NEW PHILADELPHIA: The Muskingum Watershed Conservancy District on Friday 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 district commissioners, 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, district spokesman Mark Swiger said.
That makes the district, which 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 also is 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 grassroots 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 land, 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 initial leasing bonuses to pay down its debt and to invest in improvements for public access and for its recreational facilities.
Plans for money
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,” he 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.
Bob Downing can be reached at 330-996-3745 or firstname.lastname@example.org.