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Thursday, August 22, 2013

The Cost That Cannot Raise Its Head

Written by Tom Bond, farmer, Lewis Co., WV

"There are many financial losses never accounted for in the development of gas from the Marcellus shale. The drilling platform and deeply rocked roads are essentially taken out of production forever, removed from any kind of production. Pipelines and unimproved areas are out of use for the time of use for production and the 70 to 90 years beyond required for the re-growth of timber (if ever). Building sites are lost, effects of on-sight disposal of wastes, which seep into the ground or are buried there, are a loss. The numerous compressor station locations can never be reclaimed completely, and depress values in their neighborhood. Lifestyle issues such as light, noise, smell, view and trespassing beyond the well pad and roads are completely forgotten in the industry accounting.

All these are ignored, externalized costs. Costs shoved off into the residents of the area where drilling is done. How would you establish a monetary value on these? Price is the amount a willing buyer would pay a willing seller. Price determination could be made by looking at the price of a property before drilling and sale to an informed buyer afterwards. Obviously, several cases of such transfers could not be easily found. Once there is drilling in the neighborhood, property sales are not easy. Often price is taken as the opinion of an expert – a real estate appraiser. He uses comparable sales to determine a fair price – the procedure is well worked out by the profession. What do you think would happen to a real estate appraiser who gave a large depression of price by drilling, even if thoroughly proven by accepted standards? He would be blackballed, of course, just as the university professor who finds fault with industry interests, when they are donating to his university."

Read more from the front lines of fractured farmland at: How long before farmers and landowners in our beautiful Laurel Highlands will be writing similar accounts?