Allegheny County could get $73M in park gas drilling deal

Allegheny County could receive as much as $73 million by leasing a public park for natural gas drilling, including a $3.5 million signing bonus.
The Pittsburgh Post-Gazette obtained documents from Range Resources that detailed the company’s proposal to county Executive Rich Fitzgerald. Range wants the county to lease all 1,180 acres of Deer Lakes Park for horizontal drilling and promises there will be no physical impact to the surface.
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Though the signing bonus is a guaranteed, upfront payment, a Range spokesman said royalties realized from drilling depend on pipelines and other infrastructure near the park in West Deer and Frazer.
“The county stands to receive $35 million given current infrastructure availability in that part of the state, with the potential to exceed $70 million,” said spokesman Matt Pitzarella, who said royalties could continue to be collected for more than 30 years. “All with zero impact on the park.”
Mr. Pitzarella said the proposal included no drill rigs on county property. Rather, the land beneath the park would be accessed through horizontal drilling with drill rigs on neighboring properties.

There is a moratorium on drilling within the Pittsburgh city limits, but major energy companies have targeted areas around the city. The Allegheny County Airport Authority has signed a deal with Consol to drill at Pittsburgh International Airport starting in 2014 for an estimated $450 million over the next two decades.

The Post-Gazette reports Range Resources has a similar arrangement at a public park in Washington County:

Between royalty payments and bonuses at Cross Creek, the county has so far netted $8.8 million since the first lease was signed in 2003. The county has received another $9 million in Marcellus impact fees from the state for its 686 wells.
“It was a surprise. We knew there would be a profit, but we were surprised with the royalties we got,” said Washington County Commissioner Larry Maggi. “We never thought it would be that much.”
Mr. Maggi said the county was wary at first about signing a lease, especially one that allowed so much drilling in the “beautiful and pristine” park, which features a 253-acre, man-made lake, pavilions and outdoor activities.
“In Washington County, we have a history of being ravaged by industry,” with coal mines, steel mills and other industry that leave behind environmental damage and abandoned industrial sites. “I think we learned from that.”
The county also learned from the mistakes that were made at Cross Creek, including one wastewater spill in 2009, several environmental violations and the accidental clear-cutting of more than 100 trees by a Range subcontractor in 2011.

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