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The Shale of a Lifetime!

by J. Money on Monday, January 30, 2012

shale boom house

I just got done reading this awesome article in Kiplinger, and it turns out there’s a Shale Boom going on right now beneath us!  Literally! (Well, if you happen to live in Pennsylvania or West Virginia or Ohio or New York, haha…) It gets me so excited that I kinda sorta but not really wanna move out there ;) Who wouldn’t want an explosion of shale money being rained all over them though? Just for being lucky enough (or smart enough) to have bought on a pile of rocks? I’d totally lease out my mineral rights for some nice chunks of change every month. It’s not like I’d be doing anything with ‘em anyways ;)

Of course, along with all that money comes a whole mess of variables that could go awry too, which we’ll get to in a second, but if all worked to your advantage you’d be sitting nice and pretty. Living your life as normal, all the while getting residual checks every month for $500 or $5,000 or even $50,000 if you got lucky enough! (Not to mention the sweet bonuses you’d probably squeeze out too). Your drinking water may not be safe anymore, but that’s the chance you’d have to be willing to take ;)

In fact, here are a slew of them you’d have to be okay with before taking up anyone’s offer:

  • You’d have all kinds of stuff installed on your property, making your yard look strange.  Unless everyone else in town was doing the same.
  • The environmental affects are still questionable.  There wasn’t enough room in the article to get into the dirty dirty here, but they did allude to possible problems as research still isn’t completed on this kind of extraction yet.  One of the biggest concerns, and rightfully so, is the affect it would have on everyone’s drinking water.
  • Your water may be contaminated.  Def. a bigger problem than I jokingly mentioned above ;)  In theory the companies would make sure that all is taken care of, and even IF they do something stupid that they’d fix it back to normal, but we all know how that can turn out in the end, eh?
  • Nothing’s guaranteed.  They may strike the jackpot, or they may go years and years without pulling out anything whatsoever.  So you’d pretty much have to be okay with uglying up your yard (or acreage) in case it falls short.

I’m sure there are other problems to consider as well, but those were the biggies that I pulled from the article. Long story short – If you’re sitting on tons of shale rock and don’t care about the possible affects, you could be bringing in some mighty fine money over the course of the next dozen or so years.  You might even be called Kiplinger’s next “Shalionaire!” haha… their section on “Shalionaires gone wild” was my fave part of the article ;) Even though it was really about all the financial consequences that would come up if you were to get handed all this  new money (taxes, legal fees, etc). I was hoping for some pretty juicy stories ;)

If you don’t happen to live near any of these shale deposits though, but you still like the idea of it all, there was some stocks that were recommended in the article too. Apparently there’s *always* a way to invest in things these days!  I won’t go into all the details cuz it’s actually not that exciting really, but if you’re interested these were the companies Kiplinger said to check out: Chesapeake Energy, Ultra Petroleum, National Fuel Gas, Schlumberger, Halliburton, EV Energy Partners, and lastly, Williams Partners. The links go to their respective Yahoo Finance pages.

So that’s the whole shebang.  You get mad money for doing nothing – what do you think?  Would YOU jump on this opportunity if it were to ever arise?  HAVE you jumped on something like this already??  It’s definitely nothing to consider lightly, but I find the whole idea incredibly fascinating.  I was telling my wife it’s a good thing we don’t live in the gold rush these days cuz I’d be the first one to fall for it! Haha… Or possibly the first one to have been successful, who knows ;) Maybe this blog woulda been called Goldmining Is Sexy instead?

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(Photo by Fikret Onal. All dolled up by J$)


{ 30 comments… read them below or add one }

1 Alex January 30, 2012 at 6:17 am

They’ve been doing refraction out here in Australia for a while now, and while there has been a lot of hubbub about its environmental impacts, there hasnt been too many reported issues.

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2 Jess January 30, 2012 at 8:11 am

My Dad and his brothers each collect a paycheck every month from the natural gas deposits that are on my Grandfather’s (deceased) farm. I think he gets several hundred dollars a month. There are several large green containers in a few of the fields, but as no one is farming right now, I don’t think any of them care. They have been getting checks for years now.

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3 Jess January 30, 2012 at 8:12 am

Forgot to mention he lives in southwestern Pennsylvania.

