Three families who took a pass on the fracking boom — and what it cost them
The fracking boom has transformed vast parts of Texas, pumping money into local economies while raising fears about groundwater and air pollution. The boom has caused increased crime and truck traffic, and has likely spawned earthquakes. But the oil and gas bonanza has also brought more subtle, but no less significant, social changes. In this occasional series, Fractured State, we will examine how the oil economy has fractured families, communities and towns.
Read the first story in the series here. The series is made possible in part by support from the Jacob and Terese Hershey Foundation.
When the landman comes knocking, most people living in the Texas oil patch experience something like joy, or at least sweet relief. Here’s someone offering you money up front and the promise of hefty royalty checks in exchange for producing oil and gas from the ground. Imagine winning the lottery without even buying a ticket.
Landmen are agents of oil and natural gas producers; it is their job to get the mineral rights owner to claim a piece of the pie. Just sign right here, ma’am. The purse is their power of persuasion. For some, the earnings amount to mere hundreds. The luckier souls who own the mineral rights to big ranches or whose properties sit atop particularly productive parts of the shale plays can receive tens of thousands of dollars in signing bonuses. Fat royalty checks roll in monthly. Newly minted “mailbox millionaires” can be spotted driving new pickups, or towing new bass boats, or returning from a couple of weeks off in Aspen.
Almost everyone takes the money. You’d be crazy not to. According to industry estimates, oil and gas companies paid more than $15 million in royalties to Texans across the state in 2012. That doesn’t include initial signing bonuses, which can be enormous. Houston-area oil and gas heir Daniel Harrison III collected $1 billion in cash in 2013 when Shell Oil Co. leased his 100,000-acre ranch in the Eagle Ford.
But across the shale plays—primarily the Barnett in the north and the Eagle Ford in the south—there are some who reject the landmen’s offers. Known in the industry as “holdouts,” these mineral rights owners dare to challenge Big Oil in Texas. It’s a kind of principled madness that often baffles neighbors, family members and the industry itself. Unlike many fracking foes, the holdouts stand to benefit personally from oil and gas drilling. Yet they risk much more than money fighting to keep the fossil fuels in the ground. Some lose their health, their homes and their faith in the government as an arbiter of competing rights. Rarely are they able to stop the companies from drilling. For this uncommon breed, no amount of money can buy peace of mind.
These are the stories of three families who were willing to walk away from thousands of dollars—and battle loved ones, their communities and their government—to make a stand, even when facing insurmountable odds.
When Amber Lyssy first laid eyes on the 564-acre farm in Wilson County, in 2000, she knew she and her fiancé, Fred, had a lot of work to do. The land was Fred’s father’s, part of a retirement package from the successful dairy business he founded with his brothers. Fred, his only son, wanted to work the land, turn it into a profitable farm and eventually buy it from his father. Fueled by dreams of a home on the range, Amber and Fred got to work raising cattle for auction. About a year later, when Amber was 20 and Fred was 24, they got married and moved to the farm.
“Fred fixed up a camp shack as our home, expecting that five years after being married we’d build a new home—a big, beautiful house. That never happened, by the way,” Amber says with a sweet laugh.
They wanted to run an organic operation. Amber and Fred had been raising cattle the conventional, grain-fed way for a few years, and it took about five years to make the transition to organic. Eventually the two were selling 100 percent grass-fed beef, lamb, goat and pasture pork at local farmers markets and through the farm’s website. Their dream of building a business—and a home—seemed within reach.
Then the landmen came around. In 2008, the Eagle Ford Shale play in South Texas exploded with drilling activity. Almost overnight, the sleepy brush country transformed into a 50-mile-wide, 400-mile-long belt of drilling, flaring, barreling trucks, bustling man-camps and instant millionaires. The calm and quiet way of life in the rural prairie land was shattered.
The Lyssy farm was right in the middle of it. Right away, companies started approaching Fred’s parents with offers to lease their mineral rights. They offered $50 an acre, about $28,000 total, plus future royalties. Fred’s parents owned the farm and the majority of the mineral rights, but Fred’s cousins had inherited minority shares from their fathers. (In Texas, mineral rights and property rights are severable; you might own the land but not the minerals, the minerals but not the land, or both the land and the minerals.) Neither Fred nor any of his six sisters had any mineral rights.
