Democrat File Photo
In 2010, Hess drilled this test well at the Teeple property on Route 191 in Manchester Township, Pennsylvania. The company did not reveal the results of this test and, due to the Delaware River Basin Commission drilling moratorium, has not extracted any gas from Wayne County.
Hess drops Wayne Co. leases
Story by Fred Stabbert III
WAYNE COUNTY, PA July 19, 2013 Exactly what it signifies is hotly debated, but the fact that a large natural gas developer has pulled out of Wayne County, PA, is reverberating across the Delaware River.
Starting last week, the Hess Corporation and its drilling affiliate Newfield Appalachia began notifying over a thousand Wayne County property owners that it was cancelling the leases it had signed with them five years ago to develop their natural gas assets.
“Thus your lease will not be continued into the development phase,” Newfield landman Scott Cavett wrote in the letter. “... Please be aware that all payments per the terms of the lease have been paid, and no future payments are due.”
The two companies had shelled out around $150 million in 2008 to approximately 1,300 landowners and members of the Northern Wayne Property Owners Alliance (NWPOA). Close to $190 million more, plus royalties, were due if the exploratory phase had transitioned into the development phase.
Hess declined to comment, while Newfield spokesman Keith Schmidt told media it was a business decision, as Newfield is now focusing on the more lucrative development of oil rather than gas.
But it could be more complicated than that.
For one, the Delaware River Basin Commission’s (DRBC’s) continuing moratorium on issuing drilling permits has stalled any drilling in the Delaware River watershed.
NWPOA spokesman Peter Wynne, in a variety of media interviews, blamed Hess’ pullout on that factor and indicated his group may sue the DRBC.
“They have no business focusing on gas drilling alone when there are many, many other industries that have ongoing impacts on the Delaware River,” Wynne told StateImpact Pennsylvania. “If they cared about the health of the river, they would ban kayaking and canoeing and fishing in the river with hip waders because these are spreading the invasive plant called rock snot. This is nonsense.”
Too, the companies have heavily guarded the results of several exploratory wells they drilled in Wayne County, some very close to the border with Sullivan County.
There’s speculation that the results were below expectations and indicated the gas would be uneconomical to extract even though the drilling industry is booming just west of Wayne County in the Susquehanna River watershed.
The anti-drilling group Damascus Citizens for Sustainability, which maintains a Narrowsburg office, saw this as a victory, crediting “an aroused and aware public.”
“I can’t believe it and I can’t stop crying,” stated member and Milanville, PA, landowner Josh Fox, who directed “Gasland.” “The companies that leased 80,000 acres in my township, in the upper Delaware River Basin, are leaving. Canceling all the leases. We are free. Thank you fracktivists. Thank you everyone for this amazing victory. We win! And we won’t stop until we win everywhere.”
On the other hand, Callicoon farmer Bill Graby, co-founder of the pro-drilling Sullivan-Delaware Property Owners Association, saw the lease pullout as a potential double windfall for those now ex-leaseholders.
“I take the letter for what it is,” Graby said. “The oil and gas companies are going to Ohio where they can actually run a business.”
Graby noted that those companies would most likely be concentrating on wet gas and oil, which is the most lucrative products in the current market.
“The companies never said they were not coming back and they actually did the landowners a favor by releasing them.
“It (hydraulic fracturing) is going to come, and when it does the landowners will be able to sign new leases,” Graby said. “It’s just a matter of time before the politics getting straightened out.”