LONDON, Ohio – Farmers and landowners face several complex issues and opportunities relative to mineral rights as Ohio develops natural gas production from Marcellus and Utica shale, advised experts from the Ohio State University speaking at Farm Science Review 2011.
“The best advice is ‘caveat emptor,’ buyer beware,” said Mike Lloyd, OSU Extension educator, and a panelist discussing the impact of natural gas production from shale on Ohio’s rural communities and economies. He joined Professors Doug Southgate and Allen Klaiber of the Department of Agricultural, Environmental and Development Economics on the Review’s opening day panel.
Lloyd said some of the biggest issues of concern for potential leaseholders include the complexity of the lease agreements themselves, as well as questions over the long term impacts of natural gas production on local communities.
Klaiber, recently joining the faculty, observed the natural gas industry at length during his tenure at Penn State University prior to his arrival at Ohio State.
“Gas production definitely creates jobs,” he said during the panel discussion, “but not necessarily in production itself.” He said service industries, including food service and hospitality, typically see increased demand as out of state workers arrive to service new wells.
Because gas production is a very intense occupation with long hours, Klaiber said local workers aren’t always interested in production jobs if they aren’t already familiar with the working conditions and lifestyle.
The question, he acknowledged, is what happens to the communities after the gas wells are established, and the production crews move on to newer wells in other communities.
“We want to avoid the ‘boom and bust’ cycle if possible,” he said.
Southgate said while the initial “play” in Ohio’s shale gas resources was exploitation of the Marcellus shale, the Utica shale is potentially much bigger, involving a larger proportion of Ohio’s counties, partly because of developments in gas exploration.
He said the most “jaw-dropping” developments in technology in the industry have come on the exploration front, with equipment that can detect vibrations roughly equivalent to “dropping a can of soda 10,000 feet below the ground.”
The panelists agreed that local communities have significant questions to consider regarding the effects of natural gas production on infrastructure and environmental issues.
“One of the biggest concerns is over water quality,” Klaiber said. “Companies are now testing water quality before production to establish a baseline for water quality before production begins.”
He noted that local groundwater supplies are typically drawn from 200-300 feet below ground, while shale gas wells are often a mile or more deep. Casings designed to protect the water supply run between 500 and 1,000 feet down the well.
Lloyd said the bottom line for potential leaseholders is to learn all they can, to ask questions, and to consider all the options.
“Picking the right time to lease ground is like trying to pick the top of the corn market,” he said. He noted that Extension professionals are available to answer questions and provide resources, but they will not make specific recommendations about lease rates or royalties.
Farm Science Review is sponsored by the College of Food, Agricultural, and Environmental Sciences, OSU Extension and the Ohio Agricultural Research and Development Center. It attracts upwards of 140,000 visitors from all over the country and Canada, who come for three days to peruse 4,000 product lines from 600 commercial exhibitors, and learn the latest in agricultural research, conservation, family and nutrition, and gardening and landscape.
Farm Science Review pre-show tickets are now on sale for $5 at all OSU Extension county offices. Tickets will also be available at local agribusinesses. Tickets are $8 at the gate. Children 5 and younger are admitted free. Hours are 8 a.m. to 5 p.m. Sept. 20-21 and 8 a.m. to 4 p.m. Sept. 22.
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