To Drill or Not To Drill (Part II)

A Natural Gas Rush in the Northeast Is Forcing Farmers to Choose Between Income and Land

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New York’s southern tier, which refers to the counties west of the Catskill Mountains just north of Pennsylvania, was once known as New York City’s milkshed and egg basket. Dairy farmers are some of the region’s largest landowners and most are ready to lease their land, if they haven’t already.

“We’re hugely in favor of gas drilling,” Peter Gregg, a spokesman for the New York Farm Bureau told me. “It turns out that a lot of the drilling potential happens to lay underneath our farms,” he added. “So we’ve advised our farmers that they negotiate good and fair leases with the gas companies.”

Stefan Gieger, who lives in the New York township of Callicoon and has 70 head of cattle, says that there are probably only a handful of dairy farmers who will resist the pressure to lease. In recent years, the price of milk has fallen to levels last seen in the 1970s even as the cost of feed and equipment has skyrocketed. “Farmers have been cash strapped and unable to make a living for decades,” he told me.

Gieger fears that rather than save dairy farmers, gas drilling will mark the end of an agrarian economy with roots in the region since at least the mid-1800s. Indirectly, he says, gas drilling will kill agriculture: The easy earnings from the extraction industry will dissuade people from continuing the hard work of farming. “I think people should be very concerned about the farmers going out of business,” he said.

And not only dairy farmers.

Mark Dunau, an organic vegetable farmer with 50 acres in nearby Hancock, says that he bought his land more than 20 years ago because of the access to clean, abundant water. His livelihood is dependent on the quality of his well and a spring fed pond. “I resent people who say this is the only way farmers can survive, because I’m a farmer and it’s threatening me,” Dunau said.

He also says it is wishful thinking to suggest that dairy farmers will continue to farm once they’ve leased their land. His neighbor, Brian Begeal, who owns a 312-acre dairy farm, has already leased his land and plans to retire as soon as possible. Two of Dunau’s close friends – a fifth-generation and a third-generation dairy farmer – also plan to lease. “Farmers who are signing are stopping production,” Gieger said.

In late October, I caught up with Earl Myers, one of Gieger’s neighbors, on a ridgeline overlooking a valley on the outskirts of Callicoon. The earth was wet from a steady rain that had fallen since early morning and the clouds had parted, filling the fields with late afternoon sunlight. Across several fields, Gieger’s farm was visible.

Public Comment Period

That evening Myers would attend the first public hearing for comments on New York State’s draft environmental impact statement for drilling in the Marcellus Shale. The comment period, which ended December 31, revealed the faultlines that have opened up over gas drilling. State officials received more than 12,000 comments and, at what were often marathon sessions, pro- and anti-drilling factions faced off over the potential impacts of gas drilling on the environment, economy, and communities of the southern tier.

Myers had already attended close to 15 public meetings and information sessions, as well as several screenings of Split Estate, a harrowing film on natural gas drilling contamination in Colorado.

When Myers started farming 50 years ago, he had more than 20 neighbors. Today, he and his family farm nearly 1,000 acres, more than half of it acquired from neighbors who have left. He can see why dairy farmers would lease their land. He knows many who have. “The money’s the one that talks really,” he told me. “That’s what worries me.” As for whether he’ll lease his own land, Myers said, “I think about it. At the same time I still don’t endorse it.”

In the last decade, as dairy farms have declined, the number of organic vegetable farms in New York has grown. Last year, the North East Organic Farming Association certified 569 farms in the state, up from 200 a decade ago.

Greg Swartz came to the region in 1999 to apprentice on an organic farm in Sullivan County and recently purchased 12 acres in nearby Abrahamsville, PA, where he grows 50 varieties of vegetables. This year he started a community supported agriculture (CSA) program and says that interest is high.

“There’s really endless potential for making a living with the land,” he told me in December. “Dairy farmers know that the only way for farming in this area to be revitalized is to not be focused on dairy.”

But if the choice is one of diversifying or leasing to a gas company, there is little hope that they will choose the former. When I met Swartz, the last of the end-of-season leeks and celeriac could be seen in the field in front of his house. A light rain was falling and the valley was quiet and empty. Swartz pointed out a stream to the east, a wetland to the north, and several small creeks that border his field.

Soil: The Farmer’s Bank Account

All of Swartz’s neighbors have leased their land to gas companies and Swartz now faces a dilemma: whether to sell his land (he has no intention of leasing it to the gas companies), or stay and make an investment in the future of his farm. Over Thanksgiving his brother advised him to sell. But Swartz is wedded to the area – his wife runs a small theater company, they have an infant son, and the success of the farm is tied to the community. He can’t just pick up and start over.

“I wouldn’t be nervous about making the investment if gas drilling wasn’t part of the equation,” Swartz says. There’s an old saying, Swartz told me, that a farmer’s bank account is his soil. “Anytime you have something that you can reinvest, you put that back in the soil to ensure that the soil is going to continue producing for you.”

For the first time in years dairy farmers stand to profit. But they may be betting against their farms and the agricultural history of an entire region. In January, Swartz sent me an email and said that he and his wife, after many sleepless nights, had decided to go ahead and make the investment. “The risks are great,” he wrote, “but we can’t leave.”

Swartz’s situation is hardly an exception. In the last few years, nearly everyone who owns land along the Upper Delaware has been presented with offers to lease their mineral rights. Some of the heaviest leasing activity in New York has occurred in Hancock, where the east and west branches of the Delaware River converge. As of April 2009, nearly 25,000 acres, or 25 percent of the total land area, had been leased.

