Are Ohio Landowners Being Deceived?

State Rep. Bob Hagan: Shale oil salesmen=snake oil salesmen

More Welch wanted to find out what selling his mineral rights would entail.  He is less than satisfied with the reply that he was given.

Cunningham Energy hosted a leasing open house in early October at Ohio University.  According to a report from EcoWatch, Welch attended and was granted permission to record the discussion by Cunningham representative Drake Stevens.  The transcription of the recording reveals Cunningham representatives misleading Welch in regards to chemicals used in the drilling process and the terms of the lease, and quoting him a land price that is well behind market value.

Here is an excerpt from the EcoWatch article (cross-posted at

As he walks through the lease [PDF], Stevens implies to Welch that the landowner has a choice as to whether to renew the lease after the initial five-year term. “I believe if you don’t want to have the option to release we can just do a standard five-year lease,” Stevens says. The actual lease provided to Welch states the opposite. It stipulates that renewing the lease is Cunningham’s prerogative, that the landowner has no say in it.
Finally, when Welch asks what the company will pay per acre, Drake quotes him $200, dramatically less than market value, which is between $2,500 and $3,500 an acre, according to Russell Chamberlain, a real estate broker and owner of Athens Real Estate Company in Athens, Ohio. Cunningham Energy says the price per acre it offers depends on location and varies from $1 to $2,500.
When asked to respond to the contents of Welch’s audio, Joe Blackhurst, a land supervisor at Cunningham, who spoke with Welch at the open house, and whose name is on the lease provided to him, said, “I don’t believe our reps knew they were being recorded, nor did they give permission to be recorded.” In the recording Stevens does give Welch explicit permission to tape the conversation. Blackhurst went on to say, “Besides, what they [the Cunningham representatives] said is true. The chemicals we use are commonly found in common household cleaners under your cabinet.”
The mix of chemicals found in Dawn differs from those used in fracking fluid. Though only a small fraction of the liquid is composed of chemicals, when millions of gallons of water are used, it still means hundreds of gallons of chemicals are blasted into the ground, according to a report on the fracking technique [PDF] by the New York City Department of Environmental Protection.

What is the Ohio government doing to prevent such tactics by energy companies, and further to protect the environment from the dangers many would cite that are connected to fracking?

Governor John Kasich extended an open invitation to CEOs of energy companies around the country to come to Ohio.  From only a few wells operating last year, there are expected to be perhaps 200 or more operating in the next year or so.

Many feel that this quick influx in drilling activity has brought major concerns with it, and that the state is negligent in investigating fracking and its impact on the environment in order to enact sufficient regulations.  Not only has the drilling activity been linked by many to earthquakes and water contamination, but the shady leasing practices perceived by many are also a major concern.

Which brings us back to the recording obtained by Welch.  Democratic State Rep. Bob Hagan reviewed that recording and was not pleased with what he heard.  “There’s no difference between snake oil and shale oil salesmen,” he says. “This is absolutely one of the biggest rip-offs I’ve ever seen.”

Republican Attorney General Mike DeWine has called for creation of an agency to protect and inform landowners of their rights in dealings with lease agreements for drilling, as well as tougher penalties on polluters and transparency with regards to chemicals used in the extraction technique. He said he would leave it up to state lawmakers to make the legal changes, though.

Meanwhile, bills have been introduced to the state legislature which would require disclosure of the chemicals used in the fracking process and also halt further fracking and underground wastewater disposal injection wells until the U.S. Environmental Protection Agency concludes a study on their effects on drinking water.  Hagan says these bills are stalled due to Republican obstructionism.

There is a segment of the Ohio public which is raising their voices and calling for a new approach to dealing with these issues.  Protesters interrupted Governor Kasich's State of the State speech earlier this month in response to his statements expressing a commitment to push for tough regulations on drilling.  The article from EcoWatch also sites a recent Quinnipiac poll which indicated that 72 percent of Ohioans want fracking stopped until further research is conducted on its impact.

Hagan calls for the state legislature to curb the industry soon.  "There’s a lot of safety issues at stake if they don’t do it right. Water could be contaminated, the environment hurt, and people could really suffer," he said.

"The industry is performing their job without any integrity," Welch concludes.

Do you agree?  Is enough being done to protect landowners and the land itself, or is money the only thing talking here?  Post your thoughts in the comments below or in the dedicated thread at the Daily Digger Forum!

As for me, I couldn't help but think of this scene from There Will Be Blood as I read this story.  Are Ohio's citizens being manipulated by real-life Daniel Plainviews?  What do you think?  Share your thoughts with us!

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