Bridgeport Drilling Leases Discussed
As many of you might have read, the village of Bridgeport is currently exploring the leasing of its mineral rights on village owned property. Let us not be too quick to jump on the cash cow wagon.
This topic was first broached at January’s village council meeting, by the Eastern Ohio Utica Shale Group (EOUSG), who is interested in obtaining such a lease. This group told council that the village owns approximately 38 acres of parceled property, and without giving an exact dollar amount per acre (due to the possibility of competitive bidding), they said the village could see an initial signing bonus of approximately $250,000. Upon hearing the presentation, I asked one of the individuals with the EOUSG, about all of the non-parceled property owned by the village, such as streets, alleys and right-of-ways (this area could be well over an additional 40-50 acres). I believe his response might have been that it could be included later. This to me was and still is unacceptable. After a small discussion, this topic was officially tabled.
Shortly before the February council meeting, council members received the minutes from the previous meeting, with the above aforementioned topic properly documented. However, included with the minutes was a copy of a “legal ad” placed in the local newspaper, stating that the village is accepting bids for the leasing of mineral rights for approximately 38 acres of parceled property. Once again at the February council meeting the topic was brought up again, with myself asking the same question regarding the non-parceled properties. This time, the mayor claimed that there was no way to do this. I will address this in a little bit. Again no official action was taken and this discussion was very short-lived.
Then lo and behold, and less than 72 hours outside of the council meeting, an article appears in the newspaper on Friday Feb. 21, titled, “Oil, gas may pave Bridgeport roads.”
While reading this article, it became quite clear that a certain village official has already decided the who, what, when, and where of the leasing of our mineral rights. Also, for the record, I do not have to be convinced of anything, contrary to what the article says.
With the previous pertinent information being laid out, I must now state my objections and goals pertaining to the leasing of the village’s mineral rights.
I have absolutely nothing against the leasing of the mineral rights. However, I do not believe that the village should jump to such decisions based on less than 10 minutes worth of discussions in two meetings for the following reasons:
1. To my knowledge, no one has ever validated the said 38 acres of property owned by the village, as stated by the EOUSG. As a village official, I cannot just take someone’s word for gospel, with the fact that they are trying to do business with us. Although, I believe they are honest, this information must be validated and I am currently working on validating such acreage.
2. I believe council should wait until proper research is done pertaining to the non-parceled property. What companies are interested in these such properties? How is it calculated? Why do some companies express interest in these non-parceled properties, while others do not? I have begun to research these issues, and hope to have it completed by our March meeting to present to the rest of Council. Keep in mind that these non-parceled properties could total more than 40-50 additional acreage. Given that the going rate is anywhere between $6,500-$7,250 per acre, one can see why I feel this is an important issue to explore. We could be dealing with an additional $260,000-$362,500. Would you not want your village officials to take the necessary time required making sure we get the most revenue possible for your village?
3. Who has taken the time to research such leases? Who can properly explain the terms: Surface rights, the Mother Hubbard Clause, or other such language? Although we will ultimately rely on the expertise of a legal adviser, I am currently in the process of obtaining copies of leasing terms from various oil/gas companies contracts to better familiarize myself as to what to expect and to look for what to avoid. All of this is being done to better educate myself, so I will be able to make the best-informed decision that I can, when the time comes.
I will agree with the official cited in the news article that our roads should and must be a priority. However, this is where our mutual agreement ends. Whatever monies are realized from the leasing of the mineral rights, we as village officials must manage wisely. I do not think that we should use all of this money for any one particular project or projects. I believe a percentage of these funds should be used for: (in no particular order):
1. Investing for credit building: Due to limited local government funds we will have the opportunity to invest for future use, in case of emergencies, or to be able to apply for various grants or low percentage loans for big projects.
2. Investing in equipment: for replacement of poorly operating equipment or vehicles that have become outdated or in poor running condition.
3. Employee bonuses: Our employees definitely deserve more than they get paid. However, I do not think that we should use this money for hourly wage increases. Money used for hourly wage increases must come from a continuous funding source, available each year. Money obtained from a mineral rights signing bonus is only a one-time cash windfall. Thus, an employee bonus would only be a one time financial commitment. Although this will not be a solution to our employees’ wage increase request, it would show them that we appreciate their hard work, while a permanent solution is sought.
4. Infrastructure/roads: As many of us know, a very high percentage of our roads are in deplorable condition, due to harsh winters, lack of proper maintenance, and an aging water system that has suffered many line failures. I do not believe anyone on council needs to be convinced that this is a necessity. Many of these roads are well beyond the usual “patching.’ Many must be completely ground up and properly re-based and paved. This will take an astronomical dollar figure to complete. A percentage of the mineral rights lease cash can be used to fix some main arteries in the village, which we are responsible for. While another percentage can be used to apply for “matching” grants, in an effort to obtain other state or federal funding to help with the rest of the necessary roads repairs.
Whenever the time presents itself that council must decide on a lease to enter into, please be assured that I will only vote for a lease as long as the following are met:
1. Due diligence is paid to maximize the potential revenue for the village.
2. The protection of the very property that we would be leasing the rights to. (Playgrounds, Weeks Cemetery and Gould Park). I will not vote to allow any construction or direct drilling on these properties.
3. All of my concerns are addressed and I am satisfied with the answers I receive pertaining to each one.
In closing, I encourage you as a resident to attend the village council meetings and contact your village officials and express any concerns you may have on this issue. This is our village and we must make sure that we act accordingly and properly to move our village forward in a positive and prosperous manner.
David W. Smith,
Council President Pro Tempore
Village of Bridgeport