The Price of Gas: How Cabot Oil & Gas profited at the expensive of the residents of Susquehanna County, Pennsylvania

Final Report:

Ron and Jeannie Carter were an elderly retired couple who had long lived on an isolated rural road in Susquehanna County, Pennsylvania, on the same land Ron’s father had once owned. This idyllic property once flourished with the sounds of animals and farming across wide fields and woods, sights and sounds somewhat diminished of late owing to their advanced age and languishing of farming activity. With little income, the Carter family sometimes struggled to make ends meet, alongside paying debts and property taxes. In 2006, their luck seemed to change however, when a landman, representing Cabot Oil and Gas out of Texas, would knock on their door, wishing to lease their land for mineral exploration, promising them a percentage of the revenues and a flat fee per acre, as their property potentially resided over vast sums of shale gas, a mile beneath them. At the time, and with seemingly little negative aspects per the landman’s assurances, they made a proverbial deal with the devil, the consequences of which would not become known for years to come. [1]

The Carter family would not be the first or last family hoodwinked by these oil and gas company landmen. Since the late 2000s, hydraulic fracturing, colloquially as fracking, has experienced rapid and unprecedented growth in the face of rising energy costs and dependence on foreign oil suppliers.[2] Natural gas production via hydraulic fracturing has outpaced non-hydraulic methods, and the gap continues to widen.[3] In Pennsylvania alone thousands of wells have been dug, and more than a million nationwide.[4] Oil and gas interests have reaped massive profits with the growth of the industry, but they have largely made these profits by taking advantage of small rural landowners unprepared for the snake oil salesmen with fancy contracts that come knocking on their door.

These payments to rural landowners have largely paled in comparison to the consequences fracking has had upon their land and surrounding areas. Many of the jobs that have come to the area are specialized, and already with the intention of bringing a certain kind of person, a profile which the average rural Pennsylvanian does not fit.[5] The increase of population through workers and support staff has causes inflation in the local economy, as demand for scant housing and supermarket shelves has outpaced supply, outpricing the local Susquehanna county residents, whose average per capita income amounts to 31,000 dollars a year.[6],[7] Water resources have been polluted in many areas, with many residents’ water becoming unsuitable for drinking, bathing or agricultural purposes, and relying on weekly water buffalos filling up tanks, expensive water filtration systems, or bottled water.[8],[9] For those residents who haven’t even sold mineral rights, they’re feeling these effects all the same without any compensation or assistance.

In this essay, we’ll go over the effect the fracking of Susquehanna county by Cabot Oil & Gas had, and how they’ve taken advantage of poor rural farmers in the pursuit of profit. We’ll also talk how this all began, and how the consequences of fracking would come to reveal themselves. By the end of the essay, you’ll have a greater idea on how the fracking industry operates whenever they go to a new place, and what they’re willing to do unless stops them.

The Carters were just one of many similar people in similar situations living in Susquehanna County. The county is overwhelmingly white, over 98%, with a total population of approximately 40,000 people spread out over a land area of a little over 800 miles, a population density of 51 people per square mile, which is ten times the population minimum for an area to be considered rural by the USDA (500 per square mile).[10],[11] With an average per capita income of 31,000 dollars a year, Susquehannans are by no means a wealthy community. When you combine these various factors, along with a lack of the institutional knowledge that people living in places that have long had developed oil and gas industries possess (and thus are more familiar with how to negotiate with such companies), the Susquehannans were ripe for exploitation.

When the landmen first began arriving in 2006-7 to purchase mineral rights and land leases in advance of the fracking interests that would be coming along, they wasted no time in plying their malicious trade. They began knocking on doors persistently, finding their way to many kitchen tables in small rural houses, sometimes with a contract for the land in question already written up. They would not shy away from making the typical used car salesman pitch; “your neighbors have already sold, you better hurry” or “I don’t give everyone this deal but for you I’ll make an exception”.[12] Being offered up to 12.5% of the revenues sounds great when you don’t know that is the legal minimum payment a company must provide to the landowner. Any worries about environmental effects on their land and water would quickly be assuaged as well. Time would soon reveal much more about the veracity of the promises made and the realities that would come with having hydraulic fracturing occurring on one’s property.

