Almost two months after fracking was legalized in North Carolina, a Pennsylvania company is offering to buy mineral rights from landowners in Durham. And since the company’s agent has not registered with state officials, he could be breaking the law.
Leaders of the Ellerbe Creek Watershed Association, a conservationist nonprofit in Durham, say they recently have received offers from Crimson Holdings Corporation, a company based in Pittsburgh, seeking to buy mineral rights on multiple tracts. The association owns 340 acres and four public nature preserves in Durham.
Crimson Holdings has also approached at least one other landowner near Falls Lake in northeast Durham County, according to documents obtained by the INDY.
The offers are signed by Frank Sides, a Pennsylvania-based agent who, as of Tuesday, was not a registered “landman,” or a representative for oil and gas interests, in North Carolina. State law requires landmen to register with DENR or they may face a civil penalty. Sides did not return a phone call from the INDY.
James Robinson, a research associate and gas leasing expert with Rural Advancement Foundation International, says the Crimson Holdings offers are the first he’s seen in North Carolina since a drilling company began signing leases about four years ago in Lee County, a suburban county south of the Triangle where geologists expect the state’s drilling to be centralized.
In June, Gov. Pat McCrory signed legislation lifting North Carolina’s moratorium on fracking. Drilling is expected to begin sometime next spring.
Chris Dreps, executive director of the watershed association, says the Crimson Holdings offers seemed like the company was “fishing” for interested parties. In response, the association’s board of directors approved a policy last week forbidding the sale of mineral rights on their property, which is mostly found within Durham city limits along Ellerbe Creek.
“It doesn’t make sense for an organization that’s protecting our land for conservation purposes to sell our mineral rights,” said Dreps. “It’s a bit of a distraction from our mission, which is to keep Ellerbe Creek clean.”
While Durham technically falls within the state’s potential drilling area—the Triassic Basin— its dense population will likely complicate efforts to frack due to state-mandated setbacks from homes and schools, experts say. State law bars local governments from imposing drilling bans within their borders.
Both lease offers in Durham include few details about Crimson Holdings, other than saying the group is seeking to “explore the natural resources” in the area. The letters offer a paltry $5 per acre leasing bonus, coupled with a 12.5 percent royalty rate, the minimum royalty required by North Carolina law.
Signing bonuses can soar as high as tens of thousands of dollars per acre in areas of the country where plentiful gas stores are confirmed, Robinson said, but details about North Carolina’s supply are too murky to fetch much higher offers.
The company gives landowners a signing deadline of Nov. 1 or until the funds slotted for the project run out.
Robinson urged landowners to be cautious and patient, pointing out they may have greater negotiating leverage once the state has more information about shale gas reserves.
“Any landowner being told you have to sign right now or you’re going to miss your opportunity is not being given accurate information,” he said. “They need to take that lease to an attorney and talk about it with family members. That type of pressure is a tactic that companies use to make landowners feel like they’re running out of time.”
Hope Taylor, executive director of Clean Water for N.C., said landowners should also be wary of unregistered landmen such as Sides. The state registry was one of several items her group, an environmentalist nonprofit that opposes fracking, successfully pushed to save last year in the N.C. General Assembly.
The registry was intended to discourage predatory drilling operations in North Carolina. “We have a lot of concerns about someone who has not even taken the time to register in North Carolina making these kinds of approaches,” Taylor said.
Taylor added that, while it’s surprising for a company to be making lease offers in Durham, it’s important for Triangle residents to be prepared should gas companies contact them. “If anything, it says they’re pretty bold if they think it’s ok to reach out to land conservation groups,” Taylor said. “Do they not think there’s opposition down here?”
The state’s Mining and Energy Commission, which has created a draft of fracking regulations, will hold public hearings on the rules next month. The first scheduled hearing is set for Aug. 20 at N.C. State University’s McKimmon Center in Raleigh.
Guard your pocketbooks. One of the Triangle's most expensive places to live may soon be a little more expensive.
Orange County commissioners are expected to vote tonight on a $200.4 million budget that includes a 2-cent property tax increase. Officials say the cash is needed to pay for the needs of the county's two school systems, Chapel Hill-Carrboro City Schools and Orange County Schools. The plan would spend roughly $97 million on the two systems.
Chapel Hill leaders have already approved a one-cent tax increase. Tonight's meeting begins at 7 p.m. at the Southern Human Services Center on Homestead Road in Chapel Hill.
The Pittsboro Board of Commissioners made history Monday night.