Amber, who was pregnant with their first child, took to the Internet and started researching. She eventually got in touch with Sharon Wilson, a drilling-reform activist in North Texas, who schooled her about the air pollution and health problems that come with heavy fracking in the Barnett Shale. The couple grew alarmed as they pored over articles and studies about dangerous chemicals and pollutants. An organic farm was no place for fracking. Brahman and benzene don’t mix. Plus, they worried about their kids breathing fouled air or drinking polluted water.
They went to Fred’s parents, Fred Sr. and Agnes Ramos, who lived nearby, with their concerns. Fred’s mother had grown up on an organic farm and his father had fought uranium mining near Falls City when it had threatened his dairy business decades earlier. They agreed that it was important to keep oil and gas off the farm.
The farm seemed safe.
When I first talked to the Lyssys in March, they’d managed to keep drilling off their land for six years. Amber spoke with pride of how Fred’s parents had held to principle despite mounting pressure from within the family and the aggressive landmen.
“We’re very fortunate in that both his mother and his father believe that this property is an asset and believe in the ability of my husband to work his tail off and produce food from this property,” Amber told me. “We’re just extremely grateful.”
But Fred and Amber were also eager to share stories of how fracking had encroached on their way of life.
After fracking began in Wilson County, strange things seemed to be happening to the animals. Fred, who walked the property daily, began to see dead deer. He couldn’t tell what had killed them, but he hadn’t seen anything like it before in his years of living on farms. Then, in 2013, the Lyssys lost a family of Great Pyrenees dogs in a matter of days. One day in the spring, one of their four puppies was throwing up and another was scratching his face bloody and moaning. By the following day, the puppies’ mother, who had been getting ready to birth a new litter within days, was dead and all four puppies had either died or disappeared. The vet ruled out rat poison and antifreeze, but could offer no explanation. Months later, the last of their guardian dogs died a similarly painful death. The family couldn’t afford necropsies to find out what had caused the animals to meet such horrible ends.
The Lyssys were unsettled. They were afraid the dogs had been poisoned by something, or someone, on the farm. “They’re your protectors, so when something like that happens you feel like you’ve been invaded,” Amber said.
Not long after the last dog died, in January 2014, Fred’s father passed away. Now the oil companies had a grieving widow to bargain with. The calls kept coming. Still, Agnes Ramos rejected their offers. But the landmen found a more receptive audience in other members of the family.
Oil and gas companies pay landmen to do their research when approaching mineral rights owners, and it’s the landman’s job to find pressure points. Amber says the landmen never contacted her or Fred; she believes they knew the two weren’t interested because of their organic ranching business. Instead, they contacted Fred’s sisters and other relatives, who also did not have mineral rights, but who might have persuaded Ramos to accept a lease offer.
The tension started to fracture the family. In February, Ramos told the online outlet InsideClimate News that the landmen were so eager to get access to her property that they had lied and trespassed, and divided her children. Ramos was frustrated that the companies wouldn’t leave her alone, Amber says, and told the Lyssys that some companies went as far as to claim that some of the other mineral rights holders could sue her if she didn’t lease. Nothing like that ever happened, but it frightened her. Fred’s sisters continued talking to at least one oil company, Giant Resources, privately. “My daughters say, ‘But Mom, God put the oil on the land to be used, so you are going against God,’” Ramos told InsideClimate. But if she gave in to the companies, she said, “I would be going against God because he gave us this land to take care of.”
Meanwhile, biblical amounts of oil were coming out of the ground in Wilson County. By that time, the Lyssys’ neighbors had taken lease offers. Three neighbors had wells on their properties and the young family couldn’t escape the strong chemical odors that blew in from the south during the warmer months. They stopped letting their cattle graze on the southwestern corner of the farm, which bordered the nearest well.
