MWCD Board OKs non-development oil, gas lease at Seneca Reservoir
February 15, 2013
The Muskingum Watershed Conservancy District (MWCD) Board of Directors has approved entering into an oil and gas lease in the Utica Shale region for more than 6,000 acres of its property at Seneca Lake in Guernsey and Noble counties that will prohibit any surface development on MWCD property and add protections to adjacent private properties.
“For nearly 80 years, the MWCD has been involved in leasing its properties for oil and gas development and has been a recognized leader in providing for environmental protections through its strong leases,” said Sean D. Logan, MWCD’s chief of conservation. “With the attention that the Utica Shale has produced here in Eastern Ohio, the MWCD demanded that any leasing of the Seneca Lake region include the strongest safeguards possible and be completed in full view of the public.”
The lease agreement between the MWCD and Antero Resources of Colorado was reached after several months of negotiations and a copy of it has been available on the MWCD’s website (www.mwcd.org) since mid-January. The conservancy district, which held a public meeting in October to announce that it planned to lease its available acreage at Seneca Lake and received public input then, also invited comments about the lease posted on its website through e-mail, fax or regular mail.
A total of 20 comments were received and MWCD staff members have followed up with many of those people to answer questions and provide additional details. About 170 “signatures” opposing any oil and gas development also were sent to the MWCD through on an online petition drive sponsored by an environmental website.
Under the lease terms approved by the Board during its meeting today (Feb. 15) in New Philadelphia, there will be no well pads, lease roads or pipelines on MWCD property, and surface operations on adjacent lands where the MWCD shares in the well or lands also leased by Antero and located within a half-mile of MWCD property also will be subject to the environmental safeguard terms of the lease, Logan said. The MWCD will have an opportunity to review erosion control and engineering plans, and the lease contains surface operation requirements to reduce the impact to the lake community, such as specifications on the drilling operations, reclamation procedures and light and sound controls.
The MWCD will receive a signing bonus of $6,200 per acre and a share of 20 percent of the royalties on gross revenues of oil and gas produced from its property, according to the lease terms. The Seneca lease is the third large-acre lease that the MWCD has entered into during the Utica Shale development (along with Clendening Lake in Harrison County in 2011 and Leesville Lake in Carroll County in 2012) and the MWCD has used a portion of the signing bonus funds to pay down its debt and to invest in improvements for public access and to its recreational facilities. The MWCD has identified more than $80 million worth of deferred maintenance, compliance issues and needed upgrades at its facilities.
The MWCD Board of Directors also has instructed the MWCD staff to review the conservancy district’s long-term financial forecast to determine if a reduction in the maintenance assessment collected by the MWCD from property owners in its 18-county region is warranted. While the MWCD has not yet received royalty payments from any of its three Utica Shale leases, all available projections are being analyzed to determine if any assessment reductions are warranted, said John M. Hoopingarner, MWCD executive director/secretary.
“At the time the assessment was levied by the MWCD in 2009, the financial condition of the conservancy district was much different than it is today,” Hoopingarner said. “It is completely appropriate for the discussions to begin about any assessment reductions.”
The assessment, which generates between $10 million and $11 million annually for projects that maintain the condition and operation of the system of flood-reduction dams and reservoirs in the Muskingum River Watershed, is reviewed annually by the MWCD Board of Directors. Any reductions for 2014 must be approved and submitted to county auditors near the end of September.
The public meeting and public review and comment period for the Seneca lease are not required by law, and input previously received by the MWCD following the public meeting were incorporated into the proposed lease agreement with Antero, Logan said, adding that MWCD staff members were pleased that residents of the lake region and others with an interest in the process were able to participate.
The MWCD has managed oil and gas leases on its properties for its entire 80-year history as a part of its overall natural resources stewardship program. There are approximately 275 traditional (Clinton development) wells that the MWCD receives royalties from, Swiger said.
The MWCD, a political subdivision of the state, was organized in 1933 to develop and implement a plan to reduce flooding and conserve water for beneficial public uses in the Muskingum River Watershed, the largest wholly contained watershed in Ohio. Since their construction, the 16 reservoirs and dams in the MWCD region have been credited for saving more than $10 billion worth of potential property damage from flooding, according to the federal government, as well as providing popular recreational opportunities that bolster the region’s economy. A significant portion of the reservoirs are managed by the MWCD and the dams are managed for flood-risk management by the federal U.S. Army Corps of Engineers (USACE).
For more information about the MWCD, visit www.mwcd.org and follow the MWCD on Facebook and Twitter.
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