May 3 2010

Mayor Calvin Tillman 2

Landowner:  Gas Companies will Continue to Behave Badly

Until Made to Stop

Ruggiero Family Story:  Can’t Happen Here?

Mayor Tillman:  Average Barnett Shale Well Loses Half

Production After 1st Year

Texas Landowner Tim Ruggiero:  "Gas companies will continue to behave badly until they are made to behave differently."

Texas Landowner Tim Ruggiero: "Gas companies will continue to behave this way until they are made to behave differently."

Mayor Calvin Tillman speaks to audience members after presentation in Clearville, PA.

Mayor Calvin Tillman speaks to audience members after presentation in Clearville, PA.

“I am not opposed to drilling.  I am opposed to being poisoned.”

These words of Tim Ruggiero, a Texas landowner from Decatur, Texas, are worth repeating and remembering.

Both Ruggiero and Mayor Calvin Tillman of DISH, Texas, recently spoke to audiences in New York City, Philadelphia, Clearville, Midway and Pittsburgh, PA.

They traveled at their own expense to share their personal experience with the shale gas “boom” in Texas via the Barnett shale.  Their goal is to educate landowners and elected officials in Pennsylvania and New York on what to expect from the so-called Marcellus shale boom – beyond the glittering promises of the gas industry.

It is a tough love message.  They say they do not want what happened in DISH and in Decatur to happen elsewhere.

They want hopeful landowners and public officials to understand that while jobs and money for some may or may not result from drilling activity in the Marcellus shale, residents and communities should be prepared to deal with air and water contamination; deceptive practices (and promises) from the gas industry; and little or no help from government regulatory agencies.

This point-of-view is not from theorists who have no skin-in-the-game with gas drilling.  It is from a landowning family who now have a huge gas rig 200 feet from their back door and who are dealing with documented air and water contamination, including irresponsible practices at the drill pad that are creating health problems.

It is from a small town mayor who received little or no response from the gas companies and state regulatory agencies until the town council agreed to spend 15% of its annual $70,000 budget for an air study which “confirmed the presence of multiple Recognized and Suspected Human Carcinogens in fugitive air emissions.”

For background (including a copy of the air study plus other documents), read part 1 of Tillman’s and Ruggiero’s message to audiences: http://www.spectraenergywatch.com/blog/?p=577

Ruggiero Family Story

The Ruggiero family education on the behavior of gas companies had a nasty beginning.  Here is their story as Ruggiero tells it:  On the morning of September 16, 2009, Aruba Petroleum waited until the Ruggiero family left for work and school, then used cutting torches to open a 50-foot-wide section in their pipe and cable fence.

Aruba then brought in 5 or 6 bulldozers and backhoes through the fence to prepare a drilling pad near their house.  The company and some 30 employees bulldozed 3 of the family’s 10 acres and filled the area with gravel.  They now have a huge gas rig on a well pad 200 feet from their back door.

Welcome to the ‘Split Estate’

Aruba and other gas companies can do this because the law says they can.  Split estate refers to the fact that, in many western states, mineral rights are often severed from surface rights in such a way that property owners who own the surface rights have little control over their property.1 (Refer to documentary film on this subject, titled “Split Estate.”  See “Links & Resources” below.)

While terms may be different, Pennsylvanians and property owners in other states are familiar with mineral rights being severed from surface rights in the chain of title.  In Texas, mineral rights dominate surface rights to an extant that the owners of the surface rights have little protection, according to Ruggiero.

Aruba Petroleum’s site supervisor delivered a terse message to the family.  The company would be drilling not one, but two wells on their property.

Good Neighbor Policy

Ruggiero describes what happened at their first meeting following Aruba’s forced entry onto their property:  “The site supervisor, held a one-page surface-use agreement, and said, ‘Texas law says that we only have to give you $1,500 per site.  But since we’re such good neighbors – and we want to be a good neighbor – we’re giving you $15,000 per site.  In other words, if you sign this, you’ve got $30,000.  Or if you don’t sign it, we’re only going to give you $3,000.  Either way, those 3 acres are now ours.’”