They voted 4-1 to approve Chatham Park, which, at more than 7,000 acres is believed to be the largest development plan in North Carolina history. Bett Wilson Foley was the lone dissenter. Pittsboro Mayor Bill Terry also opposed it, but he does not have a vote.
The project, which will create dense residential development clustered around five “village centers” in the largely undeveloped tracts of eastern Chatham County, is expected to increase the small Chatham County town’s population from 4,000 to 60,000 people by 2050.
Commissioners approved a master plan Monday that survived changes in town leadership, multiple rewrites and a blistering consultant’s evaluation. Its last hurdle Monday was a determined band of protesters, who gathered early at the Historic Chatham County Courthouse to denounce the massive development. Many wore shirts with the sarcastic motto “Pave Chatham” and carried signs reading “Table the vote.”
They distributed a cartoon depicting Chatham Park developer Tim Smith at the wheel of a speeding car while complicit town officials, with the exception of Foley, seem to sit willingly in the rear. Angry Pittsboro residents are crammed rudely in the trunk. “Who’s in the driver’s seat?” reads the caption.
Smith is with the Cary-based Preston Development, which, with the financial backing of software executives Jim Goodnight and John Sall of S.A.S. Institute, envision the vast mixed-use Chatham Park as a sequel to Research Triangle Park. When fully built, it would include 22,000 homes, plus office and retail space.
Developers made several concessions with Monday’s final master plan, agreeing to increase the minimum amount of open space to 1,320 acres. Earlier versions of the plan called for as little as 667 acres, despite a 2008 conservation report from the Triangle Land Conservancy (TLC) that recommended town officials set aside at least 2,400 acres.
Builders also agreed to buffers of 500 feet and 300 feet near two portions of the development abutting the Haw River. An earlier draft maintained an average buffer of 200 feet, although TLC called for buffers of at least 1,000 feet.
The master plan also included a stipulation that the developer will “help defray” the town’s additional costs associated with the growth, which would require massive infrastructure investments in Pittsboro, including more schools, police officers and fire departments.
Town commissioners tabled the plan in November following a heated public hearing. In February, an outside consultant panned the development for lacking sufficient detail and failing to provide sufficient open space. Meanwhile, the builders have been assembling the land for the project for most of the last decade.
As expected, Gov. Pat McCrory signed off on the Energy Modernization Act this morning, legislation that could open the state to issue fracking permits as soon as spring 2015.
“We remain intensely focused on creating good jobs, particularly in our rural areas," McCrory said in a statement. "We have watched and waited as other states moved forward with energy exploration, and it is finally our turn. This legislation will spur economic development at all levels of our economy, not just the energy sector."
Estimates of the drilling's impact on North Carolina's economy vary depending on who you ask, but the drilling has been linked to widespread reports of environmental contamination in states that already allow fracking.
McCrory signed the bill as the state Mining and Energy Commission continues its work to develop regulations for the industry.
Environmental advocates bemoaned the governor's approval Wednesday.
"The biggest disappointment here is that politicians are rushing our state into dirty drilling for little gain and great risk to our water, when they could be boosting limitless, non-polluting energy sources like wind and solar," said Elizabeth Ouzts, state director of Environment N.C., on Wednesday. "Why cater to them at the expense of our environment, instead of promoting our state's homegrown, clean energy sources?"
Orange County commissioners will hold a public hearing tonight on a proposed solar farm on a 50-acre tract just north of Chapel Hill. The hearing will begin the process for builders to obtain a special use permit for the property, which is located off Mount Sinai Road near Cascade Drive. The applicants, Arizona-based Sunlight Partners LLC, intend to use roughly half of the land to build solar arrays, which will feed into the public power grid.
County Planning Director Craig Benedict said Orange County currently has one similarly-sized solar farm already in construction in the White Cross area.
Officials are expecting some opposition to the development, chiefly over fears that it will lower neighboring property values. The property is located within the county's rural buffer and is surrounded on three sides by residential development.
Tonight's hearing is a quasi-judicial hearing, meaning supporters and opponents will be limited to fact-based evidence, rather than subjective opinions.
Commissioners will not be making a decision on the application tonight. Following the hearing, it will be referred to the county Planning Board, which is expected to make a recommendation in time for commissioners' Sept. 16 meeting.
Obtain a copy of the permit application here. Tonight's meeting will be held at 7 p.m. at the county's Department of Social Services office, located at 113 Mayo St. in Hillsborough.
That was Jim Womack, chairman of the N.C. Mining and Energy Commission, speaking to the Indy in December 2012. Depending on who you ask, Womack—a county commissioner in the fracking heartland of Lee County—either delivered on his statement or failed in that goal when his commission unanimously approved a set of chemical disclosure rules Tuesday.
