EVANSVILLE, Ind. — With the expansion of the U.S. petroleum industry, more farmers need to know what’s going on under their crops and how to reap the rewards of gas, coal and mineral leases. Last week the Indiana Farm Bureau oversaw a pair of seminars to help property owners navigate the maze of leasing.

Owners of farm ground that formerly would not have been considered for oil or gas wells are finding themselves on the receiving end of a spate of offers. It pays to know the industry, speakers emphasized. New technology, such as hydraulic fracturing (fracking) and horizontal drilling has made less-accessible petroleum more attractive, according to Ross Pifer, director of the Rural Economic Development Committee at Penn State.

Pifer, an ag attorney and professor with the university’s Dickinson School of Law and director of the Ag Law Resource and Reference Center, advised property owners to learn as much about the gas market as possible before talking to an operator or marketer.

“Make sure you are adequately protecting yourself,” he said. “The surface impact is often overlooked by owners when signing a lease.”

Energy companies are likely to want broad use of the land. Any restrictions will impact the value of the lease, Pifer said. Landowners need to assess how they use the surface, now and in the future.

Some questions to answer before signing include: Where will access roads be built? Who is responsible for reclamation, and to what extent? How waste products will be handled? How will this affect future generations?

Pifer related the history of gas and oil in Pennsylvania so property owners and lawmakers in other areas can apply those lessons. The first Pennsylvania oil well was tapped in 1858 and it set off a drilling frenzy. “Pennsylvania was Texas before Texas,” he quipped.

In the aftermath of oil came the natural gas rush. At first no one knew what to do with it, but eventually it was piped into Pittsburgh. By 1900-01, Pennsylvania was responsible for 42 percent of natural gas production, Pifer said.

Leases were based on the late 1800s development until 2005, when petroleum producers began extracting gas from Marcellus Shale. By 2008, property owners were being approached by developers with even more attractive lease offers.

“It is not accurate to picture everyone as the Clampetts (of “The Beverly Hillbillies”), but a lot of farmers got some added income,” he joked, “so they could stay in farming a little longer.”

In 2007, Pifer said there were 112 shale gas wells in northern Pennsylvania. By 2012, the number had skyrocketed to 1,263.

What makes these numbers relevant to Midwestern farmers is there are many more formations similar to the Marcellus Shale scattered all over the United States, including the New Albany Shale in southern Indiana. Several are not commercially viable at this time, he said, but technological advances will open up new options.

Fracking and horizontal drilling have made shale gas formations more economically feasible for producers, to the point that the United States is projected to become the largest petroleum producer in the world by 2020, surpassing Russia for a while.

Shale is not a porous rock. With hydraulic fracturing, fluids under high pressure cause the rock to crack, increasing its permeability and allowing gas to migrate through it. Sand is forced into the cracks to keep them open and allow the gas to move.

Farmers in states with fracking have found themselves in the position of negotiating leases with oil barons and making as much or more from what is underground as they do from crops and livestock. When the boom started in the Marcellus Shale region, older leases like those in western Pennsylvania were paying $25-$50 per acre per year. Rates rose to $5,000 in four months, Pifer said.

In some cases, on the east side of the state where gas wells were not common, new leases netted owners up to $1 million for the same acreage for which early signers only received $50. But the economic crash in 2008 dropped drastically new lease prices. Prices have gradually increased since then, he said.

Where petroleum production has expanded, Pifer said, the landscape has been altered – and not just at the well head. While economic development benefits overall, he said problems arise in new well areas where there are not enough motels to house construction workers and tourists. Infrastructures are strained by heavy truck traffic and established construction firms are stretched because they have to offer employees more to keep them on the payroll.

Then there are environmental issues, he noted. Thousands of gallons of water are used in the fracking process, which can draw down the local aquifer. Water used in fracking may be treated in a wastewater facility and some property owners have experienced methane migration – turning on a water faucet and being able to ignite the flow because it is contaminated with methane. Other water is injected into deep wells.

Seismic activity has also been blamed on fracking, Pifer said; however, studies indicate it is not the fracking that causes earthquakes, but the injection of wastewater into the deep wells. And several states have enacted disclosure laws to require the companies doing the hydraulic fracturing to reveal the components in the water being used in the process.

All these changes are important to consider before signing a lease agreement, Pifer said. The best scenario for owners is no surface rights to the oil/gas producer, but that may result in a lower lease price, he explained. Even though most of the operation is underground, there must be a great deal of equipment on-site, supply storage and water tanks. Well pads for fracking operations are larger than standard well pads, he said, but they will hold more heads.

In Pennsylvania, Pifer said, the typical lease is five years. Shorter is better, he said, because markets vary; landowners need to be careful of automatic renewal phrases hidden in fine print. That’s just another reason to have all documents reviewed by a knowledgeable attorney before signing a lease.