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Published: Sunday, 2/3/2013

Amish riding wave of gas-drilling boom

Leases could help sustain agrarian tradition, experts say

BY ERICH SCHWARTZEL
BLOCK NEWS ALLIANCE.
A Chevron rig drills for natural gas behind the property owned by the Mast family of New Wilmington, Pa.  Energy companies are leasing land throughout western Pennsylvania and eastern Ohio where Amish families like the Masts live. A Chevron rig drills for natural gas behind the property owned by the Mast family of New Wilmington, Pa. Energy companies are leasing land throughout western Pennsylvania and eastern Ohio where Amish families like the Masts live.
BLOCK NEWS ALLIANCE/ANDREW RUSH Enlarge

NEW WILMINGTON, Pa. — Late last year, representatives from one of the world’s largest energy companies came to the home of Lydia and Sam Mast. The company was planning to drill a gas well on an adjacent property and needed to test the Masts’ water.

By November, the access road had been paved and the rig was built, drilling day and night into the shale formation that lies thousands of feet below the Masts’ seven acres.

“That was the first I knew there was a company called Chevron,” Mr. Mast said.

The Masts and many of their neighbors are Amish, part of a community that’s lived in white homes along New Wilmington’s back roads for decades. They shun technology and embrace a family-based, agrarian lifestyle, even though many can’t afford to farm anymore and instead support their families with construction businesses and shops run out of their homes.

A new source of money, however, has come to the Amish of western Pennsylvania and eastern Ohio.

They own some of the most coveted land in the nation, and rapid-fire leasing by gas companies is creating millionaires — and disturbing communities worried about greed and envy.

Though many wells have yet to be drilled, the signing bonuses that come with leasing land are life-changing sums. Experts say the gas drilling could subsidize a farming career that hasn’t been economically viable for the Amish for a long time — a technological means to an agrarian end.

ne sect in the news, the Mullet community of Bergholz, Ohio, uses a $3.5 million windfall from gas leases to pay for basic living expenses and legal bills while its leaders serve jail time for high-profile beard-cutting practices that led to hate-crime convictions.

The hydraulic fracturing technology unlocking the oil and gas reserves under their land is the latest energy activity to enter the Amish community, which has long allowed shallow well drilling and strip mining. As a result of the so-called fracking activity, Amish homesteads are joining English landowners groups and fielding appearances from landmen eager for a signature, all surprised participants watching their tiny tight-knit communities become mini-boom towns.

Good times

The gushers in Carroll County, Ohio, are so famous they make cameos in investor reports. Chesapeake Energy, the main driller in the county, cites their production numbers in pitches to shareholders.

Carroll County has issued nearly 200 permits for drilling, almost three times more than any other county in Ohio.

“If this is a nine-inning baseball game, we’ve just finished up the national anthem,” said Gary Harris, special project coordinator at the Carroll County Chamber of Commerce.

Rex Energy has a permanent storefront next to a hearing-aid repair shop in the town square. Farmers drive Bentleys. The local Ponderosa is said to be the chain’s third-most popular franchise in all of Ohio.

Officials have even discussed installing a buggy lane on the roads to help horses keep a distance from the new truck traffic.

Many of the Amish farms of New Wilmington, Pa., have shallow wells that have been on the property for decades. Recent drilling targets deeper gas formations such as the Marcellus and Utica shale. Many of the Amish farms of New Wilmington, Pa., have shallow wells that have been on the property for decades. Recent drilling targets deeper gas formations such as the Marcellus and Utica shale.
BLOCK NEWS ALLIANCE/ANDREW RUSH Enlarge

OAmishman John Troyer lives about five miles from some of those gushers. He owns a construction business and his family runs a trade post that sells board games and paperbacks. In 2007, when shale drilling in Pennsylvania was scarce and in Ohio was nonexistent, he was approached about leasing his mineral rights.

It seemed like free money for parts of the land he wasn’t even using. Mr. Troyer leased with Great Lakes Energy Partners for $10 an acre. He made $430 on the deal.

A couple of years later, he was building a house for a Pennsylvania man who was moving to Ohio. When they started talking about the shale drilling that had proliferated across the neighboring state, Mr. Troyer was astonished by what he heard.

“They were saying like $3,000 an acre for out there. I didn’t believe him at all. Well, now it’s just about doubled that here,” he said.

With the potential for the Utica Shale now known a couple of years later, neighbors in the community of about 100 Amish families have signed deals worth $2,500 an acre. Later, he heard at church about some netting nearly $6,000 an acre.