The rules approved Tuesday are complicated, allowing drilling companies to maintain trade secrets in the chemical cocktails they use for fracking operations. However, commissioners say, companies will be required to prove the necessity for a trade secret in “closed-door” meetings with the N.C. Department of Environment and Natural Resources (DENR).
Proponents say the rule is necessary to maintain trade secrets for drillers. Opponents say it allows fracking companies to continue to pump nebulous chemicals underground, despite widespread reports of environmental pollution and water contamination.
Ray Covington, vice chairman for the commission, said Wednesday that DENR will not keep records on those trade secrets and it’s unclear who will make the final decision at DENR on whether a chemical is justified in its secrecy.
Covington, a Lee County landowner who backs drilling, said he will leave that to DENR Secretary John Skvarla to decide the process, a move that may give some pause. Skvarla, an appointee of Gov. Pat McCrory, has already drawn fire from environmentalists over a statement last January indicating that he believed the science of global warming to be up for debate.
His agency also caused an uproar last September when it turned down federal grant money for baseline water testing in the fracking regions, a key measure for determining the environmental impact of drilling.
“There’s just so much involved in this that the public just does not understand,” Covington said. “The rule set that we passed is absolutely one of the best chemical disclosure sets in the country.”
According to Covington, North Carolinians should not be concerned about those secret chemicals. "It's not the bad stuff that the companies are worried about," he said. "They're trying to be the cleanest and greenest. There are a number of companies that are producing trade secrets that are clean and green and even edible and they don't want to share that with their competitors."
Not everyone is so heartened.
“The disclosure rule has some good provisions, but overall fails the public safety test,” says Cassie Gavin, director of government relations for the N.C. Sierra Club, an environmental group.
Gavin pointed out the commission’s disclosure ruling includes a complicated process for emergency first-responders to determine chemical contents following a spill or leak at a fracking site.
Federal laws require drillers to keep details on the chemicals available for emergency responders on-site, but off-site, responders would be forced to contact the energy company for more information. Covington said the company will be required to provide that information within a two-hour time span, a “reasonable amount of time,” according to Covington.
But Hope Taylor, director of environmental nonprofit and fracking opponent Clean Water for N.C., said the provision is “appallingly burdensome and could result in needless and dangerous delays, costing the health and lives of responders, workers and other victims.”
The Sierra Club also criticized the commission for approving rules that will prevent DENR from holding records on fracking trade secrets.
“Why is the state agency charged with protecting the environment avoiding knowledge about fracking chemicals?” Gavin said. “If this information is too hot for DENR to handle, how can they assure public safety?”
The rules passed Tuesday come after one set of disclosure rules was pulled from commission consideration last May, reportedly because energy giant Halliburton took issue. On Wednesday, Covington defended that move, insisting the old set was pulled because Womack wanted more “stringent” rules.
The Mining and Energy Commission is expected to finalize its fracking recommendations in November, with drilling possible for 2015 in North Carolina. It’s important to note, however, that state lawmakers can approve their own regulations, regardless of the commission’s recommendations.
In case there isn't enough negative publicity surrounding fracking, left-leaning nonprofit Environment North Carolina released its own report on the controversial drilling practice Thursday, dubbing the drilling an "environmental nightmare."
"In state after state, fracking polluted our air, water and landscapes," said Liz Kazal, a field associate for the Raleigh-based nonprofit. "If fracking is allowed in North Carolina, this is the kind of damage in store for waters like the Deep River."
The drilling, viewed as an economic boon by proponents despite its speculative job-creating numbers, has been dogged by claims that it's responsible for water and air pollution, as well as increased seismic activity. See a recent report that fracking wastewater is to blame for earthquakes in one Ohio town.
Environment North Carolina, which has long opposed the drilling, describes the report from its Research and Policy Center as the "first of its kind to measure the footprint of fracking damage nationally to date—including toxic wastewater, water use, chemical use, air pollution, land damage and global warming emissions."
Among the report's claims, the nonprofit says fracking is to blame for:
1. 280 billion gallons of toxic wastewater in 2012
2. 450,000 tons of air pollution produced in one year
3. 250 billion gallons of fresh water used since 2005
4. 360,000 acres of land "degraded" since 2005
5. 100 million metric tons of global warming pollution.
Download Environment North Carolina's full report, which reads like a Stephen King novel for environmentalists, here.
