The response by agriculture/natural resources and community development Extension educators to shale development in Ohio has been proactive. There is a need, however, to understand the impact that shale development is having broadly on families and communities and specifically as it relates to lease payments and the perceptions and realities of resource windfalls or sudden wealth. This article presents the preliminary results of a qualitative study. In the course of data analysis, themes emerged around the topics of money, family and community life, and land. A discussion of the role of Extension professionals is provided

Bates, James S.

Loy, Polly Wurster

English

Clemson University: TigerPrints

Journal of Extension Volume 54 Number 6 Article 7 12-1-2016 Windfall Wealth and Shale Development in Appalachian Ohio: Preliminary Results James S. Bates Ohio State University, bates.402@osu.edu Polly Wurster Loy Ohio State University, loy.1@osu.edu Recommended Citation Bates, J. S., & Loy, P. W. (2016). Windfall Wealth and Shale Development in Appalachian Ohio: Preliminary Results. Journal of Extension, 54(6), Article 7. https://tigerprints.clemson.edu/joe/vol54/iss6/7 This Research in Brief is brought to you for free and open access by TigerPrints. It has been accepted for inclusion in Journal of Extension by an authorized editor of TigerPrints. For more information, please contact kokeefe@clemson.edu. December 2016Volume 54Number 6Article # 6RIB9Research In BriefWindfall Wealth and Shale Development in Appalachian Ohio:Preliminary ResultsAbstractThe response by agriculture/natural resources and community development Extension educators to shaledevelopment in Ohio has been proactive. There is a need, however, to understand the impact that shaledevelopment is having broadly on families and communities and specifically as it relates to lease payments and theperceptions and realities of resource windfalls or sudden wealth. This article presents the preliminary results of aqualitative study. In the course of data analysis, themes emerged around the topics of money, family andcommunity life, and land. A discussion of the role of Extension professionals is provided.  IntroductionOhio has a long and lucrative history of natural gas and oil recovery that dates to the mid-1800s. The recentdiscovery of large gas- and oil-rich shale deposits and the perfection of horizontal drilling and fracking extractionmethods have led to a boom in the energy industry in Ohio and many other U.S. states. Gas and oil shaledevelopment is occurring in more than 15 states, with more states planning exploration and development(Romich, Bowen-Ellzey, Moss, Bond, & Civittolo, 2015). The response by Ohio Extension educators has beenproactive and, going forward, will continue to emphasize critical topics related to shale development in thecommunities involved. At the time of this writing, agriculture/natural resources and community developmenteducators had collaborated to present 213 educational events to over 16,000 participants since mid-2011. Theseevents have focused on general education, leasing, pipeline easements, legal issues, public policy, impacts,taxes, and other topics. Three of the events included a presentation by family and consumer sciences educatorsabout the impact of sudden wealth on families and individuals. As families realize the profits of lease agreementsin the return of royalties, the field is wide open for exploring the next phase of the impact of shale developmentby investigating the social issues affecting families and communities in the face of individual monetary windfallson such a large scale (Romich, Civittolo et al., 2015).In 2014 we initiated a research study in Belmont County, Ohio, to explore landowners' experiences related toshale development on their properties and in their communities. We conducted in-depth interviews with 30landowners, inviting them to "tell their stories" while prompting them with general questions. A major focus ofthe project, which is ongoing, has been to understand how payments to landowners for the lease of their mineralJames S. BatesAssistant Professor,Field Specialist—Family Wellnessbates.402@osu.eduPolly Wurster LoyExtension Educator,Belmont Countyloy.1@osu.eduOhio State UniversityExtension, Family andConsumer SciencesThe Ohio StateUniversityColumbus, Ohiorights has been viewed and experienced. Newspaper reports and anecdotal stories from landowners havesuggested that some lease payments are a windfall of wealth for landowners (Hannesson, 2000). This topic hasyet to be explored adequately in the context of Ohio's shale boom or nationally, leaving many questionsunanswered (Peek, Penn, Sanders, Shideler, & Ferrell, 2015). In this article, we present preliminary results fromthe study and discuss the possible roles Extension professionals might play in working with landowners who livein regions of the United States that are experiencing shale development.MethodResearch participants varied relative to age, amount of land owned, marital status, number of children andgrandchildren, and the timing of when they had signed mineral rights lease agreements