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4 Erin January 30, 2012 at 8:34 am

Halliburton J$…….come on!

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5 Sense January 30, 2012 at 8:49 am

Woo, this subject is a hotter debate than I think you are aware…no doubt you’ll get some strong opinions on this one. It’s a big NO for me. Fracking can cause major, irreversible damage to the environment. I won’t be throwing my dollars that way. They can’t just ‘fix’ the water supply once it’s been compromised…IF the companies admit fault, it takes decades (at least) that costs millions in remediation OR they have to pipe in clean water to the area, which also costs lots of money. Other effects can occur (mishandled waste, cancer-causing air pollution, induced earthquakes). The documentary Gasland is about a guy who was offered $100K to drill and this is what he found out when he investigated:
http://www.youtube.com/watch?v=dZe1AeH0Qz8

Despite the protests and very good reasons not to, it seems to be the next cheap ‘oil’ so I don’t think we will be able to stop it, esp. as threats to cut off our supply in the Middle East grow in number. It is a darned if you do, darned if you don’t situation, in many respects.

Maybe I’ll buy stock in water companies instead!

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6 Stephanie January 30, 2012 at 9:34 am

I’m pretty much right on the border of all of this – I live in northwest NJ, close enough to hear all the news about this issue, but not close enough for me to be in a position to be able to collect a check every month. ;-)

Anyway, here’s what I don’t get: We keep hearing about the huuuuuge surplus of natural gas. My house uses natural gas for heat, hot water, cooking, the clothes dryer… And the cost of natural gas keeps going down because there’s such a glut. In fact, just the other day I read about some companies that are cutting production because of how low the prices have gone. So why all the urgency to get at the Marcellus Shale? Personally, I’d rather see companies take advantage of the gas surplus, which would buy them time to direct more efforts at developing renewable fuel sources.

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7 J. Money January 30, 2012 at 9:44 am

@Alex – I wonder how much longer it’ll take to get some good solid info? If there isn’t any already? Pretty neat it’s reaching the entire world it looks like :)
@Jess – Wow, really?? That’s pretty cool! I wonder how much of an impact it makes once they *are* farming again?
@Erin – Hey, that’s what they’re saying ;)
@Sense – I have a feeling you may be right on this one – it def. seems like a hot debate ;) And it seems we’re just in the beginning of most of this stuff, yeah? Unless I’m crazy slow only now just hearing about it.
@Stephanie – Huh, that’s an interesting point. I have no idea, but it sounds pretty awesome if we’ve got enough of it out there right now! It’ll be cool to see how we use all this stuff come 10-15 years from now :) I bet we smart up and come out with something game-changing.

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8 Nick January 30, 2012 at 10:33 am

Wow. That’s some crazy stuff – both the pros and the cons. I’d definitely do some more research if I were approached but that GasLand trailor certainly makes it look too dangerous for my liking…. I’m just hearing of these “Shale-anigans” too.

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9 Jonathan January 30, 2012 at 10:34 am

I would never sale or lease the mineral rights to my property. I grew up in the coal fields of Eastern Kentucky where the mineral rights of most land was bought up decades ago. There are regulations in place today to better protect landowners than there were when most of those Eastern KY contracts were written, but there is still too much risk and hassle in my opinion.

There is also the issue of the impact to resale value of your land. When we bought our place one of the first questions I asked was if mineral rights were included. Where I grew up it was assumed that mineral rights were not included. Afterall, almost no one owned the mineral rights to their own land. I wanted to know that when I bought a parcel of land, it was all mine, including everything beneath the surface.

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10 Edward Antrobus January 30, 2012 at 11:20 am

Colorado recently adopted the “toughest” rules in the nation on fracking. Although by toughest, it just means that companies actually have to disclose what chemicals they are mixing in with the fracking fluid.

I probably would lease my mineral rights if I lived in the area. But like Jonathan, I live in a part of the country where what is under the land is a different property than the land itself. Between water rights, mineral rights, and land rights, three different people could own the same spot on the map. Obviously mineral rights are different, but for water rights, you don’t even own the water that FALLS on your land. That belongs to the person who owns the water under your land, or who owns the water that that rain drains into. According to the Colorado Division of Water Resources, putting a rain barrel out is STEALING!

