Below are excerpts from an article by Calvin Tillman, the Mayor of Dish, Texas, a small town northwest of Ft. Worth in the heart of the Barnett Shale, a gas-producing shale formation that saw the pioneering

of the combination of hydraulic fracturing with horizontal drilling that has led to our own Marcellus Shale resource being available for gas production. Texas state laws and gas industry regulation differ from our

own, but Mayor Tillman’s experience with a variety of issues associated with gas development may be helpful to our community in the efforting to prevent similar problems.



When taking over as mayor of Dish, the first question that I was asked by local media outlets was to respond to the fact that our property values as a whole had decreased considerably from the past year. This is where small towns and cities get the bulk of their funding, through taxes on these property values. Therefore, if the taxable value goes down, naturally the revenue for the town does as well. Now I must say that I am opposed to unnecessary taxation, and therefore have done everything I can to make the taxes here

the lowest in the area, and succeeded. The town has doubled in size over the last couple of years, yet the taxable value continued to drop. It baffled me how essentially the total value of the town dropped every year, while we were experiencing massive growth. Not only did it baffle me, but it concerned

me. As most small towns do, we use the county tax assessor’s office to perform the tax collection service for us, so they were my first call. When they explained the mineral values were the cause of this drop,

and that was 60% of our tax base, I was again stunned. (Note: oil and gas mineral values are currently exempt from property tax in PA.) As you know, we are located in the middle of the Barnett Shale, and have

had a great deal of exploration in this area. So what would cause the values to continue to drop? This was also during the timeframe when natural gas prices were climbing to all-time record highs.

As I investigated the source of the decline in my town, it all started to become apparent. The property values not tied to minerals have continued to drop. I believe this is mostly due to the massive natural gas

compressors, pipelines and metering stations. They have all but made the surface property here worthless; however, that does not account for the minerals, which make up over half of our taxable values. I then found that on average, each well drilled loses 50% of its production after the first year. That is

a huge drop in production in only one year. So that tells me that the only way to maintain the same mineral value is to drill 50% more wells every year. So if you have ten wells this year, you would need to drill five more next year just to maintain the same production. There is another impact that can be recognized

quickly, and that is the effect that the exploration has directly on surface values. I am sure that there are some who believe the propaganda and are fine with having a well or pipeline in their front yard. However, regardless of what you may have heard, they are the exception not the rule, especially if you have a small population of mineral owners in your community. The average person will not purchase the property right next to a well site or compressor, providing they are made aware of it. Unfortunately, most of the

mineral owners in this area have kept the minerals and moved on to someplace else. However, when they have tried to sell their property with wells and pipelines on them, they have not been successful.

There have been four large tracts of property for sale in Dish for several years, which have attracted no real interest in purchasing the property. If you do manage to get some interest in the property, it will likely be for something like a pipe yard or something else that continues to devalue the surrounding

property. So getting quality growth in an area that has a large amount of exploration proves to be a large hurdle, if not impossible. Now we must consider the pipelines and appurtenances to these pipelines, such

as compressors or metering stations. These facilities have dealt us a very harsh blow without giving much in return. A gentleman who unfortunately lives next door to a compressor site sold off a piece of property to a developer who built 18 homes that average around $200,000 each. However, now that

the compressors are there, he has not been able to give his property away. He was only able to lease some of it to a company that stores pipe. That is the best he can do now, and that in itself is very low quality growth and makes the area even less desirable. Another illustration is a gentleman who

has had 63 acres for sale now for several years. He purchased the property as an investment, and now has three pipelines and an above-ground valve. He cannot give this property away. As he reaches retirement

age, his retirement has been stolen from him. This is no different than Enron or any other scandal, only it has been made legal thievery. There are two other pieces of property that have been for sale for several years, one of which is a large parcel of about 70 acres and the other about 10-20 acres. So how about all those mineral owners who have gotten filthy rich? Here in Dish there have been some folks who have made

a great deal of money on the minerals. However, most of them had lived here their whole life and had property handed down over the generations; otherwise they only have a small portion of the mineral rights. Therefore, there are only a few who are still alive who have a major portion of the mineral rights, and as

previously stated most of them have moved away to someplace where they do not have to deal with the mess that is left behind. This area was the beginning of the Barnett Shale; if I am not mistaken, the first

gas-producing well in the Barnett Shale was within 20 miles of Dish. Therefore, the minerals were purchased several years ago, and the leases were quite low in comparison to the massive leases signed last summer. The lease here is somewhere around 16% royalties with anywhere from $1,000 to $1,500

per acre, not the 25% and $25,000 per acre that have been publicized. So what does the 16% royalty get you? From what I understand, for someone who owns four acres and has a quarter of the mineral

rights, payments average less than $100 a month. Therefore, if you had one acre with 100% of the minerals, you would get something similar. Therefore, unless you have a massive amount of land with 100% of the

minerals, you are not going to get much money. If you are part of the lease, you must also consider the truck traffic, odor and noise, and you just might be fortunate enough to have a high-pressure gas pipeline run through your front yard. All of these things accompany the hundred bucks a month.

So to the point: Is the juice worth the squeeze? From my perspective as a smalltown mayor and a property owner, I say no! Not in the manner in which it is being done in Texas. I think that with minor regulation

it could provide the natural resources that we need without totally destroying the surface values and the growth of these areas. For example, there is no process in Texas for the laying or routing of pipelines. The

pipeline companies can literally put them anywhere they want without concern for surface owners and other natural resources. Municipalities do have some limited control over the placement of the wells, but

not the pipelines. (Note: In Texas, pipeline right of ways can be acquired through eminent domain. Only for transmission lines and by public utilities in PA as of now.) The items that were discussed were

only the things that are easily recognized. I am still learning the effects on air and water quality and exploring the possible health effects of this exploration. I have recently learned that the companies with the compressor site have found a loophole that allows them to virtually go without regulation

in regards to the air emissions they produce. I will share more on this subject as I figure out the specifics. I have the documents; I just have not digested everything yet. This also does not include the tens of

thousands of dollars in legal fees it takes to offer the citizens some minor protection from these companies. Nor does it take into account the hundreds of hours of my time spent researching and campaigning

for more regulation, for no pay. So you must ask yourself: Is the juice worth the squeeze? I can support any statement that was made in this posting; therefore, if you have more specific questions, please let me

know and I will clarify for you. To those of you who have visited Dish, I doubt you have any questions in regards to the impact the Barnett Shale has had on us.



Calvin Tillman

Mayor, DISH, TX