with energy companies.Participants were recruited through professional and personal associations with the second author and throughsnowball sampling. Semistructured, in-depth interviews were conducted. In one instance, certain landownerswere interviewed together because they were members of a cooperative land agreement. The interviews wereaudio recorded and transcribed.The interview process coincided with the "honeymoon" phase of development, meaning that leases had recentlybeen signed and landowners had recently received their lease payments. For some, that payment wassubstantial; the highest amount received by an individual landowner exceeded $5 million. For most, no drillinghad occurred and pipeline easements had not been negotiated. There was a feeling of anticipation that as theseadditional phases of development occurred, future royalty payments could be substantial.ResultsThree major themes identified during a preliminary analysis of the data center on (a) money received from theenergy companies, (b) the impacts of shale development on family and community life, and (c) landowners'connections to and concerns about the land (see Figure 1). Quotations from interviewees included herein areillustrative of the sentiments of landowners.Figure 1.Themes of Landowner-Identified Issues Related to Shale DevelopmentResearch In Brief Windfall Wealth and Shale Development in Appalachian Ohio: Preliminary Results JOE 54(6)© 2016 Extension Journal Inc. 1MoneyMost landowners interviewed who had signed lease agreements with energy companies had received a leasepayout they characterized as a substantial amount; however, lease payments are always based on amount ofacreage lease. Often the landowners viewed the money as a good thing for themselves and their families,although most stated that because of their money management skills, they did not "need" the money to survive.However, dealing with the money in a way that preserved their wealth and did not negatively affect theirlifestyles was an important consideration. Many expressed concerns about the potential effects of abundantmoney on their children or grandchildren, with one landowner making the following statement:We've already established a trust. We have age limits on how much they can get at acertain period of time. They can do what they want to do, obviously, after we're gone.Ten percent of it goes to charity. No matter how much is in there, 10% is gone. Oncewe start getting royalties—and we're assuming that will happen—I'm sure we will dothings differently too, like set up maybe different foundations and things that themoney can be used for, because we don't know what all this is going to be worth. Onceagain, we certainly don't think that a lot of money being given to someone without[their] earning it is a good thing.Family and Community LifeA few landowners expressed concerns about increased truck traffic in their communities and the resulting impactson local infrastructures and safety of the roads. In fact, members of one landowner family stated that they hadsold their farm in the county and were moving out of state to avoid such traffic. In addition, landowners fearedthat long-time friendships with neighbors might turn into animosities and jealousies due to imagined or realinequities in monetary distributions. Others expressed concerns about the impacts shale development and theassociated money would have on family relationships. One landowner related the following details about theprocess of negotiating with her two sisters (pseudonyms have been used so that anonymity is maintained):It went smoothly in that it's very clear that Barbara and I only have 25% interest inthe land and my aunt had bequeathed 50% interest to my sister Judy since she wasthe goddaughter, and that's just the way it's been. We could get all bent out of shape,but this is what it is. I think I myself have a more emotional attachment to thefarmhouse and the barn and the 3 ac, the home place that my sister Judy owns 100%of, and to me, because it needs a lot of work, 100% of the gas money should go tothat plot. But she has a husband and two kids, and she doesn't see that. She sees thatas a money pit, and I have to get over that. There is my business, and there is theirbusiness, and there is God's business, and that house and the barn is not my business.My aunt Phoebe gave it to Judy for whatever reason. . . . My mom hates to see thebarn and the home she grew up in fall into disrepair. Both of us together have kind oflet go of it. It's Judy's business. Judy has been paying the taxes.LandStudy participants indicated having strong connections to the land and concerns for its care. These sentimentsResearch In Brief Windfall Wealth and Shale Development in Appalachian Ohio: Preliminary Results JOE 54(6)© 2016 Extension Journal Inc. 2were expressed most strongly by landowners who had made their livings from the land and by those whosechildren had grown up on the land. An emotional connection to the land existed, as though the land were abenevolent parent who had taken care of these families. Many farm families had even made improvements totheir land or