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McKean County officials looking at opening up county-owned land for oil and gas drilling; move could eventually affect municipality’s bottom line
By MIKE SCHREIBER
Era Associate Editor
McKean County officials are looking at opening up county-owned land for oil and gas drilling as part of a move that could eventually affect the municipality’s bottom line.
On Monday, Commissioner Chairman Joe DeMott confirmed that county officials have received a letter from a drilling company expressing an interest in drilling on county-owned land. DeMott, who did not name the company, said the county is in the preliminary stages of the process, and nothing would likely occur until sometime next year.
During a meeting last week, the commissioners approved a resolution allowing them to approach energy companies to explore the possibility of drilling — which has reached historically high levels across the county and surrounding region. Producers are particularly interested in capturing natural gas from the wells; the price for the commodity has been steadily rising for some time.
“Oil and gas exploration is a major industry in the county today, and since the county owns considerable pieces of property, we would like to explore turning that into some money for the taxpayers,” DeMott said, adding the county could potentially receive free natural gas for use in the courthouse and other buildings.
“If a major (natural) gas strike were to occur, we would expect the county to realize some significant payments, as well as potentially free gas,” DeMott said.
Currently, the prime piece of land for such an operation lies behind the 911 Center off U.S. Route 6 in Smethport, where 350 acres are potentially available. County officials said there are a number of parcels available, however, for possible use.
The county is also in the process of applying for a state grant that would develop a land use study for that area, as well as the nearby county fairgrounds and other areas around Smethport for trails and other projects.
DeMott said in addition to receiving the letter from the energy company, he became aware of the possibilities that oil and gas drilling could provide the county through his association with the Bradford Regional Airport Authority. Numerous oil and gas wells dot the airport’s grounds and have helped the airport improve its budget.
Pennsylvania Oil and Gas Association Executive Director Steve Rhoads said there’s been a lot of interest statewide by municipalities and other land holders looking to team up with the oil and gas industry.
“It makes a lot of sense to take advantage of the opportunity if you own minerals,” Rhoads said, “particularly with natural gas prices getting higher.”
Rhoads said by doing so, municipalities can reduce energy costs significantly over the long term.
Last month, National Fuel Gas Corp., announced a 5.34 percent increase — or $6.58 — in the price of natural gas for county residents. The resulting increase means a hike from $123.25 to $129.83 on the monthly bill of a residential customer using 100,000 cubic feet of natural gas annually. That figure rises for municipalities and businesses.
In regards to the acreage behind the 911 Center — the county currently has a lease with a farmer who is using that property — DeMott said there are already some gas wells situated on neighboring properties, adding he’s been told they are good producers.
“There is good potential for oil and gas production on that piece,” DeMott said, adding the lease with the farmer runs into next spring. The commissioner said while the county does own the mineral rights on that parcel, it’s still exploring whether that’s the case on the other parcels across the county.
“If there is interest in developing those other properties, we would look into doing something on those as well.”
While there is no immediate indication on how much the county could receive in royalty payments from the sites, DeMott said in talking with the Penn State Cooperative Extension Office, the leases have increased exponentially over the last few years.
“There is a possibility we could take in a sizable amount of money,” DeMott said.
Officials said companies looking to drill on the site lease that right for a specified period of time, with the drilling done at the expense of the energy company. The county would then receive a portion of those proceeds and some other considerations.
“At this point, we really don’t have a feel for how much interest there is in the energy community to do this,” DeMott said.
Any liability for the county — particularly environmentally — will also be discussed before entering into any deal, DeMott said.
“One of the things we would like to do is develop this as a state-of-the-art environmentally-friendly drilling process,” DeMott said, adding the county intends to develop some other “environmental demonstration-type” projects on the property behind the 911 Center.
According to DeMott, those projects could include streambank improvements on Marvin Creek and working with the Cooperative Extension Office on agriculture projects, among others.
County officials also believe by allowing drilling it will eventually impact the annual budget.
“This year’s budget was balanced with funds received from the Solid Waste Authority, but looking at next year, we won’t have that sort of windfall,” DeMott said. “We are always looking at cutting expenses and generating income to keep taxes low.”
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