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11 Skint in the City January 30, 2012 at 12:43 pm

Not for me, cos I’m sure there must be an environmental argument to this which paints a less rosy picture than the financial one. Interesting to think about these alternate ways of making money though. I’m sure investing in renewable energy like installing solar panels on your house etc is going to pay big dividends in the next few years, with the ability to sell electricity generated to others.
BTW, huge congratulations on your expected new arrival. I’m expecting one myself! Two babies on a budget this year – the future’s bright!

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12 Jessica January 30, 2012 at 1:24 pm

I’m not a fan of fracking. The water table issues are just too grave and the fact that the earthquakes in Ohio have been tied to it put the costs too high. I have a friend that works in oil and gas that says you can never repair what it does the environment and people’s health that live in the area. When you start putting money in front of the people and environment, you’ve crossed over to the dark side in my opinion.

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13 Jeff January 30, 2012 at 1:25 pm

After seeing the Gasland documentary, I wouldn’t take the cash unless the money was large enough to buy a new house far enough away from the drilling. But if there’s going to be drilling all around you, there really is no choice since you’re likely to get all the ill effects anyway. Kind of a Catch-22.

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14 Jen @ Master the Art of Saving January 30, 2012 at 2:43 pm

I’d do it if I had the opportunity, I don’t think I’d care about the yard looking crappy if I was getting paid. :-)

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15 Brent Pittman January 30, 2012 at 2:46 pm

Yes, a thorny issue. There is speculation fracking caused the recent Oklahoma earthquake. See an example article http://ecocentric.blogs.time.com/2011/11/08/did-fracking-help-cause-oklahoma-earthquakes/

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16 Evan January 30, 2012 at 4:21 pm

My in Laws own a lot of land in one of these areas. It was a family joke since before 5 years or so ago the land was WORTHLESS and they fought over who would pay the taxes (it was owned with siblings and cousins)…now I am hoping to be a kept husband one day LOL

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17 Tyler S. January 30, 2012 at 5:48 pm

@Alex, Usually by the time the issues are reported in circumstances like this, it’s not until a significant amount of irreparable damage has been done. Don’t count on someone raising the alarm as soon as there is some kind of danger.

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18 J. Money January 30, 2012 at 6:23 pm

@Nick – Haha, nicely played sir ;)
@Jonathan – Great point there, hadn’t even considered the resale value of it later. Especially since the royalties would probab still continue to go to the one who sold those right until at least the end of their contract comes up, yeah? That would suck.
@Edward Antrobus – HAH! I’m learning something every day here from you all, I love it :)
@Skint in the City – COOL!!! Congrats to you too, friend! :) Wanna buy me solar panels for my baby once it’s born? Haha… I want them so bad!! I’d love to be able to make my own energy and then sell off that which we don’t use up. I’m def. gonna consider it in the next house we buy. Or maybe build ourself!
@Jessica – Yikes! Earthquakes?? Crazy… yeah our environment is going to crap over the years :( I gotta be better about keeping it all into consideration as hard as it sometimes is. Guess it’s good I have you guys to help me stay on it ;)
@Jeff – Ooooh another movie I shall put on my to-watch list! Never heard of it but sounds interesting :)
@Jen @ Master the Art of Saving – Yeah, I def. don’t care about it looking crappy that’s for sure. But I am now getting more freaked out about the health issues with everything, jeesh.
@Brent Pittman – That’s so crazy to me – that mankind can cause them like that! Oh man… will go over and check it out in a bit, thx :)
@Evan – HAH! Who woulda think? Are they getting some nice checks right now then, or has it not trickled in yet?
@Tyler S. – Yeah that’s the freaky part man, you don’d find out it’s really horrible till it’s too late (like the affects on smoking and how many people were addicted, so scary!)

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19 jesse.anne.o January 31, 2012 at 8:35 am

I am with Sense and the other NO FRACKING folks. Irreversible damage to a natural resource is not something to screw around with. From all my reading on this the first few rounds of this in NY had companies massively downplaying the environmental impact and if I’m not mistaken, only recently was there any real push to have the ingredients involved in fracking known (causes cited w/these ingredients had speculated flammable water & neurological issues).

