field located outside the construction area. All excess rocks and large stones wll be removed and disposed of by the Project Sponsor. 

When the subsequent crop productivity within affected areas is less than that of the adjacent unaffected agricultural land, the Project Sponsor as well as other appropriate parties, will help to determine the appropriate rehabilitation measures to be implemented. Because conditions which require remediation may not be 'noticeable at or· shortly after the completion of construction, the signing of a release form prior to the end of the remediation period will not obviate the Project Sponsor's responsibility to fully redress all project impacts.

Subsoil compaction shall be tested using an appropriate soil penetrometer or other soil compaction measuring device. Compaction tests will be made for each soil type identified on the affected agricultural fields. The subsoil compaction test results within the affected area will be compared with those of the adjacent unaffected portion of the farm field/soil unit. Where representative subsoil density of the affected area exceeds the representative subsoil density of the unaffected areas, additional shattering of the soil profile: will be performed using the appropriate equipment. Deep shattering will be applied during periods of relatively low soil moisture to ensure the desired mitigation and to prevent additional subsoil compaction. Oversized stone/rock material which is uplifted to the surface as a result of the deep shattering will be removed. 

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 The Landmen Are Back!

Pat Doyle and Melissa Wurtz are landmen (landpeople?) working for Atlas Energy and Twin Peaks Energy respectively.  These companies have been engaged by Atlas America, a driling company with about 1000 acres in Otego.  Mr. Doyle asked to meet with our Steering Committee.  After I learned he was a landman, I turned him down.  I suggested that he have Atlas America contact us directly.

PLEASE BE ADVISED THAT THEY MAY BE CALLING YOU.  If you have already made an appointment with either of them, PLEASE ask for a copy of their lease and the  sign-on offer.  We need that kind of information as quickly as possible.

As for Atlas Energy, they will be drilling in Otego on previously secured acreage as soon as their permit for a vertical well is processed.  They are doing the engineering survey as we speak.

AGAIN, PLEASE CONTACT US IF YOU HAVE BEEN CALLED OR WHEN THEY CALL.

On the political front  --  The Englebright/Abbadabo Bill which will delay drilling for perhaps three years, has passed the Assembly Environmental Committee and is now in the Rules Committee.  The Senate Environmental Committee is considering an adjusted form of Englebright/Abbadabo (a one year + moritorium) to be sent to their Rules Committee.  This is a red herring; one year will extend to two.  The Joint Landowners Coalition has been calling to make our viewpoint known.  However, since 11 of the 14 committee members are from downstate, the bill will probably  go through Environmental Committee.

However, in the Senate it is not a slamdunk.  Three Democrat Senators from western NY oil counties will probably vote with our  senators.  Our final fallback position is that Governor Paterson will probably veto any form of Englebright/Abbadabo.  This should allow the revised SGEIS to come out as planned in late summer.

For those of you who live downstate  --  WE NEED YOU.  Write to your Assemblyman and Senator.  Tell them that this is a New York State issue, that you want safe drilling now, this will help the economy of the entire state, and this will move us towards energy independence.

Stay tuned.  More to come.

Dick Downey
 

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    Delta Engineering Presentation Overview - March 29, 2010

List of Services Provided in Conjunction with Congdon & Co., Inc.

A team of professionals to help verify the accuracy of production so you receive the correct royalty payments:

•One opportunity at this phenomenon and your personal business venture – will experience typical ups and   downs

•$100,000/Month 100-125Acres in Pennsylvania (recent example)

•PA Shale formation IP Rates = 3.5-8MMCF/Day variables – delivery prices, etc.

•Initial fee projections show $600-$900/mo for the first year of service (adjusted for the number of landowners in the unit) – 640 Acre units, 6 wells,  new fracking

•Decline curves are steep – Initial production is critical and the source of most income in the first two years

             

As part of our continuing commitment to our region and community, we are pleased to announce a pilot program for Marcellus landowners:

                                                       Part I:

•On-Site Meter Monitoring and Witnessing Function

•Periodic Field Visits by Technicians

•Lease Provisions, Gas Company Contacts, Your Legal Council if necessary 

                                                       Part II:

•Auditing Functions to Ensure Proper Back up Data for Royalty Checks

 –Specific Lease Provisions, Legal Council

 –Gas Company Coordination–3rdParty

 –Reporting to Landowner, Financial Advisors

                                                       Part III:

•Tracking your specific production and other area wells to provide future projections of production and income streams for financial planning 

                                                  -------------------------------

                         CLICK HERE TO SEE THE DELTA-CONGDON POWER-POINT PRESENTATION

                                                     Delta Engineering Presentation.pdf

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         Financial Planning Meeting Overview - Feb. 18, 2010

Johna Peachin, a CPA based in Oneonta who has been serving the area since 1984, spoke to our Association on Thursday evening regarding financial and tax issues related to gas drilling. Her firm specializes in wealth and business management and she has had many family farm clients who have signed leases over the years. She became more seriously involved in this activity about five years ago when these leases became active and drilling began and as the accounting profession developed seminars and training sessions for these activities.

