"Everything is in suspended animation," said Marian Schweighofer, executive director of the Northern Wayne Property Owners Alliance, a coalition of 1,800 landowners that leased 140,000 acres to Newfield and Hess. Most of those leases are in Wayne County.
Newfield and Hess told the landowners they would make good on a planned January payment totaling about $50 million. But payments scheduled through 2015 are now in doubt.
In May, the DRBC, a multistate agency that governs water use in the environmentally sensitive watershed, suspended new permits for all production wells, but allowed operators to continue to apply for exploratory wells while the regulatory review was under way.
Exploratory wells are designed to capture core samples of the deep shale formation so geologists can study the rock and determine whether it is worth developing. The leaseholders say that exploratory wells require little water, and that the DRBC has no business banning them because they don't pose a threat to the river.
But environmental activists, fearful that the exploratory wells could be converted into production wells, pushed the DRBC to extend the ban to all wells.
That put the property owners in a difficult position. The Northern Wayne Alliance has an unusual lease arrangement that provides its members with graduated payments over several years, rather than a lump payment up front. The drilling companies pay the landowners the bulk of their money only after they are able to complete exploratory wells.
Schweighofer said more than $200 million in payments is thrown into doubt because of the continued ban - as are any royalties the landowners would receive from production.
"All of that is now in jeopardy," she said.
Last week, the alliance said it would ask the DRBC to hold a hearing to reconsider the ban on exploratory wells.
Katherine O'Hara, a DRBC spokeswoman, said the agency had not yet received a formal hearing request and had no comment on the companies' decision to suspend the leases.
Contact staff writer Andrew Maykuth at 215-854-2947 or email@example.com.