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Inflection Energy, LLC well pad under construction in a residential-agricultural zoning area, despite neighbors' appeal of township conditional use permit.
Homeowners' Dreams Could Become a Waking Nightmare
The lane leading to it runs straight and true. Welcoming its family, the house rises before you, perfectly proportioned, in brick that blends with its surroundings. From the back yard the view opens up to fields, forests, farms, and Bald Eagle Mountain crowning the distance. Late day sunlight burnishes the beauty.
"It's our dream house," says the homeowner who had it built, finished only three years ago. Now the view includes something else: the beginnings of a well pad, the earthworks and liner of a man-made pond, on the Shaheen property. Homeowners are now suing to prevent its becoming a multiple-well drilling site.
Besides risks to water wells, health, safety, and quality of life, it's possible the 128 families surrounding the proposed Shaheen well site in Fairfield Township could lose even more: the value of their homes, in some cases a family's primary or only major asset.
Homes may become unsellable, not only because buyers are unwilling to purchase homes near drilling activity, but also because lenders may decline to grant mortgages to prospective buyers or lines of equity for home improvements. And insurance companies may not grant or renew homeowners' policies if they - or their neighbors - have leased to gas companies.
If houses can't be sold, purchased or insured - if people fear damage to their own and their children's health -- those homeowners could be forced to choose between life and home. Some may simply turn the key and walk away - leaving the banks to deal with worthless properties.
The likely consequence will be townships and counties in the Marcellus Shale region suffering economic losses as some areas of real estate lose value.
 Entrance to proposed Shaheen gas well site in Fairfield Township.
128 single family homes are within 3000 ft. of the drilling site.
According to Reuters, realtors in other parts of the country are seeing prospective buyers concerned about environmental and health aspects of living close to well sites. A University of Denver study found the majority of 550 people surveyed would decline to buy a home near natural gas drilling.
"'For the most part, it renders those houses unsellable,' said Phyllis Wolper, a Denton, Texas, realtor" with several clients living near oil and gas wells who have been unable to sell their homes.
National and international banks and other mortgage lenders are refusing mortgages where properties have leased or severed mineral rights from surface rights. These include Santander Bank, which locally has already refused to refinance at least one property. Since July 2012 Santander has required mortgage recipients to sign an agreement not to lease. If a lease is signed, the bank will call the loan (demand the entire balance). Yet Santander, according to its website, still has an entire division devoted to financing energy companies.
Quicken Loans denied a mortgage to a Pennsylvania couple whose farm is across the street from a drilling site. According to an investigative report by WTAE ABC in 2012, Quicken loans told the family, "'Unfortunately, we are unable to move forward with this loan. It is located across the street from a gas drilling site.'" Two other national lenders also turned down the homeowners' application.
The company told WTAE, "'While Quicken Loans makes every effort to help its clients reach their homeownership goals, like every lender, we are ultimately bound by very specific underwriting guidelines. In some cases conditions exist, such as gas wells and other structures in nearby lots, that can significantly degrade a property's value. In these cases, we are unable to extend financing due to the unknown future marketability of the property.'"
Impoundment under construction at proposed Shaheen drilling site. Photos shot from adjacent landowner's property.
Other reports say "the FHA (Federal Housing Administration) and Department of HUD (Housing and Urban Development) will not provide financing if surface or sub surface gas rights have been leased within 300 feet of a residential structure OR within 300 feet of property boundary lines."
However, the web site "bankrate.com" has a more detailed analysis; search the site for "how oil and gas rights affect mortgages." Sources quoted by the site point to the number of variables that enter into decisions and that these can vary from state to state.
According to American Banker, both Fannie Mae and Freddie Mac could call a loan "if a borrower enters into a mineral rights agreement." A Freddie Mac spokesman reportedly said "no public information" is available to show whether that has happened, but acknowledged such policies. It specifically bars borrowers from "taking any action that could cause the deterioration, damage or decrease in value of the subject property." Borrowers can not enter into a mineral lease "without express approval."
State Employees Credit Union, described as a $27 billion asset credit union, reportedly said it would stop making mortgages on properties where the landowner sold the oil rights (severed them). "You could end up where someone puts a drilling platform on that property . . . We'd have to tell their neighbors, 'We're sorry, your property value just went down.'"
American Banker also quotes a New York vice president of residential mortgage lending as saying "the ultimate warning sign for banks may be insurance" because borrowers need homeowners' insurance to get a mortgage.
"'We're actually seeing insurance companies cancel [insurance] renewals when they find a [gas or oil] lease on the property'. . . ."
All the impact fee money in the world can't buy the quality of life we still maintain here, although it is fast eroding. Even with a severance tax, which our state still does not require, there may be no-one left here to benefit from money that comes to communities where no-one wants to live.
Ironically, Rex Tillerson, CEO of ExxonMobil, the country's largest natural gas producer according to the Wall Street Journal, has joined other homeowners in suing a water authority that seeks to meet frack water demands with a new tower next door to Tillerson's multimillion dollar Texas ranch. Besides affecting Tillerson's view, he cites the "noise nuisance and traffic hazards" that will be associated with frack water trucks filling up at the proposed tower.
WSJ says "companies have fracked at least nine shale wells within a mile of the Tillerson home," including one owned by ExxonMobil subsidiary XTO.
We know XTO well here in Lycoming County, a presence more widely publicized since state Attorney General Kathleen Kane filed criminal charges against XTO for illegal discharge in Penn Township of 57,000 gallons of fracking wastewater -- containing chlorides, aluminum, and barium -- at a site also showing evidence of prior illegal discharges. The discharge contaminated a local spring and ran into a nearby stream feeding Sugar Run, a tributary of the Susquehanna.
Tillerson's lawyer said the ExxonMobil executive and his neighbors are concerned about the impact on their property values.
For additional, detailed analysis, including discussion of a peer reviewed study, read this December 2013 article in The Boulder Weekly.
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