“In a way you kind of think you’re getting ripped off,” he said. His original lease was swapped by several firms and expired in 2012, but a clause renewed it automatically for another five years even though no drilling had begun.

Still, the boom that surrounds Mr. Troyer’s 43 acres is so strong that it made it easier for him to accept the meager $430 he made from leasing his land.

Business at his construction company is strong, thanks in part to Carroll County residents who can now afford to build new houses. Even the traditionally slow winter months have seen an uptick in activity.

“There’s a lot of work out there, and some of it is definitely because of the gas,” he said.

The simple life

Like many in the Amish community, Mr. Troyer owns a substantial plot of land with horses and chickens on it but doesn’t make his money farming.

Ask 10 Amish people what the ideal career is and nine will say working on a farm, said Erik Wesner, author of Success Made Simple: An Inside Look at Why Amish Businesses Thrive and the creator of www.AmishAmerica.com.

The percentage of Amish farmers who can earn a living off the land has plummeted, and alternative careers have their drawbacks: Construction takes the father away from the family, and tourism invites the English world in so freely.

Millions of dollars in leasing bonuses and royalty checks, though, could start to subsidize a return to that idealized, agrarian lifestyle, Mr. Wesner said. By allowing gas drilling on their property, farmers could return to working the land without the worry of profiting from it.

“The technological mix that the Amish accept is quite rational with the goals of what they hope to preserve in the community,” he said.

Andy Byler of New Wilmington had three days to decide whether to join thousands of Amish and English property owners in the Mount Jackson Landowner Group, which represented landowners across several counties. He leased his 90 acres for $2,750 per acre, using the money to pay off bills and the farm.

The rest of the money was invested with the American Equity Investment Life Holding Company in Des Moines, chosen for its good interest rates and disaffiliation with the stock market.

“There’s good and there’s bad” with leasing, he said, pausing from readying cattle for the weekly New Wilmington livestock auction last Monday. He worries about the easy money, telling his four children, “you still need to go to work.”

Mr. Troyer in Ohio compared the lease windfalls to someone winning the lottery.

“Those are the first people that are broke a lot of times,” Mr. Troyer said. The community has discussed the temptations that could come with such cash.

“We’ve talked about that — this isn’t going to be good for everybody,” he said.

A windfall

For one nationally known Amish family, the leasing check is considered a gift from God.

When Sam Mullet’s $3.5 million signing bonus arrived last April, the community leader and eight other Amish men were in jail on federal hate crime charges. Angry over what they saw as impropriety among some Amish, they had attacked some with clippers and horse shears, shaving the men’s beards to make them look like young, redemptive boys.

The arrests in 2011 removed nearly every breadwinner and financial planner from the community, which was already struggling financially.

Mr. Mullet made about $40,000 a year and had leveraged his land with $240,000 in mortgages borrowed to sustain a house-framing business that had gone bust with the housing bubble. He took a public defender at the start of the case.

Gas companies had approached about leasing his 700 acres several times, but Mr. Mullet balked at the $1,000 per-acre offers. He was among the last to sign in Bergholz, nearly setting a local record: more than $5,300 per acre, with royalties on the extracted gas of 18 percent.

“We made a pretty penny off it,” said his grandson, Edward Mast.

A significant amount of the $3.5 million signing bonus that arrived last April is gone, though, because of the legal bills and costs associated with keeping the community running with most of the men in jail.

Mr. Mullet first paid off his mortgages and three others held by some of his sons. A niece and nephew had lost their home in foreclosure, so Mr. Mullet paid $125,000 to buy the home back from the man who bought it at the sheriff’s sale.

Despite the windfall, Mr. Mullet decided to stick with his public defender, Ed Bryan. He now pays $250 per hour for legal counsel, which goes into a general fund that pays Mr. Bryan and other public defenders throughout the county. So far, it’s added up to “well over six figures,” Mr. Bryan said.

Gas lease money lets the nine men buy calling cards to phone their wives from jail (a landline was installed in the Mullet home after the landman suggested they use it to keep in touch). About $3,000 of the lease money was spent every week on “Amish taxis” — vans that shuttled the women and children from Bergholz the 100 miles to the Cleveland courthouse for the three-week trial.

