Susquehanna County Blog

At this point, most will probably agree there is a huge amount of information available regarding the current “play” going on all around us.  If you haven’t seen, or don’t live in an area where it is available, the Scranton Times, starting this past Sunday (5-4-2008) they have been featuring numerous articles on this matter. 

Most of the articles are on line and available at www.scrantontimes.com

There are several pictures of drilling at Ordie Price’s Sawmill in PA 92 in  Lenox Township, about 1/2 mile from the I-81 Lenox exit. 

There is an article in the Sunday edition which notes that although (the Department of Environmental Protection) DEP is responsible for overseeing the drilling, fracing, production, wastewater and other byproducts from fracing processes as well as the impact of the roads leading to the actual well site, there are only Northwest and Southwest regional offices for the Oil and Gas Management Program.  The Northwest office oversees this area.  The DEP is working to increase their field staff.  ++ Probably by the time they manage to increase their staff and get them up to speed, it will be so far into the process that it won’t make a material difference to what’s happening ++. 

In one of the articles, the fracing process is discussed.  The fracing fluid is described as a liquid slurry of salt water, sand, gums and chemicals. 

Of course, there is NO mention of what chemicals are used, or explanation of “gums”.  Sounds as if Henry Waxman (D) California needs to fire up his House Oversight Committee (again), to investigate the situation. 

One of the most disturbing comments was made by a county resident who voiced the opinion that we are hillbillies and country people.  Don’t know about you, but this writer believes there are many other residents who would take umbrage from that remark; both those who have a formal education and those who don’t. 

In Monday’s edition, there was a Q & A session.  Very interesting.  One of the questions was regarding a landowner with only a few acres, but has neighbors who have signed a lease.  The question asked if the companies would be interested in their place.  The answer was yes.  The landowner would benefit IF the property was included in a production pool.  Yes, the companies are interested, and unless you have specific reasons not to lease, leasing could prove rewarding IF gas is produced from you pool.  Too many ifs for this writer.

This writer was speaking with someone from the local banking industry recently gave an entirely different viewpoint.  This person noted that these leases “could” invoke the “Due On Sale” clause which appears in every mortgage.  This means that if you have a mortgage and don’t use the lease funds to pay it off, the bank could demand payment for the entire balance of the mortgage.  Check with your own bank for details on this.  You may be surprised.

The other thing which was noted was that when you get a new mortgage, the property is always appraised.  The appraiser will most certainly be taking into account the fact that the property has been leased and will DISCOUNT THE VALUE OF YOUR PROPERTY BY THE CURRENT VALUE OF LEASES, RATHER THAN WHAT YOU SIGNED FOR.   According to this person, this means that although you may have signed a lease for $750 per acre for 20 acres for example, because the current value of a lease is $2,500, then the value of your property would be discounted by not $15,000 (750*20), but rather $50,000 (2,500*20). 

I hope this does not become the same shock that will occur for those who spent their lease money without keeping the IRS in mind…

More later

This entry was posted on Tuesday, May 6th, 2008 at 12:24 pm and is filed under 2008, Gas Wells. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.