The highlights of her remarks appear below, but her principal message is that planning is important - better to be safe than sorry.

Bifurcation is a concept involving two components of land value: surface rights and mineral rights. While a new concept in New York, land in the west has always been valued and sold with and without mineral rights. Each right has a value and can be sold separately. Previously, selling land was one dimensional - surface rights - no one thought of mineral rights. Surface right value may be a lot less today if a lease exists but is not sold with the land's surface rights. The potential payment stream from mineral rights, however, may make the land far more valuable if included in any land sale.

It is not always obvious who should receive lease/royalty payments, particularly if there is a long hiatus between the two. Royalty payments can dramatically impact estate planning, nursing home planning and college planning (needs-based scholarships). Land held in a C­corporation will subject lease/royalty payments to "double taxation." Some trusts and SOl(c)(7) social clubs should not receive such payments.

There are techniques to move ownership of mineral rights from one type of entity into another or from one person to another. Each requires a mineral rights valuation. The lower the valuation, the easier and less costly the transfer. Right now the viability of gas drilling in this area is uncertain (how much gas is down there, future gas prices, regulation of hydrofracing). This situation means low valuations. Once gas flows, valuations are likely to skyrocket and transfers will no longer be possible.

There is a lot of misinformation or myths about lease payments. They are not capital gains or farm income and one cannot defer the income under like-kind exchange rules. Lease income is rental income. There are a few expenses that can be deducted against the lease payment ­mainly legal and consulting expenses. You cannot buy equipment to offset against this income because lease payments are considered "passive" income.

Royalty payments are similar but they are "passive" income and come with special rules. Certain expenses can be deducted from royalty income, principally professional fees and expenses paid. "Carrying" costs of land, e.g., property taxes and mortgage interest, are NOT allowed, as these pertain to surface rights. In addition to cash expenses, mineral extraction, including oil and gas, involves an expense called depletion. Cost and percentage depletion are the two allowed methods under federal taxation. The former involves determining: (a) the basis of the property, (b) the total number of recoverable units and (c) the number of units sold in the year. Percentage depletion is a simple multiplication: gross royalty income times the percentage allowed by statute for gas (currently 15%). Most people use percentage depletion; however, New York State does not allow this method.

It is clear that several professionals usually get involved in these matters. Ms. Peachin calls them the GALA team. The team involves: a Geologist for valuations and cost depletion estimates, an Accountant for financial planning and taxes, a Lawyer for liability protection and entity issues, and an Auditor for verifying the accuracy of payments from the gas company.

There is a rich history of dishonest practices in oil and gas extraction such as mid-night thefts, meter tampering, etc. as well as less than arms length sales between affiliated companies. That is what auditing is about. It is a highly specialized function. Our area of New York doesn't have this expertise yet.

This was a discussion to raise awareness and prompt some thinking and action, if appropriate. It is usually too late to plan once the "ship comes in." There are steps to take to minimize these problems and unintended consequences and sooner is better than late. There is nothing worse than having to say "I told you so" to a client who did not follow through!

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              MINUTES  of AD  HOC GAS  DRILLING/ 
                       ECONOMIC  OPPORTUNITY  COMMITTEE 
                                          NOV. 7, 2009

        

ATTENDING:  Denton Reed, Andrew Latham,  Marie Lusins, Steven Palmatier, Dick Downey, Richard Nyahay

The purpose of the meeting was to identify economic opportunities that might arise with gas field development in Otsego County.  What goods and services might this industry need that could be provided locally?

During the first hour the participants spoke to their interests and expertise, generally getting to know each other.  Richard Nyahay of Gastem USA joined the group at 11 o’clock.  The discussion centered on the goods, services, educational opportunities, contacts afforded by local businesses, institutions and individuals.  The following items were discussed:.

1)  ON-SITE FOOD CATERING:  The nature of the work and the hours could make this a useful service.

