After years of fighting with local governments for permission to expand gas production, this producer has shut in its wells.
“Lenape said it leases drilling rights on about 5,050 acres in the town, pays the owners $13,000 a year in gas royalties and provides them $65,000 a year in free gas.” With the wells shut in the town must look for new gas supplies, and landowners with wells on their properties will no longer receive royalties.
According to NGI’s Shale Daily, Lenape Resources has produced gas and fractured wells in the town for over 20 years.
Media driven panic over hydraulic fracturing has led to unprecedented harassment of energy producers–now this town must deal with the consequences.
Michael Joy of the law firm Reed Smith LLP, which represents Lenape Resources had this to say about the legislation companies must operate under; “what the Town of Avon has done in its so-called ‘grandfathering’ clause is to tell Lenape that its number of wells and its technology are limited, essentially saying, ‘You can operate — at a loss. You can build a Ford Pinto, so long as you use the Model-T technology.’”
When faced with the alternative of producing at a loss, Lenape has decided to not produce at all. In a state that gets 30% of its energy from natural gas, what would be result if more producers went on strike?