The couple had been reluctant to criticize fracking because they didn’t want to damage the farm’s reputation and stunt their budding business. But shortly after Fred’s father died, the Lyssys decided to speak out. Not many people in the Eagle Ford were willing to criticize fracking outside of hushed conversations among friends. Their friends in the Eagle Ford who opposed drilling, they said, wouldn’t talk to reporters because they feared upsetting family members who had taken lease offers.
Amber became a kind of fracking watchdog. When she saw a tanker truck spill fracking wastewater on a county road near her home and noticed a strong diesel smell coming from the pool it had formed on the ground, she collected a sample of the murky brown liquid and took it to the next county commissioners meeting, which she knew would be covered by the local news. The commissioners dismissed her complaint, but two months later in nearby Karnes County, the local sheriff’s department, the Texas Commission on Environmental Quality and the Railroad Commission of Texas opened investigations into a similar incident where a tanker truck illegally dumped toxic wastewater on eight miles of roadway.
“To me, it’s like, how many families are being negatively affected and nobody says a word?” Amber told me in March. “It’s all about the money.”
But money has a way of wearing people down.
When I caught up with the Lyssys in September, the family was in limbo. Fred’s sisters had approached their mother in July with a 50-page lease offer ready to sign. Giant Resources was offering good money to lease the farm (the family declined to disclose the amount, and Ramos did not want to be interviewed) and favorable terms. According to Amber, Giant said it would eventually confine its operations to half an acre. Fred and his sisters would all get a cut of the profits. But Fred and Amber wouldn’t budge. Things got ugly. Fred’s sisters turned his mother against him, Amber says, and she stopped speaking to her only son.
“From the very onset of the ugliness, Fred said, ‘I really don’t want to have anything to do with the money because I think it’s wrong to poison people’s children and I think it’s wrong to poison the environment,’” Amber says. Fred also warned his mother that the deal sounded too good to be true. Ultimately, he made the difficult decision of losing a part of his family—and the progress he’d made toward his dream of running a large-scale organic farm in Texas—to stand up for his principles.
After 13 years of working the land and creating a home there, the young family decided it was time to leave the farm and began looking for other options. They piled into Amber’s father’s Prius with their three kids and traveled across the country in search of a new farm where they could safely do the kind of work they wanted. Fred received tempting offers to manage farms in several states and ultimately decided to move to Virginia, where he’ll be able to farm organically. In the fall, they began the laborious task of transplanting their operation across the country and were forced to sell much of their livestock.
Fred turned out to be right about the lease offer being too good to be true. In October, his mother told him that Giant Resources had withdrawn its offer after she hired an attorney to negotiate the specifics. As of this writing, Ramos has not reached another deal with Giant or with any other company. The Lyssys still believe that leaving the farm was the right decision for their family, even if it was difficult to say goodbye to what they thought would forever be their home.
“It’s very far away from family, which is hard,” Amber says. “That’s the thing that I had to really get over that was so unsettling—when you look at something and you think this is it, for all time.”
Years before drilling rigs and tanker trucks became ubiquitous on South Texas ranchland, city dwellers in North Texas got their first taste of fracking. But unlike their rural neighbors to the south who own large tracts and can keep oil and gas companies out if they choose to, Metroplex residents don’t always have a say in whether a company gets to tap the resources under their land. When the landmen come knocking here, it’s only a matter of time before the drilling rigs show up, too.
Ranjana Bhandari learned that lesson in 2007, when Chesapeake Energy—a notoriously aggressive natural gas producer with a big corporate footprint in Fort Worth and a large stake in shales in Texas, Pennsylvania and Ohio—set its sights on the natural gas under her house. Bhandari lives in Interlochen, a high-end neighborhood in Arlington that evokes Interlaken, Switzerland. Her neighborhood might have its own canal system and a Christmas lights pageant that draws thousands each year, but most of her neighbors didn’t find luxury living incompatible with gas drilling. They were happy to cash the checks from Chesapeake Energy. Today there are nine Chesapeake-owned gas wells within a 1-mile radius of Bhandari’s home.
