REALTOR Johnnie L. Rosenauer

© Josh Huskin

Oil rigs are popping up across the San Antonio suburbs, forcing REALTOR® Johnnie L. Rosenauer to travel farther outside the areas he serves to find the peaceful properties his clients want.

Drilling Down For Better Options

With available land at a premium in Texas, fracking is an issue that divides and affects entire communities.

The drilling zones for oil and natural gas exploration are widening across Texas, forcing Johnnie L. Rosenauer farther away from home to sell property. Companies involved with fracking, the extraction of petroleum resources from shale, have brought oil rigs, industrial drills, trucks, and constant disruption in recent years to the quiet San Antonio suburb of Spring Branch, where Rosenauer has based his eponymous real estate firm since 2006. It's become difficult to make a sale there as buyers seek more peaceful terrain. Thousands more oil and gas wells are tapped for development and drilling throughout the state, and Rosenauer has driven as far as five hours away from Spring Branch to find ranches and farms outside their path for his clients. But options are disappearing fast.

"I don't know a single practitioner who doesn't have the same story," says Rosenauer, who is also a real estate professor at San Antonio College. "Our market area is larger than the state of Georgia. We have to resign ourselves to driving farther or selling less in parts of Texas these days. There certainly are areas not impacted by fracking at all, but none of them is close enough to be a viable option for me."

Fracking has gotten a bad rap not only for the disturbances it causes—including clusters of small earthquakes reported in active drilling areas such as Dallas-Fort Worth—but also for possible health hazards. Environmentalists have linked methane releases at drill sites to poor air quality, and many fear that toxic chemicals used during fracking could cause widespread water contamination.

To alleviate his clients' worries, Rosenauer searches for land where the mineral rights—the right to extract and profit from whatever is below the surface—belong to the property owner. That way, his clients control whether fracking companies can access their properties. But the reality is most of the mineral rights in Texas are already owned by oil and gas companies, making it nearly impossible for many property owners to turn  companies away, Rosenauer says. Further complicating the situation, Texas inventory hit an all-time low in May, so available land is at a premium.

"Some people think, 'Well, I'll just go find another property,'" he adds. "In my world, those folks don't have a lot of choices. There are too many buyers chasing too few acres, and pretty soon, someone is going to have to buy [without mineral rights]."

What Rosenauer views as an obstacle for buyers, some fellow practitioners look at as a boon for property owners. One Texas city where emotions are fierce on both sides of the issue is Denton. "A lot of people have made a lot of money," says Chris Rosprim, president of the Greater Denton/Wise County Association of REALTORS®. Energy companies cut royalty checks to owners whose properties they drill on. With standard royalty rates of at least 10 percent of the value of whatever oil and gas is extracted, the payouts can be lucrative. Royalty checks often range from $5,000 to $10,000 per acre; millionaires have been made overnight.

Nevertheless, Denton voters approved a fracking ban in November 2014—which was later overturned by state lawmakers. Rosprim says the local REALTOR® membership was split over the ban because of the additional economic perks fracking brings, including jobs and tax revenue. "The only way to stop [fracking] is to sue the state," he adds. "God bless you if you have that much money."

For his part, Rosenauer, acknowledging the upsides of fracking, doesn’t take an official stance on the practice. He notes that his area has benefited, with "more hotels built in the last five years than in the last 50."

But he is well aware of deep ambivalence in the community, even from residents who've profited.

"I have one client who has made over $5 million from production on his properties, but he wishes not one of the wells had ever been drilled because he has strangers and noise on his ranches constantly," Rosenauer says. "There are a lot of issues owners have to come to terms with."

Graham Wood
Executive Editor of Digital Media

Graham Wood is Executive Editor of Digital Media for REALTOR® Magazine. He can be reached at gwood@nar.realtor.

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