16 Jan The EPA, U.S. Fish and Wildlife Service, and New York Frack Moratorium
As if we didn’t have enough risk components to consider when evaluating our oil and gas interests, be sure to add the EPA and environmentalists right up there with the national and world economies, Middle East unrest, and the volatile commodity market. Caple Royalty Services works extensively to warn royalty owners about the risks inherent in the commodity marketplace – risks that imply nobody has the crystal ball for projecting oil and gas prices. There is always upside and downside commodity price potential. And the EPA/Environmental component brings the most irrational and unpredictable impact of all – the possibility that some mineral owners may never see their minerals developed in their lifetimes.
The idea that the EPA has become a major component of the risks impacting our royalty values is not irrational concern. I would submit that royalty owners could wake up one morning, read the newspaper, and literally realize the loss of any marketable value in their mineral rights as they read an article on a drilling or fracking moratorium in their area. This loss would not likely be a permanent loss, but as to current market value, it could render properties to have little cash value until legislation is passed to allow further development. Royalties received ten years from now have little value because of the discount factor for waiting that long to receive those funds.
One example of the EPA’s current work is found at this link: http://www.naturalgaseurope.com/epa-links-hydraulic-fracturing-with-groundwater-pollution. While Wyoming may seem remote to most of us, it is just another step toward environmentalists subjecting our rights to develop our much needed resources to their political agenda.
Another example would be the recent effort to make the Dunes Sagebrush Lizard an endangered species in West Texas and Southeast New Mexico as reflected in the article found at this link: http://www.mywesttexas.com/business/oil/article_e7f32d45-fab8-5025-afa9-26a00d768910.html
Can you imagine being one of the mineral owners in that area who wait to see if they will have the right to develop their minerals, while there is more concern among the environmentalists about a lizard than our rights as landowners, much less the nation’s need for cheap energy?
And finally to make a point, how would you like to be a mineral owner in New York state, knowing you have oil and gas worth millions, and you can’t monetize it because of a fracking moratorium? Maybe you are a farmer in debt, and the Marcellus Shale was your hope for avoiding bankruptcy, but now you wait on the whims of politics. None of us are immune to this kind of financial impact!
My purpose in this article is not to create panic or fear; but, instead, to assist royalty owners in understanding the risks inherent with owning substantial mineral assets that comprise an unwise proportion of your financial assets. Our mission is to assist you to manage your finances wisely by helping you understand how your mineral interest affects your financial well-being. Contact Caple Royalty Services for a free consultation about these and other royalty related issues.