State officials are currently crafting regulations for drilling in North Carolina, which could begin as soon as 2015.Sen. Mike Woodard, a Durham Democrat, gets in on the frack-bashing in Environment North Carolina's release. "The dangers detailed in this report reiterate that a few short months of energy are simply not worth jeopardizing our water, our air and our rural landscapes," Woodard said. "In short, fracking is a bad deal for Durham and for North Carolina."
Official estimates say North Carolina has enough gas to power the state for about five years. Drilling is most likely to take place in central portions of the state such as Chatham, Lee and Moore counties.
Check back with Indy Week for pending reactions from drilling supporters and opponents.
Major news for frack-followers: A Duke University study published this week finds homeowners living near fracking wells may be at an elevated risk of drinking water contamination.
The study, performed by researchers at Duke's Nicholas School of the Environment, analyzed 141 drinking water samples from water wells in northeastern Pennsylvania, prime fracking country.
According to the study, methane concentrations were six times higher and ethane concentrations were 23 times higher at homes within a kilometer of shale gas operations. Propane was found in 10 samples, all of them within a kilometer of fracking sites.
Robert Jackson, a study co-author and Nicholas School professor, suggested in a school statement that "poor well construction" may be to blame for the contamination.
“Distance to gas wells was, by far, the most significant factor influencing gases in the drinking water we sampled,” Jackson said.
While a previous Nicholas School study has found methane contamination near fracking wells, the new study is the first to link drilling with ethane and propane contamination, according to the statement.
All three gases are considered to be flammable with a risk of explosions. Methane is generally thought to be non-toxic, although propane and ethane can pose health risks, such as asphyxiation, in high concentrations.
The study is released as North Carolina lawmakers continue to debate the contents of Senate Bill 76, a bill that may ultimately authorize the N.C. Department of Environment and Natural Resources to begin issuing fracking permits in March 2015.
Sen. E.S. "Buck" Newton, a Republican from Johnston, Nash and Wilson counties who co-sponsored the bill, said the drilling has the potential to create thousands of jobs and billions in revenues (for more on those expectations, see here).
"Do we want to sit around and twiddle our thumbs for another 15 to 20 years and do nothing when other states have been doing it for decades safely?" Newton said.
The practice is seen as an economic driver by proponents, but critics point to numerous reports of environmental contamination associated with drilling across the country.
The original Senate legislation authorized the N.C. Department of Environment and Natural Resources (DENR) to issue fracking permits starting March 1, 2015, although the House version approved Thursday morning requires another vote from the N.C. General Assembly for the permits to become valid.
The House version also strips language allowing for the injection of fracking waste underground and would retain a state registry of landmen. As reported recently in INDY Week, the Senate bill's sponsors received significant campaign contributions from energy interests.
Committee Democrats questioned whether the state would be allowing permits to be issued before fracking regulations are finalized. Newton, however, called the March 2015 deadline "more than adequate time" to finish the rule-making process, which is ongoing in the N.C. Mining and Energy Commission. The commission has an October 2014 deadline for completing its work.
During Thursday's meeting, DENR Secretary John Skvarla indicated his support for the controversial legislation.
"The bill is a giant step forward to all of us who demand environmental protection and certainty to the people willing to spend tens of millions of dollars in the hydraulic fracturing process," Skvarla said.
Not so, according to environmental opponents.
"It is much better than the Senate version," Environment N.C. Director Elizabeth Ouzts told INDY Week Wednesday. "But it is still bad for water quality, and it breaks the promise that the legislature made last year that they would allow the Mining and Energy Commission to develop rules before setting a date for permits to be issued."
As expected, fast-track fracking legislation, Senate Bill 76, passed the House Commerce and Job Development Committee Wednesday morning, although with several notable departures from the version passed by Senate leaders in February.
Those differences, according to fracking opponent and Environment N.C. Director Elizabeth Ouzts, include stripping the legislation of language allowing the injection of fracking waste underground. The House version also removes a provision booting environmental and geological experts from the regulatory Mining and Energy Commission, the panel tasked with preparing the state's regulatory structure for drilling.
The bill's key point—authorizing the N.C. Department of Environment and Natural Resources to issue fracking permits in March 2015—remains, although with the addendum that permits will require another legislative vote for them to take effect, Ouzts said.
"It is much better than the Senate version," Ouzts said. "But it is still bad for water quality, and it breaks the promise that the legislature made last year that they would allow the Mining and Energy Commission to develop rules before setting a date for permits to be issued."
Senate Bill 76 now heads for the House Environment Committee. The legislation is sponsored by Senate Republicans Buck Newton, Bob Rucho and Andrew Brock. All three senators received substantial campaign contributions from energy companies in recent years.