The first untruth that would be revealed would be about the monetary compensation offered to the landowners. The early adaptors sold their land at a rate per acre and percentage of royalties, but the initial sellers only received 25$ an acre. Those who would sell later once the value of what was under them became apparent, would receive thousands of dollars per acre.[13] The royalty fees would prove to be a poison chalice, as though it was written in the contract, those who didn’t have a lawyer had no idea that if decided by the company, their share would face deductions accredited to the operating costs, potentially facing constantly diminishing returns.[14] As well, the percentage is strictly based on how much the company made, if demand dropped, or it wasn’t in season, the gas wouldn’t be as valuable, and as such they would be receiving far less payment. Ultimately however, money would prove to be of lesser concern, to the true corruption that would soon affect their homes.

At the beginning of the fracturing operations, the environmental effects were much as one would expect, a lot of dust kicked up by trucks, the sound of machinery and drilling, and the occasional gas flare off illuminating the night; all things that reasonably would be considered to occur with any kind of gas and oil nearby.[15] The real problems would begin when the words of the landmen in the years past began to fail the sniff test. Laundry began to smell off, water turned a strange brown color, and animals and people began to get sick. Somehow, gas and hydraulic fluid had leaked into the water table. Cabot Oil & Gas, one of the main companies Susquehanna, helped out without accepting responsibility, providing water or filtration systems to some families for a time, until they went to court to stop doing such.[16] The depth of the problem would not become completely clear until an explosion occurred on Norma Florentino’s land on October 8th, 2008.[17] Although no one was killed by the methane explosion, the incident made the news and was representative of a very large problem. Norma and her family were now left with damage to their water supply, their land, and an inoperable gas well resulting in no income, courtesy of Cabot Oil & Gas.

Cabot Oil & Gas was one of the largest fracking companies operating in Susquehanna county, and still is to this day. From June of 2006 to June 2008, they doubled their stock market value from 5.50 to 16.30, proving their profitability as well, and since then it has ballooned even further. However, at the same time they’ve also managed to rack up the most amount of environmental and regulatory breaches in the county, 480, more than half of the total for the entire county.[18] Despite this, and water issues commonly occurring within the proximity of a Cabot fracking derrick, they were quite reluctant to admit any responsibility for what they claimed to be naturally occurring. They would provide water bottles, filtration systems or water buffalos on multiple occasions to residents with effected wells though always without admitting any culpability, and ceasing said support after a time when they felt they had done enough. It thus became clear that without real legal action, Cabot Oil & Gas would never be brought to account for their actions.

In November of 2009, 15 families of Susquehanna county filed suit against Cabot Oil & Gas for the crimes committed against them, including the Carter and Florentino families. They sought reparations for what had transpired, and to at least give them the funds they would need to be able to move. A group of rural farmers and retirees going up against such a large and powerful company would prove to be a true David and Goliath struggle. Ultimately due to this, the majority of the families will out take settlements, some of which included buyouts for their land, while others remained despite the dangers posed by their water.[19] Only two families managed to hold out for nearly 7 more years to finally receive a 4.2 million dollar judgement against Cabot.[20]

What happened in Susquehanna was only a microcosm of the fracking industry in America. It could happen anywhere, not just Susquehanna County. Even with a settlement, it has been by no means a happy ending, families have had to agree to a gag order as part of it and thus cannot speak about what happened or is still happening; their wells are still damaged, they still can only use the water for certain things.[21] It’s imperative we take what happened in Susquehanna County to heart in the future, as American society continues to debate fracking in the halls of Washington, and at the kitchen table, and cease the exploitation of rural citizens by the hands of oil and gas companies.

[1] Wilber, Tom. Essay. In Under the Surface: Fracking, Fortunes and the Fate of the Marcellus Shale, 9–17. Ithaca, NY: Cornell University Press, 2012.

[2] Plumer, Brad. “Fracking, Explained.” Vox. Vox, April 15, 2014. https://www.vox.com/2014/4/14/18076690/fracking.

[3] Perrin, Jack, and Troy Cook. “Hydraulically Fractured Wells Provide Two-Thirds of U.S. Natural Gas Production.” US Energy Information Adminstration. US Energy Information Adminstration, May 5, 2016. https://www.eia.gov/todayinenergy/detail.php?id=26112.

[4] “Oil & Gas Threat Map Shows Trump’s Folly.” The Oil & Gas Threat Map, March 29, 2016. https://oilandgasthreatmap.com/threat-map/.

[5] Wilber, Tom. Essay. In Under the Surface: Fracking, Fortunes and the Fate of the Marcellus Shale, 102-103. Ithaca, NY: Cornell University Press, 2012.

