NEW YORK—Leasing consultant James Leonard tells a tragic story, but it’s also a cautionary tale. Leonard warned a room full of upstate farmers considering leasing their land to gas companies for fracking: “You’re signing not only on behalf of you, but also on behalf of your kids, your grandkids.”
“Three years ago or so, a young fellow came to me, in his 30s or so,” began Leonard. “He signed his lease, got his bonus money—about $2,500 an acre—which gave him a little over $500,000. This guy had never had money in his life. With $500,000 he did what any red-blooded American would do: He went out and spent a hundred grand on all the toys—the pickup truck, the ATVs [all-terrain vehicles], the snowmobiles, and all that good stuff.”
“So, he had $400,000 left and he invested all of it in late summer of 2008. And what happened after that? He lost half; he came in, had to do his tax returns, and I had to sit there and look him in the eye and tell him the taxes on $500,000 were $200,000.”
“He’s got nothing left,” concluded Leonard.
The laws on fracking aren’t finalized yet, but gas companies are leasing up large tracts of farmer’s fields along the Marcellus and Utica shales upstate.
It is still uncertain how much the land will be worth, since no one really knows how productive the wells will be, and the value of natural gas fluctuates in relation to the price of oil.
“It’s sort of a good time for them [gas companies], because we don’t know what the heck is going to happen. They can get some pretty cheap leases,” said Kenneth A. Smith, executive director of the Cornell Cooperative Extension for Chenango County, which uses Cornell University research to benefit the community.
At the annual Farm Show in Syracuse on Feb. 24, hundreds of upstate farmers gathered to check out the new tractors, seeds, and tools of their trade.
About 30 of the farmers gathered to discuss fracking leases with experts from Cornell University and leasing consultant, James Leonard. The farmers and many of their neighbors living along the Marcellus and Utica shales had already been approached by gas companies; many have already signed contracts.
Data is not readily available in all counties, but approximately 60 percent of the land in Cortland County has already been leased. Citizens Campaign for the Environment spent 16 months sifting through county clerk office documents to find out how much land could be fracked in eight counties along the Finger Lakes. They found more than 602,000 acres, or 30 percent, of the eight counties are under gas leases filed between 2005 and 2010.
