Don't get too excited over Chesapeake news


Earlier this week, Reuters scored a massive scoop when it reported that Chesapeake Energy is dropping its court fight to extend gas-drilling leases in parts of New York.

At issue were some Chesapeake leases in the Southern Tier, many of which, as Reuters piece put it, "were agreed to long before a boom in hydraulic fracturing swept the United States." The article says that landowners in Broome and Tioga counties sued to stop Chesapeake from extending the leases. Some of the landowners realized that they were getting far too little money for the rights to drill on and under their land. Others become concerned about the environmental impacts of fracking.

The Reuters article also says that Chesapeake's decision is partly due to frustration with New York's de facto moratorium on high-volume hydraulic fracturing. The state is currently conducting environmental and health reviews of the gas extraction technique.
Some environmental groups cheered the report.

"It is great news that Chesapeake Energy has dropped its greedy legal strategy to box landowners into leases signed onto before fracking’s many dangers came to light. The fracking debate so far has been driven almost entirely by the industry’s bottom line," Environmental Advocates of New York policy director Katherine Nadeau said in a statement. "We hope this turn of events can now ensure the discussion remains focused on what is best for New Yorkers' overall public health and quality of life."

But a couple of things are important to keep in mind:
  • Chesapeake still holds quite a few gas leases in New York. And reports that a good chunk of the Chesapeake leases in Onondaga County have automatic renewal clauses. It's probably safe to say that Chesapeake has leases in other counties that renew automatically.
  • At least some of the landowners don't object to drilling and fracking on their property. They just object to terms they negotiated with Chesapeake at a time before they knew how much the potential gas resource under their land was worth. New lease agreements are entirely possible. Consider this quote from a landowner, featured in the Reuters article:
    "I can renegotiate with other companies now," said Frank Laskowski, who owns land in Broome County just north of Binghamton. "Before that we were tied up with Chesapeake at $3 an acre and 12.5 percent. Most people are getting much more than that."
The simple fact remains that some large companies, landowners, and politicians want fracking in New York. 

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