More Money, More Traffic: How Fracking Has Transformed One Rural Pennsylvania County

Adam Diaz is young, handsome and, most recently, rich.

The 35-year-old Susquehanna County, Penn. native was scraping by supplying construction contractors with cut bluestone when the gas industry arrived to his sleepy corner of Pennsylvania in 2009.

“[Houston-based] Cabot [Oil & Gas Co.] approached me, they came to me and said, ‘You guys have a great work ethic, and we want to use local people’ ” to supply equipment and manpower.

Cabot took Diaz’s outfit under its wing, training them in the rhythms of gas drilling: what pads need at given times, how to handle the trade’s complex tools.

Four years later, Diaz now owns seven different companies, including a home furnishings manufacturer and a timber harvester — that bring in $50 million a year and employs 250 people. 

“If I didn’t have money to buy the other companies [their employees] would be out of work, no question,” he told us by phone recently. “It wasn’t terrible before the gas industry, but wasn’t anywhere as good as it is today.”

CabotAdam DiazThere is probably no other northeast Pennsylvania native who’s capitalised as thoroughly on the area’s gas rush as Diaz. (Indeed, he was also the lede in the New York Times’ coverage of the area’s gas drilling boom, and he’s been trotted out elsewhere by the industry as an example of how has boosted local commerce. Cabot recommended we speak to him).

But he is not alone in having seen his fortunes changed in just a few years.

While the country was heading over a recessionary cliff in late 2008, northeast Pennsylvania began to see the trickle of what would become millions of dollars pouring in from drillers looking for gas.

We recently traveled to Susquehanna County and its seat, the town of Montrose, to see how life had changed since the dawn of the gas boom.

What we found were lots of people grateful for the infusion of commerce injected into a local economy that had stagnated.
[image url="" link="lightbox" caption="The Grimsley residence has a broken down barn in front and a producing gas well in the back." credit_info="Robert Libetti/ Business Insider" alt="Fracking Montrose, PA, Barn" align="left" size="xlarge" nocrop="true" clear="true"]

At the same time,the boom has altered the lifestyle of a population used to a quiet, rural existence. Heavy trucks now rumble over the area’s rolling hills, and some residents have seen their water impaired by the controversial drilling practice known as fracking (the gas industry denies they’re at fault).

The rush was ignited five years ago by Terry Engelder, a University of Pennsylvania geologist who estimated that the Marcellus Shale, a rock formation spanning seven different states, contained enormous volumes of natural gas.

Naturally, the gas industry took notice, drilled some test wells, and proved him right.

Cabot bet big on Susquehanna County, which sits on top of one of the richer parts of the play.

It’s paid off. Since 2009, the company’s share price has increased 320%. The company now boasts 15 of the top 20 wells in the county and owns more than 200,000 acres there. The word “Marcellus” appears 43 times in the company’s 30-page annual report.
[image url="" link="lightbox" caption="" credit_info="Robert Libetti/ Business Insider" alt="Fracking Montrose, PA" align="left" size="xlarge" nocrop="true" clear="true"]

The county has seen a similar surge in wealth. By one count, county residents have taken in a total of $300 million in gas royalties.

“There are new facades on buildings, new streets being poured, a lot of people working,” Diaz says. “People are upgrading their homes, there’s all kinds of stuff going on.”

Bill Kelley, owns a equipment-rental business in Montrose. Cabot also recommended him as an area businessman whose sales have boomed in the past few years. He revenues have been going up by 40% each year.

“And that’s just our little business here,” he told us. “If you look at other businesses around the area, they’ve also grown with this — if you look at the grocery stores, the restaurants, the Inn of Montrose, overall I think it’s had a very positive influence on this little community of ours.”
[image url="" link="lightbox" caption="" credit_info="Robert Libetti/ Business Insider" alt="Fracking Montrose, PA," align="left" size="xlarge" nocrop="true" clear="true"]

Indeed, nearly every local we spoke with who works in the service industry told us receipts had ramped up. Jay Agkinson, a lifelong county resident who runs Montrose’s Shell station, said morning fill-ups can sometimes resemble truck meets.

“A lot of people who never had money have money now,” he said.

Just up the road from Cabot’s regional headquarters on Route 29 are retirees Jim and Annie Grimsley. They say they’ve been able to furnish their kitchen with royalties drawn from the gas well sitting in their backyard.

But the Grimsleys are representative of others in the area who say the industry’s presence has yielded a mixture of good and bad.

“Annie used to stand in the middle of 29 to take pictures,” Jim said. “She won’t cross the road to get the mail anymore — the mailbox is on the other side of the road. The traffic has really increased.”

Even Diaz admits the truck traffic is bad, though he believes it was actually much worse at the outset of the boom. According to the New York Times, Cabot has spent $12 million last year on road repairs here. 

Due south of Montrose on Route 29 is the town of Dimock. It’s become a focal point for the fracking debate after more than 30 families sued Cabot in 2009, accusing the company of contaminating their water. Most have since settled.

Kathy Prusack, who also lives in Dimock and has a well on her property, said her family’s water is fine. She gets enough royalties to pay for gas money, and she says her son drives trucks for a Cabot contractor. 

Robert Libetti/Business InsiderBut Prusack says she is ambivalent about both. She put her first royalty checks to the side because she didn’t believe she’d done anything to earn them.

“What you’ll mostly hear about is how wonderful the gas company has been to this area. But [the families who sued Cabot] have had real problems with their water.”

It’s possible both are true.

Cabot has aggressively courted favour with the area. Its signature investment was helping complete a brand new hospital for the area’s Endless Mountain Health care System. They donated $2.2 million directly and convinced the rest of the community to throw in an additional $2.2 million. They’ve also pledged $25,000 each of the last three years — and will do so again this year — to create scholarships at the Susquehanna County Career and Technology centre. According to the New York Times, they’ve also donated $50,000 to the local Red Cross.

Cabot execs now serve on the boards of local organisations, and the company sponsors area events like the Fourth of July fireworks and a book mobile.

CabotArtist’s rendering of the local hospital Cabot is helping to build.Peter Quigg, president of Endless Mountain’s Community Foundation, says he’s grateful for Cabot’s presence.

“Cabot has not had to do any of the things that they’ve been involved with. They could have been here and just gone about their business, helped their stockholders, and that would be that. In my opinion they’ve gone above and beyond  iin their corporate citizenship.”

When we talk about how the gas industry has impacted the local community, we’re not talking about a whole lot of people. There are about 1,600 residents in Montrose proper, and just 42,696 in the whole county, which covers more than 830 square miles and putting it among the top-10 least-dense counties in the state.

Right now, New York is debating whether to ends its fracking moratorium.The demographics of southern New York are pretty similar to Susquehanna County (Montrose is about a 20-minute drive from the New York border).

So if Albany wants to look into what to expect in a possible gas rush future, the story of Susquehanna County seem like a good place to start.

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