NEW PHILADELPHIA: Landowners in the 18-county Muskingum Watershed Conservancy District will see a 50 percent reduction in annual assessments starting next year.
The district’s board approved the cut at a meeting Friday in which it also announced what appears to be the most lucrative drilling-rights lease deal ever signed in Ohio.
Colorado-based Antero Resources will pay $15,000 per acre to drill on more than 6,300 acres of district-owned land at Piedmont Lake in Guernsey, Harrison and Belmont counties.
That would produce a one-time signing bonus for the district in excess of $94 million, plus royalty payments of 20 percent on natural gas and liquids produced by those wells.
The biggest bonus paid landowners by drillers in eastern Ohio is about $7,500 an acre. There have been deals between companies where the price per acre has been $10,000 to $12,000. But the price paid by Antero to the district is unprecedented and may be the most lucrative lease in both the Utica shale and the neighboring Marcellus shale in Pennsylvania.
Another 300 acres will be added to the lease later, officials said. That acreage will be leased later by Antero at the same financial rate.
Other leases in effect
It was the fourth Utica shale lease signed by the district. The other leases at Clendening Reservoir in Harrison County in 2011, at Leesville Reservoir in Carroll County in 2012 and at Seneca Reservoir in Guernsey and Noble counties in 2013 brought in $77.8 million in signing bonuses plus $3 million in royalty payments, to date.
Those funds have been used to pay down debt and to begin work on a $160 million plan to improve recreational facilities.
That additional revenue led the district to cut the assessments paid by 500,000 landowners stretching from Akron south to the Ohio River.
Most landowners now pay $12 a year. That will be cut to $6 a year.
The assessment first was levied in 2009 on landowners in Summit, Stark, Wayne and 15 other counties in the Tuscarawas-Muskingum watershed.
The district collects about $11 million a year from the assessment to ensure the safety of 14 dams and reservoirs.
The district has commitments of about $125 million to the U.S. Army Corps of Engineers to pay the local share on dam projects in eastern Ohio, said John Hoopingarner, district executive director-secretary.
The district will provide $5.5 million from oil-gas revenues in 2015 to make up the 50 percent reduction in assessment income, he said.
The district’s governing board will review the assessment annually and could cut or suspend collection in the future, if drilling income continues to increase, he said. The fee could also be increased in the future by the board, he said.
Water sales approved
The governing board also approved three water sales to Utica shale drillers:
Oklahoma-based American Energy Utica is purchasing up to 60 million gallons of water from Clendening Reservoir. The company will pay $6 per thousand gallons.
Oklahoma-based Gulfport Energy is buying 45 million gallons of water from Piedmont Lake. It will pay $6 per thousand gallons.
Antero Resources is also buying 15 million gallons of water from Seneca Reservoir. It will pay $4.25 per thousand gallons.
Those purchases will lower the reservoirs from a half inch at Seneca, to three quarters of an inch at Piedmont to 1¼ inches at Clendening, officials said.
The maximum daily amount that can be withdrawn for hydraulic fracturing or fracking is 2 million gallons a day from May through July and 1.5 million gallons per day in April, officials said.
The water can be cut off in the case of a drought or reservoir problems, officials said.
Bob Downing can be reached at 330-996-3745 or firstname.lastname@example.org.