Arlington became one of the first cities to contend with urban drilling when fracking came to the Barnett Shale in the mid-2000s. If fracking is now a global experiment, its first test subjects were found here in the Metroplex suburbs. Today, a drive down Division Street, an east-west artery that bisects the city, makes the dominance of the fracking industry clear. Long brick walls abut dirt roads that lead to massive tanks and fleets of trucks, barely visible through locked metal gates on the main road. Nothing is sacred. Gas companies have sunk wells inside neighborhoods, in parks and on school property. The athletic fields at Oakridge School, Arlington’s premier private school, are home to a pad site with seven gas wells. Across the street, two more horizontal wells underlie the redbrick buildings of the main campus.
It wasn’t always like this. When Bhandari and her husband, Kaushik De, moved to Texas 21 years ago from Michigan, fracking wasn’t yet a dirty word—it just sounded like one. The couple, originally from India, relocated so that De, a physicist, could pursue his research at the Superconducting Super Collider lab under construction in nearby Waxahachie. Congress pulled the plug on the project in 1993, months after the couple had lugged their belongings across the country and after De had accepted a teaching position at the University of Texas at Arlington. De continued to teach in Arlington, but ended up moving his research to the Large Hadron Collider in Switzerland. Bhandari gave birth to their first child and later left work to care for him full time. Life was simple, quiet.
Then, in 2007, the couple started receiving letters from Chesapeake. The company offered the family a signing bonus of about $5,000 per acre for their one-third acre tract, plus a 25 percent royalty interest if it could drill a horizontal well beneath their property. The well head would be in a park about 1,000 feet from their home, where mothers push strollers along the paved trails that line the creek and children play in the grass.
Chesapeake also approached 502 other nearby property owners. Most of the residents took Chesapeake’s offers, some after holding out briefly to negotiate better terms. A group of residents eventually got Chesapeake to move the well head out of their neighborhood, but the company would still be drilling horizontally underneath Interlochen. Resistance gave others leverage to demand higher signing bonuses, and at one point Chesapeake bumped the offer to $17,000 per acre. Bhandari’s was one of the few families that refused the higher offer, too. They would have received nearly $6,000 up front plus a monthly royalty check—welcome cash for a single-income family with a young child. But Bhandari was not satisfied with pushing the problem onto another neighborhood. Sure, she had seen the billboards with a steely-eyed Tommy Lee Jones urging, “Let’s get behind the Barnett Shale,” but she wasn’t convinced the process would be as quick and painless as the landmen promised. When fracking came to her doorstep, she, like many mothers around the country’s shale plays, started to question the industry’s claims.
“We looked at both sides of the equation—the money they promised us and the negative, and we felt that that didn’t justify the negative,” Bhandari says. “I couldn’t justify having benzene in the air for everybody to breathe [just] because they were promising us a big check. In the end, you can’t breathe the money.”
For four years, Chesapeake persisted. At one point, Bhandari says, a company representative told the couple that even if they refused, the company would find a way to drill under their land and take the natural gas.
Chesapeake wasn’t bluffing. By obtaining an exception to a century-old law that sets minimum distance requirements between oil wells, the company sought to drill right up to the family’s property line without the couple’s consent. The law, called Rule 37, was written to protect the rights of mineral rights owners by creating a buffer that prevents others from taking their minerals. To get the exception, Chesapeake needed to get enough of Bhandari’s neighbors to lease their tracts.
The family tried to warn neighbors about the dangerous pollutants fracking unleashes and the decreased property values that could come with it. Most told them that, as Texans, they had grown up around drilling. What was all the fuss about? “Who do you think you are, Erin Brockovich?” one neighbor asked Bhandari, half-jokingly. The soft-spoken former economics professor shuddered at the thought; she had been happy researching and quietly approaching neighbors, but had no interest in making noise.
Everyone was amiable, she says; they just didn’t understand what she could possibly think was so wrong with fracking that she would turn down “free” money. Others didn’t think it was worth the effort, even if they didn’t want the drilling, to stand up to the industry only to lose. Just a handful joined Bhandari and De in challenging Chesapeake. While their neighbors used their thousands in signing bonuses to deck out their homes with new furniture, the couple and a few other families prepared to go before a Railroad Commission examiner, a commission employee who oversees a court-like hearing. By the time of the hearing, in June 2011, Chesapeake had obtained access to all but 30 of the 503 tracts it needed to start drilling. Fort Worth residents who had been through the process warned the families they would lose their case before the state’s regulatory agency, which is notoriously cozy with industry.