their families' farm businesses as a result of lease payments. One family had established a trust andhad included in the documentation "little comments" conveying the opinion that their children "should alwayshold onto the land." Another landowner expressed strong feelings about the land with the following comments:These old men that own this one place where the [energy company] is just tearingeverything up, I don't know what they think. . . . there is no way [the energycompany] would do that to my farm for any amount of money. They are three old men,and . . . they were complaining to one of the neighbors one time about [how] theywent on their four-wheeler up to this well pad and . . . were watching [the energycompany's activities]. Somebody from [the energy company] told them to get the helloff, [that] they weren't to be on that place. I thought, "Anytime that anybody comeson my farm and tells me to get off anyplace that I own, it would be a cold day in youknow where." They paid [one neighbor of mine] for 3 ac of land for this well pad, [and]they have taken a whole field. He was complaining about it to them one day, [and]they got real nasty with him. They would not do that with me. There's no way.The Role of Extension ProfessionalsThe web of impact from the growth of the shale gas industry is complex and far reaching and is complicatedfurther by recent dramatic fluctuations in global energy prices, which affect rates of development and financialreturn for landowners. Whereas some effects are obvious and immediate, such as the impacts of leases andeasements that protect landowners and their properties, other effects are not so tangible. Extension professionalsneed to be at the forefront of the associated research and educational outreach by anticipating the needs ofresidents in shale development areas across the country. Identifying best practices, risk and protective factors,and social trends is the next step for educational efforts in the face of the many societal changes that willaccompany the continued growth of the shale industry. When asked what a family or leaders within a countyshould think about or plan for, one landowner gave the following response:I think if I was doing anything through Extension or schooling or whatever, I wouldwork hard at educating people to take this opportunity to turn it into something good. .. . You don't have to own acres to take advantage of this [opportunity]. Anybody thathas any way of visioning this or planning for this can do well here. . . . How do weprepare our young people to take advantage of this. . . . Educate, educate. Educateyourself.Family and consumer sciences professionals, in particular, will have opportunities for a wide variety ofprogramming related to family finance, intergenerational wealth transfer, financial investing, interpersonalrelationships, family issues, community dynamics, and so on. Changes in demographics and population numbersin these mostly rural counties will generate a need for interventions useful to schools and social services asprofessionals plan for expected changes and organize services accordingly.ReferencesResearch In Brief Windfall Wealth and Shale Development in Appalachian Ohio: Preliminary Results JOE 54(6)© 2016 Extension Journal Inc. 3Hannesson, R. (2000). Resource windfalls: How to use them. OPEC Review, 24, 195–209.Peek, G. G., Penn, C. J., Sanders, L. D., Shideler, D., & Ferrell, S. L. (2015). The oil and gas boom: Basicinformation about oil and gas activities for Extension professionals. Journal of Extension, 53(3) Article 3TOT3.Available at: http://www.joe.org/joe/2015june/tt3.phpRomich, E., Bowen-Ellzey, N., Moss, M., Bond, C., & Civittolo, D. (2015). Building sustainability in gas- and oil-producing communities. Journal of Extension, 53(3) Article 3IAW1. Available at:http://www.joe.org/joe/2015june/iw1.phpRomich, E., Civittolo, D., Bowen-Ellzey, N., Bonnell, J., Bates, J. S., Moss, M., . . . Bond, C. (2015). Buildingsustainable communities in Ohio's shale region: Leveraging manufacturing clusters and local assets with strategicplanning. 2015 OMEGA Report: Community and Energy Series Technical Report 15-03. Columbus, OH: The OhioState University.Copyright © by Extension Journal, Inc. ISSN 1077-5315. Articles appearing in the Journal become the property ofthe Journal. Single copies of articles may be reproduced in electronic or print form for use in educational ortraining activities. Inclusion of articles in other publications, electronic sources, or systematic large-scaledistribution may be done only with prior electronic or written permission of the Journal Editorial Office, joe-ed@joe.org.If you have difficulties viewing or printing this page, please contact JOE Technical SupportResearch In Brief Windfall Wealth and Shale Development in Appalachian Ohio: Preliminary Results JOE 54(6)© 2016 Extension Journal Inc. 4

Windfall Wealth and Shale Development in Appalachian Ohio: Preliminary Results

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Windfall Wealth and Shale Development in Appalachian Ohio: Preliminary Results

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