New Castle News

March 24, 2012

Drill deals being considered by school districts, communities

Debbie Wachter
New Castle News

NEW CASTLE — Marcellus and Utica Shale-related drilling and leases are polka-dotting the landscape of Lawrence County.

Several local government entities, including school districts, are considering or have entered land lease offers, and at least three drilling companies are pursuing leases and planning to establish drilling sites throughout the county.

They include Shell Oil Co., Hilcorp Energy of Houston, Texas, and REX Energy of State College, Pa.

According to the Lawrence County Register and Recorder’s office, 1,642 leases were signed in Lawrence County between Jan. 1 and March 19. An additional 1,877 leases were signed in 2011.

Local school districts gave leasing status updates this week but attempts to reach superintendents in Laurel and Neshannock about any leasing potential were unsuccessful.

The Ellwood City Area School District has no land to lease, according to superintendent Frank Aloi.

Below are some of the activities currently involving local government groups:



 WILMINGTON

The Wilmington Area School Board has called a special meeting for 7 p.m. Monday in the high school library to consider two proposals for shale drilling on district-owned land.

 One is from Shell Oil, and the other from CoExprise, a company that seeks and negotiates leases to help the landowners get a fair deal.

District superintendent Dr. C. Joyce Nicksick said the district has 73.35 acres to lease.

An email she received from Shell Oil Co. she said, indicates that Shell is interested only in district-owned properties in Pulaski and Plain Grove townships where the district owns school buildings and a total of 21.009 acres.

Shell has offered $3,250 per acre and 18 percent royalties, Nicksick said. In its email, Shell urged the school board not to sign with companies that only negotiate and do not drill.

Nicksick said she intends to invite representatives of Shell and of CoExprise to Monday’s meeting, and noted that while Shell is interested in the Plain Grove and Pulaski properties, CoExprise expressed interest in leasing all of the district’s acreage. This includes the school properties in New Wilmington Borough and in Wilmington Township, Mercer County.

The school board members on Monday took a straw poll to see if there is interest in entering any leases, before it set the a special meeting.

“I don’t want it,” board member Dr. David Swerdlow declared.

But the majority of the members attending said they are willing to consider it. Dr. Bo DiMuccio was absent from the meeting.

Nicksick told the board that CoExprise will finish its leasing activity in the county by March 31.



SHENANGO

The Shenango Area School Board already has signed a lease with Shell Oil for 44.62 acres owned by the district. There will be no drilling on the district land, according to Mike Schreck, assistant superintendent.

The board approved the agreement Dec. 6, and is to receive $3,250 per acre plus 18 percent of royalties.

 The district anticipates receiving $145,015, not including any royalties. Schreck said any money received will go into the district’s capital reserve fund.



MOHAWK’S DILEMMA

The Mohawk Area School District has held off signing a lease for drilling, waiting for the best possible arrangement, according to Superintendent Kathleen Kwolek.

“Our district has not acted on the lease agreement regarding Marcellus Shale,” she said in an email this week.

Kwolek said the district was officially approached by Shell but is still seeking an agreement for items it wants to include in an addendum.

The Mohawk district owns about 100 acres.



BOROUGH LEASE

 Ellwood City Borough Council on Monday signed leases with Shell Oil for 131.64 acres, included in six parcels of borough-owned land. One parcel is located near Woodside Avenue in the borough. The other five are along  Connoquenessing Creek in Wayne Township, according to borough manager Dom Viccari.

The borough will receive $427,830, plus 18 percent royalties on any gas removed. Shell is leasing the borough’s mineral rights for $3,250 per acre.

Viccari said the borough signed with Shell Oil Co., but it emphasized in the leases that there is to be no drilling on borough-owned land.

“There will be no surface mining, no pads and no wells on any of our properties. That was a condition we insisted upon,” he said, emphasizing, “On any of this property there will not be a well head built.”

Rather, the borough leases gave Shell “a big footprint” to begin looking for a big well head site, he said. He said he has no idea when or where Shell will be drilling in the area.

Viccari said Shell had approached the borough about a lease.

“We’ve been talking about this now for six or eight months,” he said.

Some of the leased land is property the borough bought from Penn Power in 2006.

“This was a pick-and-choose deal,” Viccari said.

Some of the property to be leased involves recreational land next to Rock Point Park in Wayne Township and in Ewing Park in the borough.

He said any money derived from those parcels would have to be used for recreational purposes.

The borough also is trying to negotiate with Shell to sell effluent from the borough’s wastewater treatment plant to the company to use for fracking purposes.

“We’re discussing that with them now,” Viccari said. “There’s a lot to be done in that aspect yet, but I’m hopeful.”

Right now drilling companies are drawing 800,000 to 900,000 gallons of water per day from Slippery Rock Creek.

“If they would buy our water, they won’t have to take it out of the stream. It would be good for the environment and good for us.

“Our water is superbly treated,” Viccari added.

He keeps a jar of the treated wastewater on his desk next to a jar of tap water for comparison, and one cannot tell the difference, he said.

Once Ellwood City receives the money from its lease, the borough officials will sit down and determine its priorities.

“I’d like to put part of it away for a rainy day,” Viccari said. “I’m a big believer in not spending it all. You never know when you are going to need it.”

 (Email: dmorris@ncnewsonline.com)