Revenue from oil and gas rights leasing could be used to make upgrades and repairs to facilities owned by the Muskingum Watershed Conservancy District.
The district, which has about 30,000 acres of leasable property in eastern and southeastern Ohio, is among a number of public entities that stand to benefit from lease bonuses and potential royalties, although environmental concerns have slowed those plans for at least one agency.
The conservancy district has already leased about 6,400 acres at Clendening Reservoir in Harrison County. That deal was worth
leases approximately $15.5 million, likely the largest lease bonus payment in the district's 80-year history, but hardly the first, said Darrin Lautenschleger, the district's public affairs administrator.
The district receives oil and gas royalties from about 275 producing wells, 120 of which are on its property. The rest are on land to which the district retained oil and gas rights after the property was sold. Such royalties generate about $250,000 a year for the district.
None of the existing wells involve the horizontal, hydraulic fracturing process accessing the deep Utica shale formation and driving up lease payments in the region. That's why the Clendening payment was so large, and the district is making plans to use that and future revenue to address various needs.
The district's board of directors in 2011 approved a $15.5 million lease with Gulfport Energy Co. for the mineral rights to more than 6,000 acres at Clendening Reservoir in Harrison County.
The district owns the mineral rights to about 30,000 acres in the Muskingum River watershed and has been approached by companies about leasing mineral rights at other reservoirs.
There are 6,154 acres of leasable land at Seneca Lake in Noble County.
The district's lease has been used as a model by other public agencies in leasing their property.
Source: Muskingum Watershed Conservancy District.
"We've earmarked the dollars that have been generated to this point to improving our facilities and improving public access," Lautenschleger said. "There are a number of items and needs that have been deferred for a number of years due to budget concerns."
Among the work that needs to be done are replacement of outdated water lines, electrical upgrades at campgrounds and improvements to boat ramps and shower facilities, he said.
The district has been approached about leasing the mineral rights on other property. While it does not own any land in Washington or Morgan counties, it does have 6,154 acres at Seneca Lake in Noble County.
Although experts say the horizontal drilling and so-called "fracking" process is safe when done properly, concerns have been raised over the potential environmental impact, especially its effect on water quality. Lautenschleger said conservation of water resources is an important part of the district's mission and that responsibility has been carried into the oil and gas arena.
The 13-page lease the district signed with Gulfport for the Clendening land contains a number of environmental protections, including approval of the placement of any wells, pipelines, tanks, access roads or other structures; a requirement of water quality testing; and a provision that the property will be restored to pre-drilling conditions once operations are completed.
"Our lease has been held up as a model for environmental standards in the past," Lautenschleger said.
Marilyn Ortt, president of the Friends of the Lower Muskingum group, said while she's concerned about the speed at which the oil and gas boom is moving, she believes the district is being responsible in its leasing.
"I guess I'm always going to have some concern because we just haven't had the experience here in the East with horizontal fracking," she said. "I think (MWCD officials) have looked at it and foreseen everything they can think of."
A plan to auction off mineral rights in portions of the Wayne National Forest in Athens, Gallia and Perry counties was put on hold in November after residents and officials in the region expressed concern over the potential impact on water sources and scenery. The forest's review of new information is ongoing and looking at whether horizontal drilling is allowed under the forest's 2006 plan, said Gary Chancey, public affairs staff officer for the forest.
"The primary mission there is to take a look at the effects on the surface," he said, adding that forest officials are also asking questions about water quality.
A decision could be reached in the next 60 days, although no deadline has been established, Chancey said.
The state of Ohio is also making preparations to offer land belonging to entities like state parks and universities for lease. House Bill 133, passed in September, established the framework for the Oil and Gas Leasing Commission to oversee and approve leasing of state-owned and controlled land. State nature preserves would be excluded.
Until the law takes effect July 1, the leasing process would be handled by the specific agencies that own the land, said Carlo LoParo, spokesman for the Ohio Department of Natural Resources.
Once potential areas for leasing are identified by the agencies, requests for proposals will be put out and a competitive bidding process will ensue. Before the bids are examined, the request would be available for public review, LoParo said.