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St. C Gets No Bids For Drilling

Community wants $7,300 per acre and 20 percent royalties

March 1, 2014
By CASEY JUNKINS - Staff Writer , The Intelligencer / Wheeling News-Register

ST. CLAIRSVILLE - At a lease rate of $7,300 for each of its 195 mineral acres, St. Clairsville city leaders stood to collect more than $1.42 million from a Utica Shale natural gas company - in addition to gaining 20 percent worth of royalties at the start of production.

Although Gulfport Energy, Rice Energy, Hess Corp., American Energy Partners, Antero Resources, XTO Energy and others are drilling and fracking across Belmont County, none of them bid on St. Clairsville's "request for proposal" that was due Tuesday.

"We've had some interest, but no one wants to reveal what they want to bid," said St. Clairsville Mayor Robert Vincenzo. "Ohio Revised Code said we had to bid it out. Now that has been bid out, we can talk to them."

Article Photos

Photo by Casey Junkins - Mineral rights at the St. Clairsville City Reservoir are part of the 195 acres that city officials are trying to lease for Utica Shale oil and natural gas drilling.

According to St. Clairsville's proposal, the minimum $7,300 per acre payment would be accompanied by 20 percent of production royalties, without allowing the driller to deduct "post production expenses" as some companies do.

"If somebody is going to come in, we want to give them some suggestions. These are the going rates," Vincenzo said.

The agreement also would have forbidden drillers from impacting any surface property within the city. In horizontal drilling and fracking, companies typically would place rigs and other equipment on the surface outside the municipality to access the gas trapped thousands of feet underground.

Another key specification in the proposal called for drillers to avoid using kerosene, xylene, toluene, benzene and formaldehyde in their operations. It also asked them to limit noise, vibration, odors, lights and truck traffic.

"We are trying to cover all bases in the case of any future problems," Vincenzo said.

City-owned parcels St. Clairsville wants to lease for drilling include the Jr. Sports Fields baseball complex in the northern portion of the city; the National Road Bikeway; the minerals under the St. Clairsville City Reservoir; the area around the municipal garage; the area around the sewage plant; a large city-owned parcel in the area of Cindy Drive along Barton Road; and another sizable piece of acreage in the village of Provident, just north of St. Clairsville.

In terms of possible spending plans for the lease money and potential royalties, the RFP shows St. Clairsville is looking to fund several public infrastructure projects. These plans show the city wants to perform a $2.5 million renovation and expansion of the J.B. Martin Recreation-Senior Center, which is adjacent to Red Devil Stadium at the former Belmont County Fairgrounds.

St. Clairsville seeks to join several other municipalities and school districts throughout Belmont County by cashing in on the burgeoning Utica Shale boom. Over the past three years, county commissioners landed a lease payment of about $3 million for signing 406 acres over to Rice Energy for $7,500 per acre. Other deals include:

- The village of Barnesville received $5.97 million for leasing 1,047 acres to Antero at $5,700 per acre.

- The Barnesville Exempted Village School District signed 63 acres to Antero at the $5,700 per acre rate, while Antero also donated some funds to the school for the deal to reach $400,000.

- The city of Martins Ferry got $729,435 for leasing about 147 acres to Exxon Mobil subsidiary XTO for about $4,950 per acre.

- The village of Bellaire is getting more than $470,000 by signing 66 acres to Gulfport for $7,250 per acre.

- The Shadyside Local School District got $7,250 per acre for 20 acres from Gulfport for at total of $145,000.

- The Martins Ferry City School District signed about 8.8 acres over to Gulfport at a rate of $6,750 for a total payment of $59,521.50.

- The Union Local School District got $519,750 for leasing 105 acres to XTO at a rate of $4,950.

- Union Local signed another deal with Rice for about 36 acres at the former Bethesda school for a payment of $112,000.

None of these amounts include royalties for production once gas starts flowing, which reach as high as 20 percent for each agreement.

 
 
 

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