Food supplies are also at risk: http://www.thirteen.org/metrofocus/news/2012/01/nyc-chefs-dont-frack-with-our-ingredients/

I totally love your blog, dude, but this was one hell of a zinger to jokingly recommend without doing some due diligence. I just hope others do a little digging before forming a full opinion on this pretty heavy subject.

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20 Corie January 31, 2012 at 10:32 am

I live in PA where a lot of the drilling is going on. I don’t know enough about the environmental impact of it all to have an (intelligent and informed) opinion on that but I do know A LOT of people who have more money than they ever will know what to do with from leasing their land.

My husband is from a small town where they are drilling heavily and other than environmental impacts there are alot of other issues such as…
-The gas workers (most locals call them “gasholes”) come and take over the town. Rent prices skyrocketed to where local people can no longer afford to rent homes/apartments. For instance rent on a small 3 bedroom home would have been around $800 per month is now anywhere from $2,000-$3,000.
-The bars are packed from the gas workers. Of course this gives business to the bar owners but this also causes many fights and even shootings in this small town where they never had to worry about these things before.
-Traffic. I’m not sure of the right terms for all of this but when you drill you need A LOT of water. The water is brought in on huge trucks and you literally cannot drive through this small town on a weekday from 8-6pm because of the water trucks and other gas worker traffic. The roads also get ruined from all the trucks driving on them making them almost impassable to regular vehicles.

There are many other issues other than what I listed above but those are just a few that the local people deal with on a regular basis.

Like I said in the beginning the people who ended up leasing their land are making more money than they ever had. If you drive around the town you see locals in nice new trucks, new tractors to take care of their land, new everything. I’ve always wondered what/how these people deal with the influx of money when they’ve never had anything. They go from making in the $20,000 range per year to making almost that PER MONTH! (Not all make that much of course it depends on the amount of land you have/location/etc.)

I also wonder what is going to happen when this dies down. Eventually there won’t be any shale left to mine. This tiny town (and many others) grew almost instantly overnight. The restaurants are full, people are spending alot of money, almost all businesses are thriving – but this has to come to an end sooner or later I would think? Are these people thinking about that? Are they putting money away for their future and the future of their families or are they living in the moment and spending what they have because they’ve never known/had money before?

Sorry for the crazy long comment but it’s interesting to think about all of the impacts that drilling has on a town.

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21 Stephanie January 31, 2012 at 11:19 am

@Corie – I, for one, appreciate the crazy long comment. Like I said in my previous comment, I’m not close enough to be directly impacted by this, I’m just east of the Lehigh Valley area, so presumably I won’t see any of the money directly. But I’m close enough that I might see some of the economic and environmental impacts, and I hadn’t thought about what would happen to an individual town when the shale (and therefore the money) is gone.

And I have to wonder if an accident related to fracking could result in a similar situation to what happened in Centralia. Probably not exactly the same, with the underground fires (I don’t know that much about the details of fracking though, so maybe?), but widespread contamination of the water could conceivably render an entire town unliveable, particularly if the majority of the town relies on well water, which seems to be common in a lot of the rural areas near me. Are these companies willing to pay to relocate the residents of an entire town should this happen??

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22 Corie January 31, 2012 at 11:55 am

@Stephanie – From what I know, which unfortunately isn’t too much, about the entire situation is that at this point there is not enough research and evidence to support what is actually happening to the water. My father in law, and a handful of others who live in their town, have land that the gas companies “want” and have been offered quite a bit of money for but they are afraid of the environmental impacts and the unknown. The majority of this town does rely on well water and as far as I know there are specific clauses in their contracts and leases holding them exempt from repercussions of the drilling. Could this change in the future if the leasees from the town come together as a whole to sue/take action if they find out their water has been contaminated? I’m really not sure. I find it hard to believe that it’s 2012 and there isn’t enough evidence to support the damage that is being done (if the damage is as severe as some may think, again I unfortunately do not have any research to back up anything).