2)  HOUSING RENTALS:  Marie Lusins explained the seasonal nature of rentals in this area (student, tourist, Dream Park, etc.).  Richard Nyahay and Steven Palmitier described the current housing set-up for drillers.  The gas company rents a center/office.  The drilling company provides housing for crews.  This can be hotels, motels, rentals, campers or trailers on-site.  Leads to reliable hotel/motels would be helpful.  “Man camps” were mentioned.  Richard Nyahay said they would be 5 years down the road, if at all.

3)  TRUCKING AND TRUCKERS:  Richard Nyahay explained the industry  specific equipment needed such as water trucks, rigs, vacuum services, geological trucks. The nearest rental facility is two hours away n Tully, NY. For some jobs, special operators are flown in.  They pick up the equipment, do their job.  As  drilling develops, rental of such equipment might be a business opportunity.  Truckers will be needed.  They will have to have special licenses due to the nature of the fluids they will be hauling.

4)  CONSTRUCTION, LOGGERS, ETC.:  These operations can be local.

5)  FUEL OIL:  Local contracts.

6)  EQUIPMENT RENTAL:  There is a need for small generators, hoses, bobcats, small job equipment, etc.  Usually obtained locally.

7)  SERVICE PROVIDERS (Surveyors, logging crews, welders, etc.)  These services can be provided by local contractors with ONE CAVEAT.  When a gas company needs a service, it needs it NOW.  With heavy rental costs for rigs and a tight time frame, the “I’ll get to it tomorrow”  attitude is not going to work.  Every glitch is an emergency and vendors have to know that.  Quality of work is another issue:  Gastem lost  2-3 days with one sub-par welder.

8)  W    ATER TESTING LABS:  Definitely a need but it must be sophisticated enough to meet DEC specs.  Marie Lusins mentioned a lab in Morris.

9)  WAREHOUSING:   Companies will rent/purchase their own yards.

10)  “DON’S LIST”:  Don’s List is a directory of oil/gas equipment and service for the Northeast.  A local “Don’s List” would be useful for companies new to Otsego County. 

11)  CONTACTS:  Aside from providers of goods and services, gas companies need access to local and State government officials.  For good will and contacts with the community (they are well aware of the opposition to drilling) they will also need contacts with local Chambers of Commerce, Rotary, universities, etc.

12)  EDUCATION OPPORTUNITIES:  Oneonta and Norwich offers some unique educational opportunities for local residents/students and industry personnel.  The local colleges, community colleges, BOCES, and Job Corp can train for entry into the industry.  The Norwich branch of Morrisville Community College is in the first steps of providing such a course.  These courses and seminars can be tailored to industry need and  be provided on-site to upgrade drillers already employed on the rig. This allows the drill crew to upgrade their “tickets.”  Steve Palmatier and Marie Lusins have on-going entrees to these institutions.

13)  WASTE  WATER  FACILITIES:  A headwork's analysis is the key to whether local water treatment facilities can process wastewater and flowback.  The process:  the driller does a sample analysis of the water to be processed, collects its data.   If the constituent chemicals are under a particular guideline, the driller can send it to a particular treatment plant.  The plant retests the effluent and accepts or rejects.  There is a need for more treatment plants, thus a business opportunity.  One problem with opening such a plant - there is a trend towards water conservation and the Marcellus is returning much less flowback than expected - 18% instead of 50/70%.

14)  COUNTY  AND LOCAL GOVERNMENT:  Contacts are necessary at this level to ensure baseline data on local roads (road bores, videos) and perhaps to provide 3rd party verification of water well tests. Interesting fact- - some landowners hide bad wells by refusing to have the pretest.  This allows them the possibility of a lawsuit later.

15)  EAST/WEST PIPELINE:  Steve Palmateir noted the absence of an east/west pipeline.  Such a conveyance would open up a lot of new territory.  Political help  with the PSC would be useful in this area.

The meeting lasted about two and a half hours.  Also discussed was the economic spinoff (the ratio of 1 gas field job for every 6 wells, the multiplier effect of expendable gas dollars, etc.), the time frame for development (2 to 5 years), infrastructure (the TEPPCO lease allows a second pipeline), the thickness of the Utica in this area (500/600 ft.) and the general nature of the gas business.  Steven Palmitier summed up the general tone of the meeting.  “How can we make it easier for a driller to do business in our area?”

