For those who follow issues related to the recovery of natural gas from shale, a recent article in the UK Telegraph is of interest. Writer James Delingpole compares the campaign by unions/bureaucrats/environmentalists against shale development with the war against the fictional Rearden metal in the dystopian novel, "Atlas Shrugged." While not mentioning Marcellus Shale directly, Delingpole's article and the issues related thereto have a direct bearing on Pennsylvania real estate and the Pennsylvania economy.
Showing posts with label Marcellus Shale. Show all posts
Showing posts with label Marcellus Shale. Show all posts
Sunday, August 18, 2013
Sunday, January 27, 2013
Marcellus Shale (and other) drilling in Pennsylvania from 2005-2012
The U.S. Energy Information Administration has produced this 21 second film to show the location of natural gas wells drilled in Pennsylvania between 2005 and 2012. Black dots represent vertical wells, while red dots represent horizontal wells and are used mostly in Marcellus, Utica, and Geneseo/Burket shale formations located in the northeast and southwest portions of Pennsylvania.
There is no sound to the video.
The geographic areas where drilling is shown (especially the horizontal wells) correspond with increased economic activity and real estate prices with stronger support.
Compare Powerlineblog's assessment of corresponding areas of New York, where Marcellus Shale drilling has been restricted.
There is no sound to the video.
The geographic areas where drilling is shown (especially the horizontal wells) correspond with increased economic activity and real estate prices with stronger support.
Compare Powerlineblog's assessment of corresponding areas of New York, where Marcellus Shale drilling has been restricted.
Sunday, October 23, 2011
Marcellus shale drilling vs. mortgage company restrictions
As natural gas drilling becomes more common in Pennsylvania and elsewhere, lenders are becoming more reluctant to make loans and accept mortgages on properties on which natural gas drilling takes place. Lenders have placed restrictions on natural gas drilling as a condition of approving loans. Lenders do this out of fear of liability for environmental damage or that environmental damage will reduce the value of the mortgaged property.
These new lending policies have taken borrowers and real estate sellers by surprise, according to last week's New York Times:
Some lenders have placed outright prohibitions on drilling on mortgaged properties, while others require the owners to obtain permission from the lender. Other lenders will not approve loans if natural gas drilling already takes place on the property.
The Marcellus Shale development has tremendous potential to increase property values, benefit Pennsylvania's economy and blunt the effect of skyrocketing fuel prices. But property owners especially must be aware that signing a natural gas drilling lease might limit a buyer's ability to obtain a mortgage to purchase the property in the future. The income and resulting increased value from the gas lease should be weighed against potential borrowing problems of future buyers and the resulting decrease in price resulting from a restricted pool of buyers.
These new lending policies have taken borrowers and real estate sellers by surprise, according to last week's New York Times:
As natural gas drilling has spread across the country, energy industry representatives have sat down at kitchen tables in states like Texas, Pennsylvania and New York to offer homeowners leases that give companies the right to drill on their land.
. . . .
But bankers and real estate executives, especially in New York, are starting to pay closer attention to the fine print and are raising provocative questions, such as: What happens if they lend money for a piece of land that ends up storing the equivalent of an Olympic-size swimming pool filled with toxic wastewater from drilling?
Some lenders have placed outright prohibitions on drilling on mortgaged properties, while others require the owners to obtain permission from the lender. Other lenders will not approve loans if natural gas drilling already takes place on the property.
The Marcellus Shale development has tremendous potential to increase property values, benefit Pennsylvania's economy and blunt the effect of skyrocketing fuel prices. But property owners especially must be aware that signing a natural gas drilling lease might limit a buyer's ability to obtain a mortgage to purchase the property in the future. The income and resulting increased value from the gas lease should be weighed against potential borrowing problems of future buyers and the resulting decrease in price resulting from a restricted pool of buyers.
Monday, November 23, 2009
Natural Gas prices linked to real estate litigation; Marcellus Shale
The consequences of the ongoing devaluation of the dollar are far reaching and hard to predict. One such consequence has been felt by Realtors attempting to sell raw land in rural areas of Pennsylvania (and other states).
As the government printing press weakens the dollar, prices of commodities, such as fuel, increase. We saw just such a skyrocketing price effect in 2008 with the price of gasoline (and other fuels). When fuel prices shot up, there were many casualties, such as the contracts between real estate sellers and their listing agents. Sellers that had previously signed listing contracts with Realtors to sell their raw land now found themselves with an opportunity. Natural gas prices had risen along with other fuel prices. These rising natural gas prices had made raw land more valuable in many parts of rural Pennsylvania. While this may have seemed to be a welcome surprise to many landowners, many of their properties had been previously listed for sale at pre-inflation prices.
The only way for some land owners to take advantage of the rising natural gas prices was to break their contracts with listing agents (or even sales contracts with buyers). Litigation between Realtors, owners and buyers often resulted.
Keep in mind that fuel prices rose, creating this situation, despite the discovery of 500 trillion cubic feet of natural gas in Pennsylvania and neighboring states (otherwise known as the Marcellus Shale) during roughly the same period as the general commodity price inflation.
Only when the dollar is being devalued at an alarming pace can commodity prices rise despite discovery of tremendous new supplies of said commodity. That same dollar devaluation that caused (1) natural gas prices to react unpredictably and (2) unforeseen litigation will continue to create unpredictable consequences for the economy as a whole, especially the real estate market.
Marcellus Shale - H/T Lycolibrary.org
As the government printing press weakens the dollar, prices of commodities, such as fuel, increase. We saw just such a skyrocketing price effect in 2008 with the price of gasoline (and other fuels). When fuel prices shot up, there were many casualties, such as the contracts between real estate sellers and their listing agents. Sellers that had previously signed listing contracts with Realtors to sell their raw land now found themselves with an opportunity. Natural gas prices had risen along with other fuel prices. These rising natural gas prices had made raw land more valuable in many parts of rural Pennsylvania. While this may have seemed to be a welcome surprise to many landowners, many of their properties had been previously listed for sale at pre-inflation prices.
The only way for some land owners to take advantage of the rising natural gas prices was to break their contracts with listing agents (or even sales contracts with buyers). Litigation between Realtors, owners and buyers often resulted.
Keep in mind that fuel prices rose, creating this situation, despite the discovery of 500 trillion cubic feet of natural gas in Pennsylvania and neighboring states (otherwise known as the Marcellus Shale) during roughly the same period as the general commodity price inflation.
Only when the dollar is being devalued at an alarming pace can commodity prices rise despite discovery of tremendous new supplies of said commodity. That same dollar devaluation that caused (1) natural gas prices to react unpredictably and (2) unforeseen litigation will continue to create unpredictable consequences for the economy as a whole, especially the real estate market.
Marcellus Shale - H/T Lycolibrary.org
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