property values

Tue, 2014-12-02 04:00Sharon Kelly
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Hard Times in a Boom Town: Pennsylvanians Describe Costs of Fracking

If you're looking for the shale gas boom, northeastern Pennsylvania is the place to start.

The Marcellus is the largest and fastest growing shale gas play in the U.S. and more than half of its 50 most productive wells were drilled in Susquehanna County in the northeast. Susquehanna and neighboring Bradford County produced 41 percent of all Marcellus gas this June.

While drilling is down in other shale gas plays across the US, with major oil companies selling off their stakes and CEO's expressing regret for buying in, the Marcellus has bucked some of the downward trends so far.

A recent report from the Post Carbon Institute, “Drilling Deeper: A Reality Check on U.S. Government Forecasts for a Lasting Tight Oil and Shale Gas Boom,” has grave warnings about the Energy Information Administration's figures nationwide, concluding that two-fifths of the shale gas the agency expects to be produced between now and 2040 will likely never materialize. While many high-profile shale gas plays have already peaked in terms of gas production per well, the Marcellus appears to be an outlier in terms of productivity, researcher David Hughes concludes.

Enormous amounts of shale gas are being produced in Pennsylvania. In the first six months of this year, drillers here pumped 2 trillion cubic feet of gas. And much of this gas came from the Marcellus shale's twin sweet spots, in the Northeast and Southwest corners of the state.

In the whirlwind of activity, some locals in here struck it rich – those who owned large tracts of land and negotiated their deals at exactly the right moment. Driving through the county, it seems like every back road has a red-and-white permit sign marking a shale gas well, a water impoundment, or other Marcellus-related infrastructure.

Mon, 2013-11-25 05:00Sharon Kelly
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Banks Reluctant to Lend in Shale Plays as Evidence Mounts on Harm to Property Values Near Fracking

Over the past several years, the fossil-fuel industry has been highly adept at publicizing the economic upshots of fracking: royalty checks, decreased prices for oil and gas, profits for investors. 

But the industry is far less eager to discuss the hidden costs of the current drilling boom – the longterm price of air and water pollution, the consequences of undermining a nascent renewable energy industry, the harms from accidents when moving and storing all the hazardous waste fracking produces. 

Add to that list of hidden costs one that is starting to grab more attention from bankers and the real estate industry: property values and mortgage problems. New research, for example, demonstrates that the vast majority of prospective buyers say they would decline to buy a home near oil and gas drilling.

As millions of Americans sign oil and gas leases granting the right to companies to extract fossil fuels from their land, they are realizing that these documents often conflict with their mortgages, which is leading to all manner of legal and financial headaches, and make it harder to sell homes on land whose oil and gas rights are leased.

Concern about these impacts is spreading in southern states like Texas, Alabama and Florida, according to a survey due for release in the next several weeks from the University of Dever. In northeastern states like Pennsylvania, fracking worries have prompted lenders to begin rejecting mortgage applications due to gas drilling – on neighboring property. In Colorado, real estate brokers describe keeping a long list of sellers in heavily fracked areas, but a paucity of buyers. 

Under the terms mortgage buyers like Fannie Mae and Freddie Mac require, “you cannot cause or permit any hazardous materials to be on your property and it specifically references oil and gas,” Greg May, vice president of residential mortgage lending at Tompkins Bank, told American Banker in an interview published Nov. 12. “That alone would make it a problem.”

The repercussions for the American real estate market could be enormous. More than 15.3 million Americans – roughly one out of every 20 people living in the U.S. – now live within a mile of an oil or gas well that was drilled since 2000, the Wall St. Journal recently reported

And that may be just the tip of the iceberg since shale gas and oil wells require ongoing drilling for them to stay productive. In 2010, for example, Pennsylvania regulators predicted a more than 10-fold increase in shale wells in their state over the next couple decades.

Thu, 2012-11-08 04:00Sharon Kelly
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In Hurricane Sandy's Aftermath, Fracking Adds to Headaches

As Hurricane Sandy battered the East Coast last month, tens of thousands of landowners with oil and gas leases faced an especially acute concern: would they get help from FEMA if their properties were damaged or destroyed by the storm?

The question arises across the Marcellus region –- and the rest of the U.S. – because one of the agency's disaster response programs will not buyout land that’s been leased to drillers, according to FEMA emails and internal documents.

The US shale boom is drawing increasing attention from federal agencies worried about the potential hazards posed by drilling. A growing awareness of financial risks to landowners and lending institutions associated with oil and gas drilling is slowly emerging. The USDA, Fannie Mae and Freddie Mac have already considered moves to protect themselves from potential legal and financial reverberations.

With FEMA Hazard Mitigation Grant Program funding now at stake, Congress is also getting involved.

Tue, 2012-09-25 00:28Sharon Kelly
Sharon Kelly's picture

Oil and Gas Leases Create Conflicts for FEMA

As the shale gas boom has brought oil and gas drilling closer and closer to home for many Americans, banking and real estate experts have found that drilling may pose significant risks involving property values, homeowners, and mortgage lenders.

New documents obtained by DeSmogBlog show that the Federal Emergency Management Agency (FEMA) is the latest in a string of federal agencies and other major institutions that are now contending with the drilling boom’s impacts. And some landowners in Pennsylvania are now finding out that oil and gas development in their communities can cause unexpected difficulties – leading to new headaches for families who are already dealing with catastrophe.

Since the 1980’s, FEMA’s Hazard Mitigation Grant Program has worked to minimize the harms caused by disasters like floods. The program also provides help to those in areas that see frequent earthquakes or wildfires, taking measures to cut down on the harm done to people and to property.

Americans often turn to this program when their homes have been flooded again and again. It is a program of last resort, helping to pull back development from areas that are prone to disasters.

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