Minutes Respectfully Submitted,       Dick Downey

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        ECONOMIC  OPPORTUNITIES  IN  GAS  DRILLING MEETING NOTES                       DEC. 1, 2009  at  OTSEGO COUNTY ECONOMIC DEVELOPMENT OFFICE

Attending: Marie Lusins, Fred Price, Dick Downey (UALA); Kevin Price (CDO Workforce); Carolyn Lewis (Otsego County Economic Development); Donna Jones (Chenango County Department of Planning and Development); Robert Robertson (Otsego County Chamber of Commerce); Steve Palmatier

Marie Lusins, Dick Downey, and Steve Palmatier presented a list of some of the jobs, equipment, and services that are needed to support gas drilling. (See attached) Many of these are non-cyclical. Projections from past experience tells us that every 6 wells creates 1 industry job. Every industry job spins off 2.4 ancillary jobs.

The education needed for some of these jobs was also discussed. Marie noted the programs in place from CDO Workforce, BOCES programs, Job Corp, and the possibility of a Morrisvile CC program. Steve spoke of the many certificates need by field workers to augment their "book"; skills needed for higher pay grades. Many of these courses can be taught "on site."

While Otsego and Delaware Counties are in the early stages of development, Chenago County has moved forward with dozens of Herkimer wells and an increased rate of development projected for the next three years. In a report delivered in September to the Broome County Legislature, Broome County expects between 2000 to 4000 wells drilled as development rolls out.

Discussion commenced on the skills and attitudes needed to service this industry (this is a 24/7 industry; you have to be reliable), the time needed to get State Ed approval of course sequence (18 months), cachment area as determined by drive time to work (one hour seems to be the max), momentum of development phase (Pace in Chenango seems to have been 1 well every 2 weeks, expected to pick up to 40 wells every quarter), the industry wage scale ($12/15 per hour for raw beginner to $150,000 for site supervisor. A mudlogger, usually a 2 year degree, gets $80,000) In the beginning the labor on site is usually imported (80% to 20%) but this ratio switches as the field matures.

Marie spoke of a regional approach for educational development - a 3 county effort has a better chance for State funding and support. 

There was some general discussion on promising innovative technology -propane fracing has significantly increased production. The Marcellus shale wells in PÅ are producing 18% wastewater returns. 1,000,000 gallons of water down hole will still need 180,000 gallons of disposal. The problems of disposal and blocked production make propane fracing attractive. Early results indicate that 98% of the gas used returns and can be used again. Carbon dioxide fracing is in the experimental pipeline.

SUMMARY: The Counties and the Chamber of Commerce would like direct contact with gas industry professionals. To that end it was suggested that a second meeting be held in Norwich in mid-January. Drillers currently active in the three county area will be invited. The objective is to get input from industry to start moving towards a local "Don’s List" and to provide impetus/ direction for local educational programs.

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Directory of local services needed for the natural gas industry once gas exploration/production starts. Expect an up-tick in activity in the following industries/job categories/specialties. This is by no means the entire list.

WELDING AND WELDING SUPPLIES                                                                                              METAL FABRICATION                                                                                                                 TRUCKING - WATER / PIPES / MISC.                                                                                            TRUCKERS: VARIOUS LICENSES, TRAINING                                                                               CONSTRUCTION - EXCAVATION / ROAD BUILDING / MISC.
FORESTERS
LOGGING
ENVIRONMENTAL CONSULTANTS & CLEAN-UP SERVICES
PIPELINE SPECIALISTS - PLANNING / CONSTRUCTION / RECLAIM.
ENGINEERING/ CIVIL
HAY BALES
FENCING - CONTRACTORS & SUPPLIES
FUEL
SURVEYORS
TOWING SERVICES
CRANE / WINCH SERVICES AND SUPPLIES
HYDRAULIC OPERATORS AND MECHANICS
TOOL / POWER EQUIPMENT RENTAL / LEASING & REPAIR
PORTABLE TOILETS
CATERING SERVICE
OFFICE RENTAL, FURNISHINGS & SUPPLIES
STONE, GRAVEL, TOPSOIL
TEMPORARY STORAGE UNITS
STEEL BUILDING FABRICATORS
NOISE ABATEMENT MATERIALS FOR GENERATORS
GENERATORS AND GENERATOR REPAIR
BANKING /CAPITAL FORMATION / STRUCTURING VC SERVICES
FINANCIAL PLANNERS
ACCOUNTING / BOOKKEEPING / TAX SERVICES
INSURANCE: BONDING / CASUALTY / VERIFICATION OF ROADS, ETC.
ATTORNEY / LEGAL SERVICES / ABSTRACT SEARCHES
CEMENT: SPECIALTY MATERIALS & SERVICE
DIESEL ENGINE REPAIR
PLUMBERS / STEAMFITTERS
PLUMBING SUPPLIES FOR BOTH PVC AND STEEL
SAFETY: FIRE / HAZMAT EQUIPMENT & TRAINING
ELECTRICAL CONTRACTORS / FLOODLIGHT SERVICE
STEAM CLEANING / MAINTENANCE OF EQUIPMENT
WATER TESTING: FIELD SERVICES & LAB CAPABILITIES
SECURITY / THEFT PREVENTION / VIDEO EQUIPMENT
REPAIR SERVICES FOR GAUGES / TECH INSTRUMENTS
WASTEWATER: TRANSPORTATION & DISPOSAL PERSONNEL
LODGING: HOTEL / MOTELS / B & B / RENTAL HOUSING
REAL ESTATE
COMPUTER SERVICES: PROGRAMMING & REPAIR
ROAD CONSTRUCTION & REMEDIATION
SITE INSPECTORS - INDEPENDENT AND DEC
LAUNDRY SERVICES
DUMPSTER RENTALS
FARM EQUIPMENT
RESTAURANTS
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           Summary of June 30th Meeting with Scott Kurkoski

