Interview: The Successful Partnership Between Ohio Farming and Natural Gas
Energy In Depth recently sat down – virtually, of course – with Belmont County, Ohio farmer Larry Cain to discuss the natural gas development taking place in his county and on his family’s dairy farm. Through the use of a landowner’s group, Cain and his neighbors developed a partnership with a local natural gas and oil operator that enabled them to have a say in the placement of wells, access roads and infrastructure and the environmental stewardship of these activities, and ensured fair compensation for everyone involved.
Perhaps more importantly, it allowed them to protect the legacies of the family farms in the community and give back to its residents in major ways. As Mr. Cain told us:
I think this development happening in Appalachia, you know the places in Pennsylvania, West Virginia and Ohio that kind of feel ignored by the big cities, is an amazing story to tell. So, for this to come to us, it’s incomparable – I think to myself, “how great is this story – people like us who are able to share in this.”
How did the landowner’s group get started?
It’s kind of a very long story…The Cain Family Farm has been part of the “cooperative” way of marketing our milk and purchasing our feed for a long time, so whenever we got together as a landowner’s group it was basically just an extension of that – all of us coming together for the common good, whether you were big or small, had a large interest or not. And we put it together late 2010-2011 because we were nervous about the activity here, and activity that we didn’t really know anything about. So, we really just wanted to come together to educate ourselves. And we invited a lot of different people to talk to our group that could help educate us.
Our group grew from 65 people in the first meeting to having about 2,000+ signatures signing the official lease agreement we sent in the end. We’d have maybe 600 people in a meeting, and while that may sound like a lot, it was mostly because people brought their entire family with them. That kind of shows how many people were involved and that it really required a lot of us.
Are the landowners in the group spread throughout different counties in Southeastern Ohio or is it only Belmont County?
We’re all in Belmont County. It originally started as just two townships, Goshen and Smith Townships, because that’s where the most interest was. Then as we had joining acreage and people who had acreage outside of those two townships, we decided to extend to Belmont County as a whole, but we limited it so parcels had to be within county lines.
It just evolved into a lot of people because we simply wanted to educate ourselves and understand the document we were signing. The financial side was definitely secondary. We thought that if we could educate ourselves first, then we could decide if it was a fair or reasonable amount. And we really wanted an operator to treat us like a partner. That was really key. We weren’t selling anything here, we were just leasing the mineral rights we owned that needed to be developed, and we needed an operator that was willing to do that in a responsible way. So that was key to us also – someone that would treat us as a partner because what we signed really was a business agreement.
What were some of the other things your group put into the lease agreement for protections for your land?
Surface use and water quality primarily – we had language requiring water sampling and testing further away from the well sites than what the state’s standards were. We’re kind of proud of that, actually. Later on, the state increased their testing distance also.
But a lot of it was just language that would enable us to work together. We wanted to be able to farm right up to where the well sites were, and some owners had acreage that was used for hunting that we wanted to maintain. So, for us, it was most important that production would fit in with our farms, homes and daily routines, and more broadly, fit in with the ways of life in southeastern Ohio.
How involved were you in deciding where the well was going to go on your property? And overall, did you feel like you were in the loop as different parts of the process were occurring?
Very much so. Our family and the others all felt very much a part of the process. We leased with Rice Energy, and they were very easy to work with. They were attentive, focused on being a good operator and included surface owners in every step of the decision making process. They spent a lot of time explaining the amount of ground they’d use, how they were going to cite the well sites, etc. And we have a lot of underground coal mining in this region, so they also had to be careful and work with the mining operators to make sure their operations didn’t interfere.
Having the coal mines underneath took away a lot of our say in the decision as to where the drilling site would be, but once the well sites were determined, we had almost 100 percent say in where the roads and everything else was going to go.
Did production ever interfere with your day-to-day farming operations?
Well, my dad owned the farm and was in his 80’s. If we hadn’t been so involved in the process and in educating ourselves, he would have been just fine not leasing the property and going on with his normal life. He didn’t look at this as something we needed. I was very proud of him because he was very involved.
