Thursday, December 13, 2012 at 5:16 PM
Across eastern Ohio, many rural communities are seeing an economic boost from companies that move to town to drill for natural gas. But some homeowners worry about how all of the activity is changing the character of their quiet neighborhoods. Ideastream's Michelle Kanu has this story about how drilling in Portage County is shaking up property values.
On a back country road in Portage County, Beckie Dean has lived in a three bedroom ranch in Garrettsville for the last eleven years. Her eyes sparkle with pride as she remembers the sweat equity she and her husband poured into building the place.
Dean: “Its 2400 square feet. We built it under an eighteen foot cathedral that is finished in rough cut pine. And it’s pretty much a country theme. I have a buffalo head on my fireplace.”
That gleam quickly turns to sadness as she recounts the last four months of watching oil company Mountaineer Keystone erect a rig to drill for natural gas in the corn field across the street.
Dean: “We had less than a month to prepare before all of the equipment started bombarding our neighborhood. The noise started all night long. The lights started all night long.”
Soon afterward, Dean says she started to notice cracks along her fireplace and climbing the walls inside her home.
Dean: “The ceiling started cracking all the way through, as you can see, and most of my cracks, this one here hasn’t started all the way through yet...”
Dean says her dream home has now become a nightmare. She says when her husband died a year ago, she had planned to pack up and move to Florida. Now she wonders how she’ll ever be able to sell her home.
It’s a worry more homeowners are experiencing as the scale of horizontal drilling and hydraulic fracturing continues to expand.
Allen Klaiber is an assistant economics professor at Ohio State University. He’s looked at how home values have been affected in Washington County Pennsylvania, which has a longer history of drilling.
Klaiber: “We found that for the average home in the rural area that was about $150,000 in value, that if you were located within one mile and six months of an active well drilling, or well pad operation going on, we found a negative impact of over $8,000.”
But, Klaiber says, drilling isn’t always a negative for the homeowner.
Klaiber: “If you’re very close to an active well pad and they’re leasing your land and paying royalties to you, you would be much better off.”
And, he says, retaining a property’s mineral rights—the right to access the resource beneath the land – can also bolster value for the owner—if they haven’t already been sold or leased away.
Another important factor is whether the homeowner’s drinking water comes from a public water system or a private well. Beia Spiller is a fellow with Resources For the Future, an environmental research group. She conducted a separate study in Pennsylvania’s Washington County.
Spiller: “Homes near shale gas wells that are ground water dependent are actually going to be facing this ground water contamination risk—or this perception of ground water contamination risk—and this risk overshadows the benefits that they are receiving from the lease payments.”
Spiller’s research found that homes that depended on ground water saw their property values drop 13 percent.
For real estate appraisers, insurance companies and lenders, the natural gas boom is still largely uncharted territory, but they are taking notice of the potential downsides. One indication can be found in a section of the standard Fannie Mae and Freddie Mac mortgage documents that show drilling activity may conflict with a buyers’ ability to get a mortgage for a home near a gas well, particularly if that home is fewer than 200 feet away. And this summer, Nationwide Insurance released a statement that says the company isn’t familiar enough with the unique risks associated with fracking to provide coverage at a reasonable price.
Ohio State professor Allen Klaiber says it’s still too soon to predict the long term impact of drilling activity on properties… and communities.
Klaiber: “Many of these areas go through a boom and a bust cycle. Right now in Ohio and Pennsylvania we’re still in the boom cycle where we’re just seeing the activity ramping up and seeing these increases, but not clear if they’re long term or not.”
That’s not much consolation for the families in Garrettsville. Resident Natalie Baker has also started seeing cracks along the walls in her home, and attributes them to the drilling nearby. Plus, she says, the well just across the road is an eyesore.
Baker: “I’m actually embarrassed to have people come to my house now and drive by a well and say this is where I live. I feel almost equal to it being a junkyard to be honest with you. I mean, it’s emotional. This is not what I wanted.”
Baker says her contractor has advised her to wait until the drilling activity ends before repairing any of the walls.
It may be a long wait. Mountaineer Keystone has permits to drill five more wells in the same lot.
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