July 20, 2011


The Dryden Safe Energy Coalition has a page claiming that Dryden would be "confiscating" $175 million if a natural gas drilling ban is passed.

How do they calculate that? Did they get ahold of the seismic studies and calculate what the price of gas is likely to be?

No. They grabbed an easy statistic, the number of acres in the Town - 60,288. Then they multiply by another big number, $3000/acre, the most recent high number gas companies are offering as signing bonuses. That would bring them to $180 million, but they're cautious enough to limit it to property actually on the assessment roll and call it $175 million.

They don't mention compulsory integration, New York State's policy in which having 50% of a drilling unit leased establishes rights to the other 50% - without that signing bonus. They don't mention that the 41% of Dryden land that's already leased has already received that bonus - and generally at levels far far lower than $3000/acre.

They even screw up and claim that:

Dryden residents have considered energy development. 41% of Dryden landowners have leased their land.

41% of Dryden land is leased, but they give no statistics on how many parcels are leased or how many people actually did that leasing. There's a pile of numbers about the size of lots and averages of this money spread across the Town, but none of it reflects the terms of actual leases held.

It is, of course, possible that the massive shortfall in the reality of that $175 million number could be made up by royalties over time, but mostly this looks like an exercise in "hey, look over here at this shiny thing!" rather than a calculation that means something.

If you want to look at a big shiny number, think about a billion. That's roughly the value of assessed property in Dryden these days. How much of a hit will that take if drilling comes to town?

Posted by simon at July 20, 2011 6:50 AM in
Note on photos


Cyrus Umrigar said:

I agree with most of what you say but wanted to correct one statement. The gas companies need to lease 60% of a drilling unit and then they can forcibly integrate the remaining 40%. They have to pay for the part they forcibly integrate, but I believe at a lower price.