The new “good neighbor” added a frac tank to hold the produced water; four condensate tanks, an incinerator, and a waste water pit.

Hydraulic fracturing or “produced water” is a combination of water, sand and toxic chemicals, according to Dan Volz, Assistant Professor of Environmental and Occupational Health at the University of Pittsburgh.  For more information, see the April 12 post on Dr. Volz’s comments: http://www.spectraenergywatch.com/blog/?p=563

Ruggiero notes, “We have had numerous leaks and thousands of gallons of chemical spills on our property.”  One evening at 10:00 pm, for example, as he checked his property (they own two horses), he heard a “venting sound.”

“One of the hatches on top of a condensate tank was open and the [liquid] condensate and the gas was gushing out of the tank like a geyser,” Ruggiero said.  “It was coming out in surges.  You could see it running down the side of the tank and going off into the air.”

No one showed up until 9:00 am the next morning.  The contaminated geyser ran all night and Ruggiero made a video.  Several videos from the Ruggiero property can be seen on YouTube, among other places.2 (See “Links & Resources” below.)

The operator’s hazardous materials response came in the form of a crew that power washed the condensate tanks.  As Ruggiero makes clear, the company’s response to its spill was to wash the contaminated liquid into the ground.

9,000 Gallon Spill

“There have been so many spills and leaks on our property that I started writing them down, because you can’t keep up with them otherwise,” Ruggiero says.  He speaks of leaks from the frac tank, condensate tanks, leaking hoses, valves, methane leaking out of the ground through saturated soil, “fugitive emissions” captured via infrared cameras – the list goes on.

Ruggiero shared details on one spill with this blog.  It involved at least 9,000 gallons from the condensate tank to the frac tank, he said.  “We tested the produced water and found BTEX in it,” he adds.

BTEX is an acronym for benzene, toluene, ethylbenzene and xylene – four volatile organic compounds (VOCs).  On the subject of benzene alone, for example, the Agency for Toxic Substances & Disease Registry reports:  “The International Agency for Research on Cancer (IARC) and the EPA have determined that benzene is carcinogenic to humans.”3 (See “Links & Resources” below.)

‘Gas Gang’ Behavior

Ruggiero’s assessment is sobering:  “If they’re behaving this badly on one site, 200 feet outside my back door, what are they doing on remote sites, or sites where access is only through locked gates?”

“We’re not getting any help from the two agencies that are supposed to be protecting us, our health, our kids and our property from all of this nasty stuff,” he said.  “They pretend to.  They talk a good game.  They generate lots of paper … but nothing ever really gets done. Nothing.”

Ruggiero calls these companies the “gas gang.”  If they show up on your property, watch out, he warns.

“These folks make promises they have no intention of keeping,” he says.  “We know there are people with contaminated water.  There are people who have health issues, people who are losing their livestock.”

“If it can happen to me, it can happen to you,” he says.  “Gas companies will continue to behave this way until they are made to behave differently.”

Beware of Moles

Mayor Calvin Tillman of DISH, Texas, is about one-half hour from Decatur where Tim Ruggiero lives.  His experience is as mayor of a small town with 11 pipelines and as many compressors, 18 gas wells and four gas metering stations.

One piece of advice he shares with audiences is to beware of “moles.”

“A lot of times, when the energy companies come in, they’ll find somebody who may be a community leader, somebody who is outspoken, somebody who knows everybody, somebody who’s been around for awhile,” he said.

“They’ll say to that person, ‘Hey, I’ve got a deal for you.  You get all these people here to sign up – and I’ll give you two percent of all the royalties.’”

“That could be a lot of money,” Tillman says.

“So if there is someone who is particularly interested in you signing over your minerals, there may be a reason why.”

Shale Gas ‘Powerball’

Tillman joked about folks who think they will move to Beverly Hills once they sign a lease.  But royalty payments may not be as high as landowners hope; and they may drop off rapidly with the declining productivity of shale gas.

In the Barnett shale, Tillman says he has found leases ranging from $75 per acre to $30,000 per acre.  He notes that, “The $75 per acre probably dates back to the 1980s because they started testing the fracturing technology and were leasing back then.”