When an energy company seeks a Rule 37 exception, the Railroad Commission is all but guaranteed to grant it. Oil and gas companies rarely encounter resistance—and when they do, they spend tens of thousands of dollars on attorneys who can easily crush individual landowners who have little to no knowledge of the process.
“I think in the context of the urban environment … little lot owners don’t have enough knowledge or resources or the ability to be able to protect themselves,” says John McFarland, an Austin-based oil and gas lawyer who helps mineral rights owners negotiate terms with energy companies. “What are they going to do, file a protest? Then they have to bring a lawyer to the hearing and they’re not going to do that.”
If they can’t hire a lawyer who specializes in arguing these kinds of cases, the “protesters,” as the Railroad Commission calls them, have to represent themselves. As Bhandari would soon find out, that’s no easy feat. “The commission is not a very friendly place for landowners; they don’t help you out,” McFarland says. “They recognize you have the right to file a protest, but it’s up to you to understand the rules—just like any kind of court proceeding, they expect you to know what you’re doing.”
The family went up against Chesapeake’s high-dollar attorneys without legal representation. Bhandari thought they made a compelling case nonetheless. The only thing to do was to wait for the Railroad Commission to make a decision. One month later, the couple received a letter from Chesapeake’s attorney. The company had agreed to maintain a “no-perforation zone” around their home, meaning the company wouldn’t draw gas from within 330 feet of their property line. Goliath, it seemed, had been wounded.
Then came the letter from the Railroad Commission. Ten months after the hearing—and after Chesapeake’s reassuring letter—the agency notified the family that it had granted Chesapeake the exception it sought, effectively allowing the company to siphon the natural gas under their home without paying the couple a dime. Unlike their neighbors who leased their mineral rights to Chesapeake, the family never received a signing bonus and will never see a royalty check.
“For me, that was a real learning experience; I thought government served the people and that we paid for the Railroad Commission to regulate industry, and it was interesting to see how it actually did work in real life,” Bhandari says. “I learned the power of oil and gas and learned the disregard for individual property owners that our state has. I understood how toxic this process is and how few tools we have to fight it or to protect our families from it, and so it has changed the way we live.”
No victory, no money, and she still has to choke on bad air. But Bhandari doesn’t have any regrets. If she had it to do over, Bhandari says, she would still refuse the money and fight Chesapeake. The money, she believes, is tainted. Fracking is linked to increased tremors in North Texas—in early January, at least a dozen earthquakes, ranging from 1.6 to 3.6 magnitude, shook Irving in less than 36 hours—and releases dangerous chemicals, including the carcinogen benzene, into the atmosphere. She believes that taking the money would make her complicit. Instead, since losing to the company, she has installed solar panels on her roof and purchased an electric car. She hasn’t bought gasoline in more than a year.
“There are too many things I can’t do, but those are things I could do,” she says.
For Greg Hughes, marching into battle with Chesapeake Energy was the only thing to do—even if he was sure to lose. Hughes’ home is sandwiched between the Clear Fork of the Trinity River and Texas Christian University in Fort Worth. Catty-corner from the neighborhood country club and less than a mile from Hughes’ home, Chesapeake Energy planned to build a pad site from which it would run a horizontal well under Hughes’ property. A systems engineer, Hughes has spent the last decade working on Lockheed Martin’s F-35 fighter jet after gigs testing safety systems at a nuclear power plant and improving the Bell Boeing V-22 Osprey.
Hughes isn’t against oil and gas development or even fracking. His position reflects his professional interest in risk reduction: He believes the industry hasn’t tried hard enough to make fracking safe in densely populated areas. Oil companies go to far greater lengths to make refineries safe, he says, because the consequences of a single failure can be catastrophic and extremely expensive, but “the consequences to a company of failure in the field are very low, so they don’t have a lot of interest in putting effort into risk avoidance.”
By the time Chesapeake started sending Hughes and his neighbors letters about leasing their mineral rights, in 2009, he was already involved with efforts to fight urban drilling.
