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March 28, 2012

Wilmington weighs drilling leases

NEW CASTLE — Safety versus finances. Heavy truck traffic, noise, pollution.

Benzine, toluene and other noxious gases. Asthma and cancer.

Kids crossing streets laden with hundreds of trucks filled with water.

Transient people moving in to work. An increase in crime rate.

The potential for overall change in the makeup of a community.

Marcellus and Utica shale drilling is coming and those concerns were posed Monday to the Wilmington school board, which is deciding whether to lease district land to a drilling company.

Board members listened to about 20 residents who addressed all these factors, then decided in a straw poll they still want to consider a lease.

Most of the residents who spoke opposed any lease because of environmental, health and safety issues.

The board had called a special meeting Monday to listen to presentations from a Shell Oil landman and a representative of CoExprise, now known as CX, a consulting go-between that professes to help property owners make sound financial decisions about leasing.

Both companies have pressured the district about a March 31 deadline. After that, offers will “get stale,” they said.

But board members have said they need a little more time and hope to take a firmer stand at their work session April 9.

Meanwhile, they have charged superintendent Dr. C. Joyce Nicksick with gathering as much information as possible about health issues, lease details and opportunities and the drilling process to assist them with their decision.

After about three and a half hours of discussion, an informal survey indicated six favor the pursuit of a lease — Dr. Bo DiMuccio, Peggy Foht, William Taylor, Kathryn Riley, Carol Harris and Nancy Bretz.

Opposed are Robert Curry, Lynn Foltz and Dr. David Swerdlow.

Representing Shell Western Exploration and Production was Lance Collinsworth, an independent landman. He said after the meeting he works for Long Consulting Group of Olean, N.Y., contracted by Shell to secure leases.

The district would be paid $3,250 per acre plus 18 percent gross royalties if drilling takes place, he said.

He advised the board Shell has leased more than 200,000 acres in Lawrence County.

“We’ve got it sewn up,” he said, adding the pipeline companies will be moving into the county at the end of this month, and 16 production units are going in later this year.

A unit is a succession of contiguous properties from where gas will be removed during a drilling process.

“We’re ready to develop,” Collinsworth said.

He initially had told the district Shell was interested only in its Pulaski and Plain Grove properties, but Monday said it is interested in all district property in Lawrence County. That amounts to 53.95 acres that also includes New Wilmington.

The other 19.4 acres the district owns are in Wilmington Township, Mercer County.

Responding to a question from a board member about whether the lease can specify no drilling on a property, Collinsworth told the board that cannot be done.

Foht asked Collinsworth what the chances are of Shell putting a well pad close to a school.

He responded wells have to be 500 feet from a structure.

Also addressing the board was Chris Cracraft, a representative of CX, who is seeking to negotiate a lease with the district for Hilcorp Energy Co. of Texas.

He noted Plain Grove is not in Hilcorp’s area of interest. Of the district’s land, Hilcorp is interested in 64 acres, Cracraft said.

He said his company amasses acreage from interested landowners and takes it to bid to get the best possible price for the landowners, marketing it to the oil and gas firms.

The landowners then negotiate leases with the drilling companies, based on those payouts.

“We work on your behalf to negotiate something you are happy with,” Cracraft said. “You want to make sure you get yourself into the best possible lease.”

(Email: dmorris@ncnewonline.com)

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