- The DEC has moved back the timeframe to get the SGEIS out until later in the Summer;

- Gas Companies are holding off bidding on leases until the SGEIS is available for review;

- The idea of a state severance tax is “bad business” – especially if the monies are put into the General  Fund;

- Joint Coalition (a.k.a. Coalition of the Coalitions) wants all coalition members to write to their elected state representatives to stop stalling and to force the DEC to get moving;

- Gas Pipeline Issues: [NOTE: Gathering lines from gas wells already covered in our lease]

               Easements run forever;

               Easement negotiations are structured to get maximum benefit for the company;

            Typically there is no payment until ground is broken;

               Abandonment provisions need to be included (reclamation provisions, pipe plugged, etc.);

               Require a non-exclusive easement for future lines:

            Include a clause to enable traversing pipeline by farm equipment, vehicles or other lines;

               Include timber provisions (if applicable) to obtain fair-market-value;

               Include provision that tax roll-backs will be covered by the company;

               Include clause regarding consideration of pesticide use for ROW;

               Include clause specifying where pipeline should be placed;

               Do NOT accept over-ground easements;

               Compressors are included under a separate agreement from easement negotiation;

               Pipeline company must be insured and must indemnify landowner;

 

                          NEXT MEETING WILL BE AFTER AUGUST 23rd

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                        NEWS FLASH !

According to our attorney, Scott Kurkoski, it seems that Fortuna is saying that the delay by the DEC triggers the  "Act of God" clause in its contracts, called Force Majeure.

Force Majeure means a circumstance beyond the control of any of the parties, for instance, a hurricane, a flood, or a war which impedes one of the contracting parties from fulfilling its contractual obligations.  Fortuna is saying that the delay by the DEC is such a circumstance and therefore its' leases with its' landowners must be extended by "x" years. 

Scott says NO!  Permits for drilling could be obtained.  The moratorium was on horizontal drilling.  This force majeure gambit is a tactic by the industry to extend the primary terms of leases yet another way.  While this doesn't affect our members directly, this information will be useful to your friends and neighbors who may already have signed leases with a driller.  They should tell these folks not to sign anything regarding this issue without first consulting a lawyer.

Please talk to your neighbors if they already signed a gas lease and tell them of this development.

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             April 30 Gas Pipeline Meeting Summary

 Guest Speaker:

John E Lacey,

Agriculture Land Resource Specialist

607- 425-4441 jelacey1439@msn.com      

Ten years with Soil & Water Conservation. Twenty-five years with the Division of Agricultural Protection and Development (NYS Dept. of Agriculture & Markets): planning the on-site farmland mitigation of utility rights of way including the routing, construction, and restoration; and the field inspection of each stage per affected farm. Three years (presently) as a field consultant in: utility corridor analysis, mitigation planning, compliance monitoring and technical instruction.

"The rural landowner needs to be construction-savvy by understanding and planning beforehand for a gas gathering pipeline, and the steps of right-of-way construction mitigation and restoration. "

♦  Natural gas production requires more than a well drilling pad on "somebody else's" leased land. For every productive gas well, the gathering pipeline to transport the gas to the nearest main transmission line may involve a construction right-of-way through at least 12 to 30 or more additional landowners, depending on distance.