At the root of Amish hair-cutting attacks in Ohio and the federal hate crime trial that followed, prosecutors say, was a dispute over religious differences and a decision by Amish bishops to overrule Sam Mullet, the leader of a breakaway group who had shunned his former followers. At the root of Amish hair-cutting attacks in Ohio and the federal hate crime trial that followed, prosecutors say, was a dispute over religious differences and a decision by Amish bishops to overrule Sam Mullet, the leader of a breakaway group who had shunned his former followers.
ASSOCIATED PRESS Enlarge

The money has kept the Mullet clan afloat.

“The whole community believes it was divine intervention,” Mr. Bryan said.

The sentencing hearing is Feb. 8, and Mr. Mullet faces anywhere between 24 months to life in prison. The wives and older children from the community will tap into the lease money again, paying $600 for the vans to drive them to the courthouse for the day.

In addition, Mr. Mullet could be paying about $1.5 million in taxes on the signing bonus in April, though some of his expenses could be deductible.

“The biggest amount of money they’re going to end up paying is to the federal government that’s locked them up,” Mr. Bryan said.

If Mr. Mullet is put in jail for a long time, the family he leaves in Bergholz has a tax attorney and two financial advisers hired to stretch the lease money and keep the community from dissolving.

“They are doing everything they can to keep a roof over their heads,” Mr. Bryan said. “The family that’s working together is one that’s going to stay together, and their focus is entirely on eternity.”

Refining the pitch

Mr. Mullet paid about $230,000 in 1995 for those hundreds of acres, a bargain because the property had been strip-mined. The hydraulic fracturing technology coming onto the land now is the latest negotiation between Amish tradition and contemporary energy extraction, Mr. Wesner said.

Many Amish farms in New Wilmington have shallow wells drilled decades ago by Atlas Energy; others have allowed electrical towers on their land. The liberalness of each community varies from sect to sect: Some Amish refuse to put plastic reflectors on their buggies, while others have participated in genetic testing.

“They wouldn’t accept one of their own becoming a doctor, but they see the benefit of research,” Mr. Wesner said. “They don’t see the technology in itself as evil, but they would like to control the use of it because they are cautious of where it might lead if they accept it.”

The different customs have forced a change of pace for the landmen scouring Ohio and Pennsylvania for willing property owners.

“Rather than just showing up, we like to make a phone call beforehand to set up a meeting,” said Rob Greiner, president of MidWest Land Services in Steubenville, Ohio. Now, he tells his employees in Amish communities: “You’re not going to be able to reach these folks by phone, and that’s really the only driving difference.”

Word of mouth circulates even faster among the Amish, the landmen said, and good relations with one farmer typically yields contracts with his neighbors.

“If anything, they seem to be more understanding of the process and more trusting,” said Dean Kimpel, a landman who lives in Ohio and leases land in Mercer County, Pennsylvania.

Some Amish farmers have made millions of dollars by leasing their land. The Mullet community in Bergholz, Ohio made about $3.5 million when they leased their 700 acres. Some Amish farmers have made millions of dollars by leasing their land. The Mullet community in Bergholz, Ohio made about $3.5 million when they leased their 700 acres.
BLOCK NEWS ALLIANCE/ANDREW RUSH Enlarge

A well-lit worksite

Still, most Amish homes — white, two-story houses with baby-blue front doors — are off the backroads of already-rural communities. The Chevron rig that should be disassembling in the Masts’ backyard soon drowns out the other sounds of modernity there once were.

“We don’t hear the interstate now,” Mr. Mast said.

Drivers who spot the operation from the road pull over to look through binoculars or stand at the edge of the Masts’ fence to take pictures — an unnerving practice for a family whose religion doesn’t allow the camera-capturing of faces.

The lights from the operation wake Mrs. Mast up at night. “It doesn’t get dark here,” she said.

The rig can be heard from Mr. Mast’s backyard work station, where he builds rocking chairs and magazine racks for his Countryside Chairs business. Though some of their children complain about the noise and Mrs. Mast smells gas wafting across the yard when she pulls dry blue dresses off the clothesline, the family hasn’t stopped sledriding or venturing into the nearby woods.

“Hopefully God will take care of it,” Mrs. Mast said.

They initially thought they weren’t up to “high-class stuff” but have learned more about gas drilling since the rig arrived and attracted visitors. They even already have a subtle homage to the industry living in their home.

Their dog, named ironically for his small size, is called Texas.

Block News Alliance consists of The Blade and the Pittsburgh Post-Gazette. Erich Schwartzel is a staff writer for the Post-Gazette.

Contact him at: eschwartzel@post-gazette.com or 412-263-1455.



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