Vermont: beneath the foliage, a natural gas bonanza?
Rutland, Vt. — Blessed with some of the world's most magnificent fall foliage, Vermonters surely know their good fortune. What they don't know is whether they have yet another fortune -- a storehouse of untapped natural gas in marketable quantities.
But the very possibility has property owners in the western section of this thinly populated, off-the-beaten-track state tingling with excitement.
So far, not a single drill bit has broken Vermont soil, but already the unfolding story has nearly as many twists and turns as a good mystery novel.
The number of property owners who have leased their lands to out-of-state energy speculators in recent months is known only to the speculators themselves -- and not all of them will talk to reporters. But the way some of the speculators have gone about their work has aroused the concerns of Vermonters all the way up to the attorney general.
The new interest here is largely kindled by promising finds of natural gas elsewhere in the Eastern overthurst belt, a geological structure formed by the thrusting of one thick layer of rock atop another by pressures deep within the earth. The belt ranges through the Champlain Valley of Vermont and New York. It bulges upward in northern Pennsylvania and tapers off gradually, ending in central alabama.
This isn't the first time that natural gas exploration has aroused public attention in Vermont. Ten years ago, a Rutland firm, Cambrian corporation, leased nearly 150,000 acres of publicly owned land in the northwestern corner of the state for the purpose of searching for oil and gas.
Whether Cambrian exercised its exploration rights is a matter of dispute between the company and the state. At any rate, the effort came to nothing, and now competing energy companies are thought to be eyeing the Cambrian acreage covetously. When Cambrian attempted to renew the leases last January, the state said "no." The matter now is in court.
Meanwhile, in nearby northeastern New York State, just south of Lake Champlain, leasing, seismic testing, and mapping of underground structures thought to hold gas and possibly oil are proceeding rapidly. That activity, which has been the subject of front-page stories in major newspapers, adds to the interest already building in Vermont.
Apparently, the most active leasing firm in Vermont to date has been Ohio Oil & Gas Company of Fowler, Ohio.
According to director of Exploration George Story, who operates from an office in Argyle, N.Y., about 20 miles from the Vermont line, Ohio Oil has "over 100,000 acres" under lease and plans on acquiring the mineral rights to as many as 900,000 more. Its payment terms: $1 per acre per year for 10 years, plus a 12 1/2 percent share of any gas produced on the landowner's property.
Those terms are described as fairly standard for such an agreement. But handouts distributed by Ohio Oil agents that held out the pssibility of up to $ 300 a day in royalties to landowner's if gas was struck on their land prompted some Vermonters to contact the attorney general's office.
On Aug. 5 the attorney general brought suit against three out-of-state energy companies -- Ohio Oil among them -- on the grounds that they were not licensed to do business in Vermont. According to the office of the Vermont secretary of state, Ohio Oil received the necessary license two days later. The suit later was dropped.
The attorney general since has issued a free pamphlet, "Landowner's Guide to Oil and Gas Leases in Vermont," advising caution in dealing with oil and gas company leasing agents. Copies are in wide distribution in western Vermont, aided by local newspapers that call attention to them through their farming columns. Organizations such as the Vermont Farm Bureau Federation also are unofficially advising members to seek the advice of attorneys before signing leases, according to executive director Deacy Leonard.
Assistant Attorney General William Griffith Denies that the state is opposed to oil and gas exploration."We make it clear in the pamphlet that we're not trying to discourage people from leasing," he says.
Mr. Story of Ohio Oil acknowledges that his firm had "a misunderstanding at the beginning" with the attorney general's office, but adds, "It seems to be getting better. We can answer any of those problems; it's all out on the table."
He claims the royalty value of a highly productive well to a landowner can be far greater than the $300 his agents in Vermont have been suggesting, "but we don't like to say that -- because if it doesn't happen, then we've got problems."
Story also hints that Ohio Oil is one of the parties interested in the Cambrian leases, adding: "We're looking at them. That's all I can say at the moment."
Another of the firms named in the attorney general's suit was Chase Oil Corporation of Howard City, Mich. That suit also has been dropped, but a Chase representative, reached by telephone, refused to discuss any aspect of his company's involvement in Vermont except to say, "We've got a few acres under lease."
Still another firm active in leasing Vermont acreage for exploration is Columbia Gas Transmission Corporation, a subsidiary of Columbia Gas System Inc. of Wilmington, Del. Columbia Gas Transmission took out a license last February to do business in Vermont and, according to vice-president William Chaddock, has "probably 20,000 acres" under lease, mostly as "spillover" from explorations in New York State.
Mr. Chaddock said his company was "one of the pioneers" in exploiting the Eastern overthrust belt but did not yet have long-term plans for Vermont. "We'll just have to wait and see," he said. "Obviously, things could change quickly."
State geologist Charles Ratte says the continues to receive inquiries from exploration companies about the oil and natural gas potential of Vermont. But he calls the state "virgin territory with a lot of strikes against it" and adds: "I think we're getting more attention than we deserve. There isn't that much that's geologically known that would lead me to spend much money here.
"There is natural gas in Vermont -- in water wells," he continues. "It's a nuisance factor."
Dr. Ratte also discounts the significance of a recent move to Exxon Corporation by a former University of Vermont geologist known for his studies of the overthrust belt in the Champlain Valley.
David Foster, president of the Natural Gas supply Association, says his group is "excited about the geology of the Eastern overthurst belt as a whole, but your definitely have to call Vermont a speculative resource at this point."