[6 Boettner, Ted. “The Fracking Boom in Appalachia: Big GDP Growth, Small Amount of Jobs and Local Income.” Ohio River Valley Institute, September 22, 2020. https://ohiorivervalleyinstitute.org/the-fracking-boom-in-appalachia-big-gdp-growth-small-amount-of-jobs-and-local-income/.

[7] “U.S. Census Bureau QuickFacts: Susquehanna County, Pennsylvania.” Census Bureau QuickFacts. Accessed December 15, 2020. https://www.census.gov/quickfacts/susquehannacountypennsylvania.

[8] Rubinkam, Michael. “Fracking’s Impact on Groundwater Lingers in Northern Pennsylvania.” Press & Sun-Bulletin. pressconnects.com, September 3, 2017. https://www.pressconnects.com/story/news/2017/09/03/frackings-impact-groundwater-still-unknown-northern-pennsylvania/629573001/.

[9] Henry, Bill, and John Trallo. “Drinking Dimock: A Glass Full of Gas Water.” PUBLIC HERALD, August 9, 2015. https://publicherald.org/let-them-buy-water-dimock-residents-sacrificed-by-dep/.

[10]   “U.S. Census Bureau QuickFacts: Susquehanna County, Pennsylvania.” Census Bureau QuickFacts. Accessed December 15, 2020. https://www.census.gov/quickfacts/susquehannacountypennsylvania

[11] “What Is Rural?” USDA ERS – What is Rural? USDA, October 23, 2019. https://www.ers.usda.gov/topics/rural-economy-population/rural-classifications/what-is-rural.aspx.

[12] Hamilton, Colby. “The Landmen Cometh: The Frontlines of Fracking Get Personal as Owners Face Aggressive Pitches for Land: WNYC: New York Public Radio, Podcasts, Live Streaming Radio, News.” WNYC, August 15, 2011. https://www.wnyc.org/story/194971-the-landmen-cometh/.

[13]   Wilber, Tom. Essay. In Under the Surface: Fracking, Fortunes and the Fate of the Marcellus Shale,20. Ithaca, NY: Cornell University Press, 2012.

[14] “Shortchanged: the Fight over Gas Royalties | StateImpact Pennsylvania.” NPR. NPR. Accessed December 15, 2020. https://stateimpact.npr.org/pennsylvania/tag/royalties/.

[15] Wilber, Tom. Essay. In Under the Surface: Fracking, Fortunes and the Fate of the Marcellus Shale, 78. Ithaca, NY: Cornell University Press, 2012.

[16] “Driller Wins Approval to Halt Water to Pa. Town.” Gazette, October 20, 2011. https://www.post-gazette.com/news/state/2011/10/20/Driller-wins-approval-to-halt-water-to-Pa-town/stories/201110200428.

[17] Writer), Laura Legere (Staff, and Butch Comegys. “Gas Drilling with Catastrophic Results.” Wilkes-Barre Citizens’ Voice. Wilkes-Barre Citizens’ Voice, April 17, 2020. https://www.citizensvoice.com/news/gas-drilling-with-catastrophic-results/article_be63c11e-a13d-5746-84a1-995ada4c95d5.html.

[18] “Susquehanna | Shale Play: Natural Gas Fracking in Pennsylvania.” NPR. NPR. Accessed December 15, 2020. http://stateimpact.npr.org/pennsylvania/drilling/counties/susquehanna-county/.

[19] Rubinkin, Michael. “Pa. Drilling Town Agrees to Settlement in Fracking Federal Lawsuit.” The Christian Science Monitor. The Christian Science Monitor, August 16, 2012. https://www.csmonitor.com/USA/Latest-News-Wires/2012/0815/Pa.-drilling-town-agrees-to-settlement-in-fracking-federal-lawsuit.

[20] Hurdle, Jon. “Last Two Dimock Families Settle Lawsuit with Cabot over Water | StateImpact Pennsylvania.” NPR. NPR, September 26, 2017. https://stateimpact.npr.org/pennsylvania/2017/09/26/last-two-dimock-families-settle-lawsuit-with-cabot-over-water/.

[21] Mataloni, Carmella. “Residents Explain Why They Settled in Cabot Lawsuit.” wnep.com, February 23, 2016. https://www.wnep.com/article/news/local/susquehanna-county/residents-explain-why-they-settled-in-cabot-lawsuit/523-55cb5e35-5beb-4197-beb9-59410b03c3c3.