I live in the Poconos and many people/companies/etc have been offered money and have signed contracts/leases with gas companies. Other people I know were in negotiation to sign contracts and the gas companies backed out because they found out that there were more deposits of shale in Western PA and the companies moved there instead. I guess this just goes to show that these small towns don’t know when everything will “dry” up and like I said before I am interested in what, if anything, these people are doing to prepare for the inevitable.

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23 Sarah January 31, 2012 at 3:40 pm

Be careful what you wish for:

We Currently have a huge energy boom going on in Western North Dakota (Bakken Formation) right now. The town I live in was about 15,000 pre-boom, now I would guess 25,000. We simply don’t have the proper infrastructure in place right now, it all just happened so fast.

Housing Prices have more than doubled in the last 5 years. One bedroom no frills apartment that used to rent for $500 is now going for $1300. Even if you are willing to shell out a large amount of cash for rent each month it is very unlikely you will find a place to live. Many people are so desperate for housing that they are living in their cars.

Our help wanted section in the newspaper takes up 3 full pages. Fast food places are so desperate that many are starting at $15 an hour. These restraunts are having to reduce their operating hours becasue there is no one to staff them.

I don’t know how people who lived on a fixed income are getting by. Many are being forced to leave this town that they have called their home for decades because they simply can not afford to live here.

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24 Sarah January 31, 2012 at 3:45 pm

@Stephanie

I too wonder what will happen to my town. I imagine almost like a mini Detroit, just a disaster.

We also had an energy boom in the 80s that went bust. My parents said their were pickup trucks for sale on every corner becuase people could no longer afford the gas. People lost their houses, many sat vacant for years.

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25 jen January 31, 2012 at 3:47 pm

sorry J$, I will have to disagree with you on this one. not only is fracking a horrible, major damage to the environment, but it also is only a temporary fix for our energy consumption.

the areas of northern PA where my friend’s family owns lots of land – well it’s gorgeous, untouched, and a last bit of beauty. however, they’ve been approached to lease their land for fracking, and while it hasn’t been touched yet, they will lose their vacation home where their families grew up, all the memories, trees, houses, animals, all GONE when fracking starts. all for a few hundred bucks a month? not worth it. maybe for the people who live there and earn very little.

please do yourself a favor and watch Gasland. yes, it’s quite biased, but it also gives a lot of great information that will open up your eyes.

xoxo!

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26 J. Money February 1, 2012 at 11:15 am

@jesse.anne.o – I bring it up for more of a dicussion piece than a journalistic one ;) Which I love doing because people like you who are *smart* on the subject chime in and share! So really appreciate the links and strong advice, it def. helps w/ putting things in perspective.
@Corie – Very interesting indeed! Thanks SO MUCH for the long comment, that was awesome to read! It’s crazy the amount of effects that occur when something huge like this comes into town… wouldn’t have ever thought about traffic and full bars, etc. Very fascinating!
@Sarah – Wowww, it’s def. changing things up! I can’t even imagine how drastic that would feel living in a smaller town like that. Guess that’s how older coal mining/gold rush towns must have gone through too eh?
@jen – You got it :) I love watching vids about stuff like this – it totally piques my interest. And I obviously have a lot more learning to do! Haha…

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27 Kristin February 1, 2012 at 9:42 pm

I agree with a lot of the comments on this thread. I am a huge advocate for an anti-fracking bill in my state. Just because you can afford to move away if they decide to pay you big $$$, does not mean that the damages aren’t being done to the environment. So, what…because you have money to move away, its ok to compromise the aquifers that your neighbors use for drinking water? Money does not solve all problems – in fact it creates more than it solves at times. People, especially in the mid-west, whom may believe that fracking their land for $$$ is their ‘saving grace’ for more $$$ in their pockets have had nothing but problems and I am sure to this day, regret every second of it. The consequences FAR outweigh the $$$. Greed = no good and this fracking issue has a lot to do with that 5 letter word.

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28 J. Money February 2, 2012 at 10:50 am

Yikes, all good things to think about!

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29 Sense February 19, 2012 at 4:31 am
30 J. Money February 19, 2012 at 12:27 pm

YES! That is awesome! Good find :) I just shot it around Twitter and Facebook – those are the videos that are great at keeping our attentions, which is perfect for those people like me riddled w/ A.D.D. :) Thx for sharing!

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