Seeking Treasure Underneath Trash: Wheeling Could Get $2M From Gas Leases for Old Landfills
WHEELING –About $2 million up front plus a steady stream of production royalties for years to come should flow into the Friendly City, as Wheeling leaders plan to lease Marcellus and Utica shale natural gas fracking rights on approximately 336 acres of property.
“While we understand that gas drilling can be controversial, we feel that we wouldn’t be acting in the most financially responsible manner if we passed up on over $2 million in up-front money that can be used for paving, playgrounds, economic development and other city functions,” Wheeling Vice Mayor Chad Thalman said.
Thalman and other members of Wheeling City Council are expected to pass a resolution allowing City Manager Robert Herron to enter the lease agreement with Canonsburg, Pa.-based American Petroleum Partners. The vote is expected after a public hearing on the matter, set for noon Tuesday on the first floor of the City-County Building, 1500 Chapline St.
This is a totally separate deal from the one in which the city joined with the Wheeling Park Commission several years ago to lease fracking rights at Oglebay Park to Chesapeake Energy. Chesapeake later sold most of its West Virginia operations to Southwestern Energy Co. for $5 billion.
“It it currently estimated that the city would receive approximately $2 million in up-front payments for this lease, plus future royalty payments,” Mayor Glenn Elliott said.
“I recognize that there are those in our community who have serious concerns about or are deeply opposed to natural gas fracking. As a private citizen, I, too, share some of those concerns,” Elliott added. “But as mayor, I have to weigh the pros and cons of any decision like this from the perspective of what’s best for the city’s taxpayers.”
According to the resolution, council will allow Herron to enter a deal with American Petroleum Partners. Its CEO is Varun Mishra.
To date, the only companies actually to drill and frack horizontal shale wells in Ohio County are Chesapeake and its successor, Southwestern.
Elliott said the drilling and fracking would take on about 336 acres of city-owned property, a significant portion of which is “under old city landfills.” One of these is the former North Park Landfill, which operated from 1971-83.
“Most of the city property being leased is the old abandoned city landfills. Almost half of the acres are outside of city limits,” Thalman added.
Thalman said the city will receive about $6,000 for each acre leased to APP, in addition to 18.5 percent of production royalties once the natural gas starts pumping.
Almost exactly eight years ago, former Mayor Andy McKenzie and fellow city council members voted to allow Chesapeake Energy to draw natural gas from the Oglebay Park property. At that time, with the Marcellus and Utica shale play in its infancy, terms of this deal paid Wheeling just $750 per acre and 14 percent of production royalties.
In early 2010, the Wheeling Park Commission and the city each gained $386,629 in lease payments from Chesapeake as part of the drilling contract for the Oglebay land.
Chesapeake’s original drilling plans called for the closure of the Oglebay Stables, with the company’s drilling pad to be established nearby at a point between W.Va. 88 and GC&P Road. However, park commissioners quickly filed objections with the West Virginia Department of Environmental Protection regarding the drilling project, primarily questioning Chesapeake’s plans for water usage and the disposal of fracking fluid, among several other concerns.
Eventually, after months of negotiations, Chesapeake eventually built drilling sites off the Oglebay surface property.
Because of continuous advances in horizontal drilling, a rig positioned on the surface can drill a well long enough to reach a natural gas deposit as far away as 2 miles or more. Typically, companies working in the Marcellus and Utica shale field drill vertically into the earth for more than a mile to reach the shale formation. From that depth, they then drill vertically into the rock to prepare for fracking, which is formally known as hydraulic fracturing.
Once contractors move the rig on to another drilling operation, the frack crew arrives at the well. Officials estimate it takes up to 10 million gallons of water to frack a single well, along with about 4 million pounds of sand, in addition to the chemical cocktail.
Frackers blast these materials deep into the earth at a force as high as 10,000 pounds per square inch to shatter the rock in order to release the oil or natural gas.
In all, the EPA identified 1,076 chemicals that have been used in fracking, although the majority are of those were rarely identified at individual sites. The vast majority of the substances are found in items such as soda pop, detergent and hair dye.
“Drilling is already happening all around us and considering that this lease does not allow any rigs on city property, I don’t anticipate problems from leasing this property,” Thalman said.