Hughes doesn’t remember receiving a formal offer from the company; it simply invited him to consider leasing his mineral rights. Chesapeake successfully obtained leases for 122 tracts to sink the well, but 12 residents including Hughes were either not offered deals or didn’t accept them. When the Railroad Commission notified Hughes and his family that Chesapeake intended to obtain a Rule 37 exception to drill underneath their property anyway, he didn’t hesitate: He’d fight. The company later withdrew its permit and then filed for the exception again, but this time none of the 12 residents were notified. The Railroad Commission automatically granted the permit. When Hughes found out, he teamed up with two of his neighbors, who were attorneys, to fight Chesapeake.
Preparing “for battle,” as Hughes says, was fun even if it involved hard work and long hours. He’s a “projects guy,” he says, and this particular project gave him the opportunity to “document the ownership of the Railroad Commission by the petrochemical industry” in a public forum.
“The crazy part is that we spent time and money on travel, hotels, et cetera, to be at the hearings in Austin in order to avoid selling something to someone,” Hughes says. “There was no way we were going to recover our costs; we knew that going in. And that’s not to mention the countless hours of wading through all the filings their attorneys threw at us. We were getting an envelope every other day with something.”
As part of each application for an exception, a company must submit a list of all the affected parties—whether competitors with nearby operations or landowners with unleased tracts—to the Railroad Commission. The affected parties then have 20 days to object, after which the exception is granted automatically if the protesters haven’t responded. If a party objects, the “protester” must travel to a hearing before a Railroad Commission examiner in Austin. Each side can call witnesses and present evidence, but the hearings rarely turn out in favor of the landowner. In 2012, a Reuters investigation found that during the previous seven years the Railroad Commission had rejected only five of Chesapeake’s 1,628 requests for Rule 37 exceptions. The company had requested far more exceptions than any of its competitors, filing nearly twice the number of applications as XTO, a subsidiary of ExxonMobil and the largest producer of natural gas in the country.
“We joked along the way that we knew we were going to lose, we just wanted to know how,” Hughes says. “Because the other joke was, ‘Hey, I don’t really have anything better to do—why not take on the petrochemical industry in Texas?’”
In the end, Hughes says, the way he and his neighbors lost is a perfect example of how the process is rigged in favor of the industry. One year after the hearing, in October 2011, the Railroad Commission granted Chesapeake the Rule 37 exception—and named as its reason for doing so the protection of correlative rights, which essentially guarantee that each mineral rights owner has a right to his fair share of minerals in a shared reservoir. But the transcripts show that Chesapeake presented no testimony and no evidence making that argument. Chesapeake’s attorney mentioned correlative rights once in his opening statement, and later objected when Hughes’ team tried to question a witness on the matter. When they persisted, Chesapeake’s attorney interrupted again and the examiner suggested a new line of questioning. The commission sided with the mineral rights owners on all the other “conclusions of law.” Still, Chesapeake obtained its permit.
“We found that to be rather ironic, kind of like if a judge all of a sudden thinks to himself, ‘The prosecution could have brought up this point but they failed to, but I think it’s a valid one’—and then issues a ruling on that basis,” Hughes says. “Things like that can make you cynical about government. It’s kind of sickening that it wasn’t even veiled and at that point we had the option to craft an appeal, and we basically just stopped.”
An appeal would have been prohibitively expensive and would have taken more time than the year he and his two neighbors had already put into fighting Chesapeake, Hughes says. “At the end of the day that would not change the nature of [the oil and gas] industry-government relationships in Texas,” he says. “Unless those changed, we weren’t really going to accomplish anything.”
Like Bhandari, Hughes says he would take on Chesapeake again, even though he’d be doomed to lose. For Hughes and the other holdouts, there are just some things money can’t buy.
In a state where fossil fuels built the schools and universities, buttress the economy and fund the politicians, the holdouts have few weapons other than their principles.
“There’s just some things that you can know you’re going up against the odds, but maybe in the long run someone else might benefit because you’ve raised questions that needed to be raised,” Hughes says. “In the longer run, I think it’s really important to us all. If you see something that needs to be fought, and you can, then fight it.”