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Property owners in drilling case testify

April 19, 2012
By DEANNE JOHNSON - Special to the Herald-Star , The Herald-Star

LISBON - Four farm families in the western end of Columbiana County testified Wednesday in Columbiana County Common Pleas Court to explain why they have denied access to their properties to a company performing seismic testing for shale gas drilling companies.

TGS-Nopec Geophysical Co., which has a contract with Chesapeake Energy to perform seismic testing, has filed an injunction attempting to force the four property owners to allow the testing. The company's attorneys, Brent Barnes and Bruce Smith, as well as Wayne Millice, a vice president of onshore multi client at TGS, attempted to explain why they believe they have a right to perform the testing.

Smith contended the case is the first of its kind in Ohio, which could lead to other implications for other cases. In other states - Texas, Oklahoma and Louisiana - Smith said rulings consistently allowed for seismic testing.

Millice testified that here, his company has hired another company, Cougar Land Services, to go to property owners and ask them to sign permits to do seismic testing. The company reportedly has sent out 6,500 permits in the county with a 95 percent success rate getting the signatures, and he said the property owners are much more cooperative when they have signed.

However, the four defendants in the courtroom were among those who did not sign the permits. Instead, TGS-Nopec's attorneys attempted to prove their gas leases allow for the seismic testing anyway. Two of the leases - the ones governing the properties of Gary and Eleanor Carter and Larry Fryfogle - were written in the 1950s. Their attorneys, Ken Vandy and Scott Zurakowski, argued the leases do not give an expressed right for seismic testing.

"(TGS) argues it has an implied right to explore," said Zurakowski, representing the Carters. "There is no implied covenant. The right is not granted in this lease."

Smith countered that by the leases granting the right to explore the properties for oil and gas, there is the right to do seismic testing.

"You are granting them the right to develop the resources," argued Smith. "Should we deny them the use of new technologies?"

During the testimony of Joe Brown Jr., a representative of Cougar Land Services, Brown claimed Fryfogle threatened to shoot their employees and the next person who came out to his property.

Fryfogle testified the woman came down there every week for six weeks insisting he had the sign the permit. He repeatedly told her he did not have to.

"I used farmer's language," Fryfogle said. When his attorney, Vandy, asked him whether there was a concealed weapon or he had shown her a gun, Fryfogle denied it. "She was gone," he said. "She had the nerve to send another guy back three weeks later."

Fryfogle has four properties and three separate lease agreements, one of which was signed by his parents. He said in his case the lease agreements only cover gas storage. He had agreed to go in with other neighboring property owners to provide a bigger acreage track for another lease deal, but said he has no intention of signing anything allowing them to drill on his property.

One of his neighbors, Dennis Smith, contended he allowed the seismic testing on his property and was promised it would cause minimal damage which would be repaired so he would never know they had been there. However, Smith said he now has ruts and damage to his alfalfa fields, as well as places where there are mounds of clay that he will strike with his farm equipment.

Millice testified to the seismic testing process they are using in the county, which includes drilling a hole 30 feet down and burying an explosive with a radio controlled detonator in the bottom. Those holes are 240 feet apart. Then a few weeks later a recording crew sets up equipment to read the shock waves and the explosives are detonated. Utilizing this technique Millice intends to create 3D charts showing what lies beneath the surface up to 12,000 feet down.

Millice was pushed by attorneys as to the value of his company's contract with Chesapeake. At first he claimed it was confidential, but when requested to answer the question by Judge C. Ashley Pike, Millice said they will receive $75,000 per square mile.

However, with large property owners like the four refusing to get involved, Millice said there will be areas where the data is incomplete or with low resolution. This makes the data less desirable and in order to make money on the project TGS planned to not only sell the information to Chesapeake but also to other companies.

Because the four property owners are not allowing the seismic testing, Millice said his company will be losing $30,000 per day while crews are on standby. The 200 people ready to do the testing are already in the Alliance area. TGS has invested $40 million in the project, according to Millice.

The other two defendants, the Golden H. Acres farm and James and Janet Zimmerman, signed recent gas drilling leases. However, Jay Herron of Golden H. Acres testified he researched the issue before convincing his parents and grandparents to sign leases. The 20-page leases created by their attorney, Bill Williams, states it grants rights exclusively to Chesapeake, which Herron said he believed meant Chesapeake and no one else.

He also said he researched on Chesapeake's website about seismic testing and it only explained Vibroseis trucks, which thump the ground to send shock waves. Herron said the website said nothing about explosive seismic testing.

Barnes challenged Herron that the website was talking about another type of shale elsewhere and that type of testing does not work here. Bruce Smith said the lease states it allows seismic testing and you should not go beyond the "four corners of the page."

However, Frederick Coombs, the attorney for the Zimmermans and Golden H. Acres, argued the seismic reference is ambiguous, not even having testing with it. It does not explain what type of seismic activity is allowed.

Coombs contended in his closing statement that TGS never saw the leases for the properties before signing the contract with Chesapeake and did not know what was in them.

Instead he indicated they intended to "bully landowners" to get their project done.

Pike assured both sides he would issue a ruling on the injunction by Friday and fax them all copies. The three attorneys representing the four property owners all made a motion the injunction should be denied based on the failure of TGS to prove it has a right to be on the properties.

 
 

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