04/20/2009 Meeting Minutes - Laserfiche WebLink

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Regular Council Meeting Minutes 4-20-09 Page 5 Jim Triner 829 Hanover Mr. Triner will try to keep this to four minutes. He is going to expound on what Jean has already referred to regarding property values and potentialliabilities for landowners. The question we have to ask is why are people signing these driller leases? They are signing them for the reward of money and limited reduced gas prices for the property owner who has the well on their lot. Signing bonuses range from $100.00 to $30,000.00 and that's if you have the drill well on your site. A good Northeast Ohio well will produce 200,000 cubic feet of gas over 10 years. The current wellhead price for gas is $3.50 per thousand cubic feet. The properly owner has been promised by the drillers a 12 '/2 % royalty. So on a typical residential lot, this will come to about $37.50 a month. A typical well produces about 50% of its total reserves during the first three years of its production so this is the reward. Now, we have to ask ourselves, is this reward really worth the risk? Recent independent statistical studies conducted in 2005 and 2006 found that the presence of wells depressed property values between 4 and 16% within 2'/z miles of gas wells. When drilling rigs have arisen within 600 feet of homes and developments, homeowners' property values have dropped 10% or more and banks are cautious about providing mortgages. For the past 16 months, Nicole Kukalec has seen her $180,000.00 ranch home in Bainbridge Township plurmnet in value, becoming virtually impossible to sell, rent or refinance. If the well was on her property, she would have just traded a $35,000.00 reward for a $180,000.00 loss. - Real estate agents report reluctance among buyers to purchase homes whose mineral rights have been sold. In Mayfield Village, a 10% drop in property values amounts to between $15,000.00 and $50,000.00 per lot. Again, if the well is on a properly, the property owner just traded $35,000.00 for a$20,000.00 gain to a$35,000.00 loss. That's if everything goes as planned. Referenced information regarding property values, property owner liabilities and potential troubling health and safety issues have been supplied in the flier we circulated last week and is being currently dismissed by some as not pertinent to the current ordinances facing Council. Let me show to you why the facts in this flier are relevant. For property owners who have already signed leases or are considering signing leases, let's continue to assess whether the reward is worth the risk. They need to be. aware of the liability for potential contamination, breach of covenants in the landowner's mortgage with the bank, abandoned depleted wells and leases that are one-sided as noted in this proposed lease he has here which is just one page which doesn't cover any of the liability issues that would be incurred by this person if they elect to sign it. Now for a couple of examples, oil and gas wells come with a potential environmental risk, most notably that which woi?ld be oil and gas leaks. Most of Ohio qualifies as a major hydrogen sulfite chrome area. Lethal exposure to hydrogen sulfite that occurs as far as 1200 feet from the source has the potential to kill people over a 103-acre area from the wellhead. Again, Mr. Triner has to ask, is the reward worth the risk? In fact, this is not a fallacy, it has actually happened in Chardon and a family who had a hydrogen sulfite leak, not a lethal one, had to vacate their house for five months.