The last issue of "Marcellus at Your Door" discussed the recent press release issued by Nationwide Insurance on July 12th. In the press release, Nationwide stated there are serious concerns about whether or not "fracking" was safe. They indicated that their company does not underwrite insurance policies for homeowners that would include covering damages or loss claims associated with oil and gas drilling activities.
As if that wasn't enough of a profound indication that these Marcellus wells bring serious adverse impacts to people and communities! What other situations are relevant and of serious concern to landowners that the current drilling frenzy has impacted? (Well, aside from the obvious concerns about well water contamination, toxins, air quality, health issues, noise and dust pollution, traffic and road safety issues, quality of life issues living near these huge well sites, loss of property values, etc.)
How about finding out that your property may not be one that the bank is willing to issue a mortgage on? This is yet another growing concern that is being recognized and reported in the media.
According to an article published in the May 20th edition of Energy Bulletin,
"Wells Fargo & Company, both the largest home mortgage lender in the United States and a major lender to the country's second largest producer of natural gas, Chesapeaker Energy Corp., refuses to make home loans for properties encumbered with natural gas drilling leases."
See internet link: http://www.energybulletin.net/stories/2012-05-20/how-fracking-mess-about-make-mortgage-mess-worse
So, this means that if your land is being drilled upon, or there are leases to the minerals under you, your property is considered a mortgage risk. And, what if you may sometime desire to refinance your existing mortgage, or even try to sell your property? Will prospective buyers even be able to get a mortgage on your property should they want to purchase your home? (Assuming you're lucky enough to find a buyer who doesn't mind having a big ol' 7-8 acre Marcellus well pad sitting on or near them.) Food for thought, folks. What is this oil and industry really doing to all of us?
It is disturbing to read these articles which are starting to pop up on the internet. Articles that are raising the questions about banks and mortgage financing companies that have indicated their reluctance to issue mortgages on gas-leased properties.
Elisabeth Radow is a NY attorney who studies gas leases. Last year, she published an article in the November/December 2011 issue of the NY State Bar Association Journal. It closely examined such issues.
See link: http://www.nysba.org/AM/Template.cfm?Section=home&template=/CM/ContentDisplay.cfm&ContentID=44613
If you have access to the internet and can pull up the above link, this is a "must read" report that EVERYONE who has a Marcellus well on or near their property should be aware of!!
In the eleven page report of her findings which is titled: "Homeowners and Gas Drilling Leases: Boom or Bust?" can be found the following statements.....
"Residential fracking carries heavy industrial risks, and the ripple effects could be tremendous. Homeowners can be confronted with uninsurable property damage for activities they cannot control. And now a growing number of banks won't give new mortgage loans on homes with gas leases because they don't meet secondary mortgage market guidelines." .....
"The introduction of fracking in homeowners' backyards presents a divergence from typical current land use practice, which separates residential living from heavy industrial activity, and the gas leases allocate rights and risks between homeowner and gas company-lessee in uncharacteristic ways."
A similar article about mortgages on gas-leased properties, provides additional perspective of what this means for the homeowner who is hosting a Marcellus well pad or for those living near one and having their minerals under them leased also.....
See internet link for the following article where the excerpt below was taken:
"A Pennsylvania couple was recently denied a new mortgage on their home and a hobby farm because according to the lender --gas wells and other structures in nearby lots...can significantly degrade a property's value. The owners came to the conclusion that if they cannot refinance their own home, no potential buyer would likely be able to get a mortgage to purchase it should the couple ever want to sell.
Others who've had their water supply contaminated but could not prove it was due to nearby natural gas drilling are facing a wipeout since their homes are now worth far less than the mortgages on them. Some of those people will simply end up walking away in order to protect the health of their families.
But why not turn to one's insurance company to pay for damage to one's property? It turns out that homeowners insurance almost always excluded damaged from industrial operations on one's residential property, Radow writes. And, that's what natural gas drilling is, an industrial operation. Even for those who escape the problems of water contamination and human and animal health effects, there remains the ever present possibility of damaging explosions and fires from drilling production operations. Homeowners insurance won't pay for that either.
Surely, the drilling companies are responsible for explosions and fires linked to their operations. Unlike water contamination which is usually an underground phenomenon and often difficult to prove, it should be obvious that the companies are responsible for damage from explosions and fires caused by their actions. Don't count on it, Radow seems to say. In such circumstances, homeowners may have to sue for damages and even if they win, may not get paid for all the damages since the natural gas drillers admit in their regulatory filings that they may not carry enough insurance to pay for such damages due to mishaps. "
Take for example the current activities going on in New Milton area on the property tracts leased by John Erwin to Antero Resources. Right now, land along the ridge tops of Brushy Fork Road is being cleared for several well pads. Excavation equipment (at least a dozen or more vehicles on site including bull dozers, articulated dump trucks, backhoes and giant excavators) are clearing dozens of acres of trees and making a new road to connect onto Brushy Fork Rd.
Trees are being piled up and lit to burn off from all the downed trees in the the cleared forest turned well sites. Much like mountain top removal excavation, just as in the coal industry.... only this is for the 7-8 acre Marcellus well pads. A giant fan is being used to blow on the fire to stimulate it. Concerned neighbors have photographed the burn sites unattended, and burning brush piles set up within yards of existing old gas wells already up there. No water tank trucks were on site during the burning and no nearby water source is available should the fire get out of control in these drought conditions.
What happens if they lose "containment" of all these brush fires they are creating to burn the trees they bull dozed? And what if a potential brush fire on the ridge top becomes a forest fire and reaches an old gas well nearby and it all goes "kaboom?"
We already know that the homeowner insurance industry will not cover damages for drilling related activities. And now we are finding out that mortgage companies are unlikely to offer mortages for properties drilled on or with leases underneath.
How much more evidence is needed to convince an unsuspecting public that this "unconventional drilling" that is imposed upon us due to the Marcellus shale natural gas play has serious implications. Even far beyond the environmental and health issues that people have already been warning about for years.
And while many people do not have a choice about leases on their properties, (since the drillers in many cases use the same leases our grand pappies gave them) what about those who do have a choice and are chosing to lease their properties to the drillers now? As example, would be the farmer in New Milton who unleashed this on his entire community.
Currently lawyers, who are chomping at the bit to jump on these type situations, are reporting that here is talk that suggests that a person who creates such risks, by their deliberate decision to lease their property could be held equally responsible as the drillers would be, for any damages or harm to neighboring properties. (see link: http://www.huffingtonpost.com/andrew-reinbach/stop-gas-drilling-sue-you_b_787881.html) It's on the way folks! Neighbor pitted against neighbor courtesy of the drilling industry who takes their billions in profits from our gas and leave us to battle it out.
This is only the beginning of some interesting events on the way for Doddridge citizens and those in other counties when the Marcellus drilling REALLY gets underway. They haven't even started yet on what they have in store for us. Stay tuned.