“Everyone looked at the up front money and was blinded by it because to challenge it was like tearing up a winning lottery ticket,” said Hancock-area vegetable farmer Dunau. Many landowners were approached long before the Marcellus Shale was being celebrated, and leased their land for as little as $25 an acre. Today, gas companies are offering as much as $6,000 an acre in addition to royalties.

Economic Freefall

Perhaps more than anything, the oil and gas companies have promised small towns like Hancock a way out of economic freefall. Katie DuBois grew up in Hancock and recently returned with her husband, a contractor. They live on the Pennsylvania side of the river, and own 100 acres, which they leased to Hess last summer after several years of deliberation. DuBois’s parents have also leased their property and she has relatives who have found work as surveyors as a result of drilling. “If you look at it, it’s really not scary,” she told me. “If you look at the benefit of what it will do for people who really have just been blue collar people their whole life, you know, that’s something not to be taken for granted.”

In the last 15 years, Hancock, along with many of the towns in the region, has experienced a steady decline. Industries have left, including Bard Parker, a surgical blade manufacturer that once employed 750 people. Today, the largely empty space is rented to a dental supply company with 12 employees. Shrubs have overtaken the entrance. Inside, the clocks are stopped at some forgotten time and an old photograph of the factory shows a gleaming white building with an American flag in front. A sign above the door reads, “Bard-Parker celebrates 75 Years of Surgical Blade Excellence.”

But will gas drilling save Hancock? The experience of oil and gas towns in the West offers a cautionary example. In 1974, ElDean Kohrs, a clinical psychologist working in Gillette, Wyoming, coined the phrase “Gillette Syndrome” to describe the disruptions often associated with the boom and bust cycle of oil and gas drilling. Crime rates and drug use skyrocketed. The influx of temporary workers placed unexpected burdens on municipalities. Families were torn apart.

A more recent analysis of drilling in Texas’s Barnett Shale shows that the largest gains have gone to the oil and gas companies and that leasing and royalty incomes account for a small percentage of the total gross product. But for individual landowners, that small percentage can be a windfall.

Unrealistic Expectations

According to Jeffrey Jacquet, a natural gas consultant who lived in Sublette, WY for four years before moving east to Ithaca in 2008, the size of a town and its previous experience with resource extraction often determines its ability to absorb the social and environmental pressures of drilling.

In a sweeping report on the potential impacts of gas drilling in the Marcellus Shale, Jacquet writes that many of the communities in the region are “sufficiently small and rural” so that large-scale development will produce similar outcomes to those that have been documented in other parts of the country. For example, in Towanda, PA, a town of about 3,000 residents where nearly everyone has leased their land, rents have ballooned, in some cases to triple what they were a year ago. Those unable to pay their rent are being evicted. A sign in front of the Towanda Motel, which has been entirely occupied by gas company employees since April reads, “Welcome Chesapeake and Nomac & Thank You.”

Although there will undoubtedly be some economic growth, Jacquet writes that, “Expectations for economic benefits are often unrealistically high.”

Of course, the Northeast differs from Wyoming in significant ways. Population densities are far greater, exposing more people to the risk of contamination and pollution. There’s also more forestland throughout the Northeast, much of it undisturbed, in areas where gas drilling will occur. (This is particularly true of the land that surrounds the Catskill Park). Land disturbance will be greater but Jacquet says it may also be easier to reclaim than western lands. For both regions, the potential damage to critical water resources – rivers, aquifers, and wetlands – is the greatest concern.

Concern for Water Resources

The entire Delaware river basin, which includes surface water diversions (rivers, streams, and reservoirs) and groundwater withdrawals (aquifers), provides drinking water for about 17 million people in four states. This fact has prompted a sizable opposition movement, especially in New York, where the threat to the city’s watershed has become a potent rallying cry. Those same water resources, however, are part of what makes Hancock, known as the “Gateway to the Upper Delaware,” so attractive to the gas companies; between two and nine million gallons of water are needed to frack each well.

Yet the area’s uniqueness could also be its saving grace. In 1978, Congress added the Upper Delaware to the National Wild and Scenic Rivers System. In the early 1990s, the Delaware River Basin Commission designated the same stretch as part of a “specially protected area” subject to heightened regulatory measures. Farmers like Dunau and Swartz see their proximity to the Upper Delaware as perhaps their greatest asset. Its distinction may, in the end, protect them.

Just beyond the center of Hancock a narrow road follows the east branch of the Delaware for several miles. On a chilly afternoon in December I met Tim Connolly, a third generation landowner who has lived along this stretch of river for his whole life. At 49, Connolly gets by cutting stone and firewood, and he seems the ideal candidate to sign a gas lease. Last year, he was approached by a landman who offered him $3,000 an acre and 14 percent royalties. He refused. “People have got to have money,” he told me. “But they don’t need their land messed up at the same time.”

Connolly led me along a muddy trail behind his house, across a small stream, and to a clearing where he gets his drinking water from what he says is one of the best springs in the world. As far as the eye can see, Connolly is surrounded by neighbors who have leased their land. A well site 500 feet away is already marked with a surveyor’s stake. This landscape of dense northeast forest intercut with rivers, streams, and springs is said to be one of the sweetest spots for gas deposits within the Marcellus Shale.

When I asked Connolly what will happen once they start drilling he said, “We’ll probably have a war between drillers and non-drillers.”

(Republished with permission of Earth Island Journal

Adam Federman is a journalist in New York City. He has written for The Nation, Columbia Journalism Review, and Adirondack Life.