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Ohio Utica Shale

District to get $40.3 million for Seneca Lake drilling lease

By Bob Downing Published: February 15, 2013

The Muskingum Watershed Conservancy District today approved a $40.3 million natural gas lease for 6,500 acres at Seneca Lake in Guernsey and Noble counties.

The lease with Colorado-based Antero Resources was approved 5-0 by the district’s commisioners, despite continued protests from a grass-roots group, the Southeast Ohio Alliance to Save Our Water.

The district will be paid a leasing bonus of $6,200 per acre plus a royalty of 20 percent on natural gas, oil and natural gas liquids from Antero wells under district-owned land, said district spokesman Mark Swiger.

That makes the district that stretches from southern Akron to the Ohio River one of the biggest beneficiaries of the Utica shale boom in eastern Ohio. It will get $77.4 million for the Antero lease and two earlier leases at other lakes. Additional and significant royalty income is also expected from the wells at the three sites.

The district covers 14 reservoirs and dams in 18 counties.

Lea Harper of Senecaville, spokeswoman for the grass-roots group, said the board had failed to listen to health and environmental concerns repeatedly raised by her group and experts assisting the group.

Added supporter Greg Pace of Senecaville, "You can’t drink money. That says it all."

At Seneca Lake, no wells or related developments including roads and pipelines will be permitted on district-owned land under the agreement, but Antero could drill under the lake and district-owned land from wells at other sites, officials said.

The lease arrangement also adds protections to adjacent private properties within a half-mile of district-owned lands, the district said.

Swiger said the number of acres could change slightly, depending on the outcome of title searches on the mineral rights.

The agreement had been outlined in January and was the subject of a public-comment period.

The district owns about 7,600 acres at Seneca Lake, most of which has not been leased for drilling. The 3,550-acre lake is the third largest inland lake in Ohio.

A total of 13 drilling companies had expressed interest in the Seneca Lake property with two firms, Antero and Texas-based Carrizo Oil and Gas, making formal presentations.

The district earlier signed leases in 2011 with Gulfport Energy at Clendening Lake in Harrison County and in 2012 with Chesapeake Energy Corp. for land at Leesville Lake in Carroll County.

Gulfport paid the district a $15.6 million lease bonus on 2,800 acres and royalties on natural gas produced.

Chesapeake paid the district $21.5 million in lease bonuses on 3,700 acres plus royalties.

The district has used the intial leasing bonuses to pay down its debt and to invest in improvements for public access and for its recreational facilities.

The district has identified more than $80 million worth of deferred maintenance, compliance issues and needed upgrades at its facilities.

The governing board has directed district staff to review the district’s long-term financial forecast to determine if a reduction in the maintenance assessment collected from property owners in the 18 counties is warranted.

While the district has not yet received royalty payments from any of its three Utica shale leases, all available projections are being analyzed to determine if any assessment reductions are warranted, said John M. Hoopingarner, the district’s executive director/secretary.

"At the time the assessment was levied by the MWCD in 2009, the financial condition of the conservancy district was much different than it is today," Hoopingarner said in a statement. "It is completely appropriate for the discussions to begin about any assessment reductions."

The assessment, which generates between $10 million and $11 million annually for projects, is reviewed annually by the governing board.

Any reductions for 2014 must be approved and submitted to county auditors near the end of September.

In 2007, the district approved the new assessment that is most often $12 per property.

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Ohio Department of Natural Resources' Division of Oil and Gas Resources Management State agency Web site.

ODNR Division of Oil and Gas Resources Management. State drilling permits. List is updated weekly.

ODNR Division of Geological Survey.

Ohio Environmental Protection Agency.

Ohio State University Extension.

Ohio Farm Bureau.

Ohio Oil and Gas Association, a Granville-based group that represents 1,500 Ohio energy-related companies.

Ohio Oil & Gas Energy Education Program.

Energy In Depth, a trade group.

Marcellus and Utica Shale Resource Center by Ohio law firm Bricker & Eckler.

Utica Shale, a compilation of Utica shale activities.

Landman Report Card, a site that looks at companies involved in gas and oil leases.FracFocus, a compilation of chemicals used in fracking individual wells as reported voluntarily by some drillers.

Chesapeake Energy Corp,the Oklahoma-based firm is the No. 1 driller in Ohio.

Rig Count Interactive Map by Baker Hughes, an energy services company.

Shale Sheet Fracking, a Youngstown Vindicator blog.

National Geographic's The Great Shale Rush.

The Ohio Environmental Council, a statewide eco-group based in Columbus.

Buckeye Forest Council.

Earthjustice, a national eco-group.

Stop Fracking Ohio.

People's Oil and Gas Collaborative-Ohio, a grass-roots group in Northeast Ohio.

Concerned Citizens of Medina County, a grass-roots group.

No Frack Ohio, a Columbus-based grass-roots group.

Fracking: Gas Drilling's Environmental Threat by ProPublica, an online journalism site.

Penn State Marcellus Center.

Pipeline, blog from Pittsburgh Post-Gazette on Marcellus shale drilling.

Allegheny Front, environmental public radio for Western Pennsylvania.