“The $30,000 per acre was a couple of years ago when market prices for natural gas were so high,” he adds.

Royalty rates he has looked at range from 12% to 30%.  “Obviously, depending on the market and on what lease you sign, royalty payments can vary dramatically.”

But there is another factor in the reality of shale gas.  “In the Barnett shale, the average well loses half of its production after the first year,” Tillman says.

If the market price of natural gas drops, he adds, “They turn down production on the wells. They scale way back.”  Guess what that means to royalty payments?

Similar economics apply to communities, especially small communities, according to Tillman.  It is very easy for small towns to become dependent on the tax revenue from minerals.

Tillman likens it to heroin addiction.  The town of DISH once received 60% of its property tax revenue from minerals, according to Tillman.

“In Texas, minerals are taxed just like your house or real property,” he explains.  “So you can get an immediate revenue boost if you’ve got minerals in your community.”

“When shale gas wells lose 50% of their production after the first year, communities may discover they can’t pay for that new fire station,” Tillman says.  “You end up having shortfalls in your budget; and you’ve got to raise taxes to build new schools.”

Help Industry Do the Drilling Right

Texas Landowner Ruggiero told this blog:  “The oil and gas industry has had a 150-year head start, but we’re making progress.  I’m not trying to stop the drilling.  I’m trying to get them to do it right.  There is a right way to extract gas and a right way to treat individuals and communities.  Gas companies will continue to behave badly until they are made to behave differently.  We need to help industry do the right thing, because they won’t get there on their own.”

Links & Resources

1 Split Estate – a high-quality, 76-minute documentary film about the challenges faced by property owners in several western states as they deal with energy companies that seem to have no boundaries.  The title refers to the fact that in these states, mineral rights are often severed from surface rights in such a way that property owners have little control over their property.  Health and environmental problems follow.  Link:  http://www.splitestate.com/

2 See videos of Aruba Petroleum’s irresponsible practices on the Ruggiero’s property on Txsharon’s Channel on YouTube: http://www.youtube.com/user/TXsharon

3 Agency for Toxic Substances & Disease Registry (ATSDR) – Based in Atlanta, George, the ATSDR is a federal public health agency of the U.S. Department of Health and Human Services.  Here is a 2-page pdf file of the agency’s ToxFAQTM on Benzene:  atsdr-on-benzene

Best Oil & Gas Development Practices - Here is a 6-page resource for elected officials and individual property owners looking for examples of how to improve the oil & gas industry’s current approach to drilling.  It includes recommendations for environmentally friendly drilling technology to transparency on industry practices.  As the report states:  “We support drilling right in Texas: responsible energy development that protects private property owners, water, the environment, and public lands while enabling energy production.”  Here is a pdf file of the document:  drill_right_texas_final It is sponsored by Earthworks at this website: http://www.earthworksaction.org/publications.cfm?pubID=444

Corinth, Texas - is an illustration of what communities and local governments face when dealing with the gas industry.  XTO says it wants to put two wells on 24 acres; but it also asked for variances on 11 local ordinances related to gas drilling.  Instead of a required 600 feet setback from homes, for example, it asked for a variance to drill as close as 100 feet.  Initially, the company would not disclose future plans; but after much prodding admitted it wanted to drill more than two wells on 24 acres.  One homeowner led the charge to activate citizens about what was about the happen in their community.  Check out the following links:

Corinth Cares: http://corinthcares.wordpress.com/about/

News Report – “Residents:  No to XTO – People push Corinth to deny request for 11 drilling variances”            Denton (Texas) Record Chronicle, April 17, 2010 http://www.dentonrc.com/sharedcontent/dws/drc/specialprojects/drilling/stories/DRC_Corinth_XTO_0417.2556e5722.html

Christine Ruggiero – After reading Tim Ruggiero’s story in this blog, you may also want to read the perspective of his wife, Christine.  It can be located at this link:  http://www.earthworksaction.org/cv_DecaturTX_ruggiero.cfm

Leave a Comment

Please note: Comment moderation is enabled and may delay your comment. There is no need to resubmit your comment.