We have about 288 acres and I believe they used about 26 for the development, including two pads, access roads and pipelines. It took up about one-tenth of our farm, and for dairy farming operations, that’s tough. We need to use every acre we have. But we also knew that the signing of the lease could lead to temporarily losing some of our property, but they worked close with us through all of that. We were able to continue farming right up to the edge of the pad. In fact, you can sit right on the edge of our farm and basically put your toes on the pad.
We need to use every inch, every acre we can to continue to support the dairy farm, and Rice was very willing to do that. They understood that these two industries can coexist and had to work together to be able to do so. Both sides did the best they could to make this work, and I think that’s all we can really ask for.
Now, everything’s been totally reseeded and turned over back to us. The spots they aren’t using have all been grazed upon and are in the process of reclamation. The roads are still there, the pads are still there. But all the pipelines have been reseeded and in total, we only lost one years’ worth of crop production during pipeline construction and reclamation – so we were really pleased with that outcome. Of course, the pads and the roads are going to be there for quite some time, but everything else fits.
There are 11 wells in total, correct? How long did it take them to go from construction to production of those wells?
I think they started actual pad construction in March of 2014. They started drilling the first five wells on one of the pads as soon as the construction was complete, which was around June 2014. Those wells were drilled to the southeast and were in production for about three years before the next set of wells was developed. Then, they came back early 2018 and drilled the other six wells to the northwest and put those into production last year. So, really, the activity ebbs and flows. It was about a 9-month span of drilling and completions each time.
Once again for us – and I think this is how everyone kind of shares in the “disruption” – it’s kind of on the backside of the farm. We didn’t really hear the noise and didn’t see the traffic, but I know some other owners on the other side did. So everyone kind of shares a little bit of the burden. At first you see truck traffic, definitely, but then it’s just a few pickups here and there. But even the increased traffic benefited the communities – they came in and were taking care of the roads and helping out the communities. I know they’d sponsor firework shows, donate money for picnics, and help the fire and police departments. So yeah, everyone share’s a little bit of the burden but at the same time everyone gets a bit of the benefits, too. People tend to think of it as only the farmers benefiting from the agreement, but, in reality, it’s a whole lot more people than that.
Touching on the financial benefits – you have mentioned that the landowner’s group has been doing charitable donations. Could you talk a little bit more on how that came about? And what you have all been able to do since working with Rice?
Yeah, that’s something we’re very proud of. In the beginning, there were about nine of us on a committee that worked countless hours to ensure every dollar that the company was willing to spend would go back to the landowner. We were very against the groups where the attorneys or leaders made a certain percentage – we didn’t want that. The committee was volunteering, so they had no financial gain. We knew the [oil and natural gas] companies were willing to pay the attorney or agent fees, but we always said that if we ever did lease we’d like the company to give that commission to a charitable fund. So that’s what we did, and the landowners also contributed to it, which started a charitable fund in the area to benefit Belmont County.
Rice then partnered with us on starting the charitable fund to help the communities we lived in and they worked in by contributing the first $25,000. The landowners came up with an additional $100,000, and we’ve been off and running since. We’re in our fourth year of granting. We’ve raised about $600,000 and given about $400,000 of that to communities.
The way I’ve always looked at it is this area has always been a charitable area – even before oil and gas. We just didn’t have the money to give in the past, so we’d donate our time. But now that we have the money, we feel it is our responsibility. If we had the money, we should give. It’s an obligation. If you’re blessed, you have the opportunity to give back. So that’s what we’ve done. We’ve given it to the county to help people because we wanted everyone to benefit.
Another good thing to come out of all this is that this is going to go on for generations. My family doesn’t live any more extravagant than they did before, but we are providing more for the next generation. I think even after the wells run out, what drilling gave to my community is a better way of life for generations to come.
It’s changed the area in a way that you almost can’t see. I tell everyone that it’s really taken a burden off of us. Before, they were struggling to keep the farm going with aged equipment and unsafe working facilities. We now have a cushion, a safety net. It’s really relieved the stress from that day-to-day farming, and the highs and lows in milk prices, things like that. And I’ve seen that with other farmers, too. They enjoy farming now. People can farm the way they want to farm. It’s just taken a weight off of us. It’s really just been about providing happiness for future generations.
Even though we enjoyed life before all of this, it’s just made life more enjoyable – and that goes well beyond just farmers.