A new study has found that a single well or flaring battery can reduce rural property values by as much as 10 percent.
Published in December, the Impact of Oil and Gas Activity of Rural Residential Property Values study showed that a single well or flaring battery “reasonably close” to a rural residential home can reduce property values by up to five percent. In instances where a number of new wells were proposed within four kilometres of a property, the value could drop by 10 percent.
“Intensity of oil and gas activity had a clear statistically significant negative influence on price,” the report said, and “both old and new sour gas facilities had a negative impact on price.”
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The study was conducted to address concerns often raised by landowners that oil and gas activity, especially sour gas activity, depressed land prices. It studied one- to 40-acre acreages in three high-density areas near Calgary. Real estate information was collected for properties sold between January 1994 and March 2001, ranging from $150,000 to $450,000 in the Municipal District of Rocky View, the MD of the Foothills and Mountain View County.
Dean Lien, Alberta’s farmers’ advocate, said while he hasn’t seen the report, he knows there is a direct correlation between oil and gas activity and the value of rural residences.
“We’ve certainly observed that going through the country.”
Oscar Steiner, an Ardrossan, Alta., bee farmer and university student doing a masters thesis on the Alberta Energy and Utilities Board and public participation, said the report should be a red flag to government and the EUB of upcoming problems.
With the increasing oil and gas activity in high-density areas, he predicted there will be “more lawsuits, more litigation and perhaps more Wiebos,” referring to northern Alberta oil and gas activist Wiebo Ludwig who was convicted of damaging gas company property in an effort to stop gas development on his northern Alberta farm.
While the report looked at only three municipalities around Calgary, Steiner said its data could easily be transferred to Strathcona County east of Edmonton where there are lots of acreage owners.
“Acreage owners have nothing to gain from any oil and gas activity. Why would they want it?”
He also predicted it will become a headache for municipalities that may start getting requests for property tax reductions because of lower property values near well sites.
EUB spokesperson Bob Curran said while half of the report’s eight authors were EUB staff, it’s not an EUB report and he didn’t think it will have a lasting impact on the way oil and gas activity is conducted in the province.
The EUB is an independent, quasi-judicial provincial government agency that helps guide how the province’s energy and utility services operate.
“It’s not a conclusive document,” Curran said, who added the language was couched in “maybes.”
“There was nothing definite in the study.”
Terence Molik an EUB economist and one of the report’s contributors, said he’s not sure who requested the study, but he knows EUB and the Natural Resources Conservation Board supported the research work.
“It’s a very important and sensitive area,” said Molik.
The document is available through the EUB.
