Pennsylvania firm seeks mineral rights for gas exploration in Triangle

Jul. 23, 2014 @ 08:38 PM

In early June, Gov. Pat McCrory signed a bill that opened North Carolina to hydraulic fracturing, commonly known as fracking.

Now, a Pennsylvania-based company is attempting to buy mineral rights from landowners in Durham and Chapel Hill for oil and natural gas exploration and development.
Celeste Burns, director of conservation for the Ellerbe Creek Watershed Association, said the association has received interest letters from Crimson Holdings Corporation seeking to buy several parcels of land.
According to the documents, the company is offering $5 for each net mineral acre.
The town of Chapel Hill also received leasing request documents for an area of Meadowmont Park at 851 Meadowmont Lane.
“I wouldn’t advise anybody to sign this lease,” said Ryke Longest, director of the Enviromental Law and Policy Clinic at Duke University, who reviewed the lease sent to the Ellerbe Creek group. “For $15, you could have your mineral rights held up for 17 years.”
Longest said the signing bonus of $5 per mineral acre is extremely low compared to other leases he has seen. He said this bonus runs more in the thousands per acre in Pennsylvania and New York.
Another common practice with mineral rights leases is speculation, Longest said. Once a mineral right owner sells the rights, the company can do anything with them.
“(A company) can come in and buy leases and sell them for $500 an acre to another company,” Longest said. “And the landowner won’t get the money.”
Individuals executing these leases are called landmen, and must be registered with the N.C. Department of Environment and Natural Resources (DENR), according to the Clean Energy and Economic Security Act of 2012.
But the regional agent listed on the documents sent to Chapel Hill and Ellerbe Creek Watershed Association, Frank Sides, is not one of the 31 registered landmen with DENR.
All landmen are required by state law to be on the registry and DENR is investigating the issue, said Michele Walker, the agency’s public information officer.
Sides did not return phone calls seeking comment.
According to the Pennsylvania Department of State, there is no company registered as “Crimson Holdings Corporation.”
Andrew Miller, vice president of real estate firm CBRE, said he sold the space listed as Crimson’s address on the documents, 2006 E. Carson St., Pittsburgh, to Campbell Development nearly a year ago.
According to its website, Campbell Development is a solution provider to the land and energy industries, and operates out of Texas and Pittsburgh.

A new industry
Fracking is the process of injecting chemicals in the ground under high pressure to fracture rocks and allow for oil and natural gas to escape. But through a chemical disclosure rule passed early this year, companies operating in North Carolina do not have to disclose the chemical mix they use for fracking.
“One of the challenges is that we don’t even know what those chemicals are because they’re proprietary as a trade secret,” said Dave Rogers, field director of Environment North Carolina, a citizen-based environmental advocacy organization. “And because that stuff is pumped into the ground and under such high pressure that it fractures the rock, it increases the likelihood that that stuff could leach into drinking water wells and other sources people use.”
Because of the proximity of Ellerbe Creek to Falls Lake, Rogers said potential contamination problems resulting from fracking could impact hundreds of thousands  residents throughout Durham and Wake counties who rely on it for drinking water.
“It seems crazy to allow fracking to occur so close to a critical drinking water source for a pretty large segment of the North Carolina population,” he said.
But Jon Sanders, director of regulatory studies at the John Locke Foundation, said fracking can provide economic benefits as a new industry in North Carolina through job creation.
“It should definitely help the economy,” Sanders said. “The extent to which will depend on how extensive the resources are.”
Last week, the Ellerbe Creek Watershed Association passed a resolution that it will not sell the mineral rights on its nature preserves.
According to an email from Chapel Hill Town Manager Roger Stancil, Chapel Hill does not plan to take any action regarding the mineral rights request.
But Rogers said it is plausible that landowners throughout the region and the Eno River Watershed are likely to be solicited for mineral rights.
“The first thing I would do is tell someone to contact an attorney,” Rogers said. “People should know their rights and they should learn about what rights they have as landowners.”
Longest said some beneficial resources for mineral rights owners considering these leases are the Department of Justice Consumer Protection Branch, Rural Advancement Foundation International (RAFI-USA,) and Ted Feitshans of North Carolina State University.