♦  Know your land and its soils. Knowledge - of your land's soil limitations, the natural soil drainage characteristics and the terrain - is important for determining: your land's tolerances and vulnerabilities to pipeline construction disturbance; and the best mitigation. Ideally, these factors are taken into account before signing a natural gas lease.

♦  Many of the pipeline constructors who bid on jobs over much of the country are more familiar with work in regions having climate, terrain and soils different from here. Verification of the right data about your land for pipeline route planning, construction mitigation, and effective restoration is key; as is the diligent monitoring of each phase of work by a qualified inspector.

♦  All soils are vulnerable to damage; but when the land is in wet condition it is most susceptible to destruction of its topsoil from unmitigated right-of-way construction. Here, soils receive a near steady average of 3 to 3.5 in. of precipitation per month - putting them continually at risk - in contrast to other regions that have a distinctly dry season for construction.

♦  Degradation and permanent loss of this region's limited topsoil layer happens from inadequate protection through the pipeline construction phase, i.e.: weeks or months of the trafficking; and severe rutting and inversion of the thin and vulnerable topsoil layer with the subsoil, by heavy equipment, in our continually moist-climate environment. To prevent such loss on farmlands, all right-of-way topsoil must be stripped down to the boundary of the subsoil layer and stockpiled aside for protection until time for farmland restoration.

♦  The temporary construction right-of-way through farmland (improved pasture, hayland. rotation, rotation cropland-hayland) should be the widest (relative to other affected lands), to provide sufficient working room plus the space for complete topsoil stripping and stockpiling.

♦  The temporary right-of-way through lands abandoned from farming and returning to shrubs, uses a moderately narrower construction width and implements a modified topsoil protection plan.

♦  The temporary construction right-of-way through forest land does not employ any topsoil stripping; but instead uses a narrow construction corridor and applies the trench spoil as a temporary cover over the native topsoil to help cushion the shallow, lateral root systems of the edge-trees from damage by pipeline traffic ... until construction is completed and the trench spoil is backfilled over the pipe.

♦  Landowners should carefully consider and inventory the property's overall resources including their investments in the land's existing improvements (pasture fences, tile drainage systems, conservation diversion terraces, crop field alignments/patterns, managed woodlots, ponds, access roads, everything ... ), before a natural gas lease is developed and finalized. Think about and determine the locations of least/most impact from a pipeline right-of-way and the critical steps of mitigation and land restoration, in the earliest stage of natural gas lease involvement as possible.

♦  Evaluate your land's safer locations for pipeline construction early in the leasing process; and know what areas are the ones to avoid. In many cases - but not always - the pipeline construction right -of-way has less permanent impact along property lines and field edges or hedgerows, depending on the land's drainage and rock depth. Severing farmlands through their tile drain systems or diversion terraces is undesirable; as is the oblique-angle alignment of a pipeline across contiguous field strips;

♦  A pipeline crossing underneath access lanes must be protected from heavy farm or logging equipment - bury the pipeline with at least 5 ft. depth of cover at access ways. In agricultural fields, pipelines must be at least 4 ft. beneath the surface; and in other rural lands reverting to shrubs and abandoned from farming they require at least 3 ft. depth of burial.

♦  The right-of-way restoration phase is critical. It must be carried out with the correct practices and in ideal conditions when the disturbed land and soils are relatively dry to moist - but not wet and vulnerable which lead to heavy damages. In disturbed farmlands, deep-ripping of the exposed and heavily compacted subsoil on the construction right-of-way, followed by rock picking, are fundamental before topsoil replacement and supplemental subsoiling. Each part of the restoration sequence should be monitored for effective completion by a qualified inspector.

♦  Avoid the offer of a hasty "restoration shortcut" on your land under the poor, wet seasonal condition of the soil. Delay the full restoration until seasonal conditions are suitable for effective work. When new drainage lines or section repairs are needed, specify the engineering grade: AASHTO-M252, which is more resistant to "ovaling" than the standard ASTM-F405 drainage material.

♦  Be involved directly, or through a qualified field inspector, in the monitoring of your land. This also applies not only to the construction and initial restoration phases but also to the minimum of two years of post-construction monitoring for residual impacts and corresponding follow up restoration.

♦  The pipeline constructor goes only by: the bid document; the information in the construction drawings; and the data that is gathered into the pipeline project's mitigation plan.  While you may not (but should) know what is in that mitigation plan - you DO know your land and what is in your lease.