Potential payday exists for drilling in Allegheny County parks
Allegheny County could raise between $40 million and $96 million from drilling in Deer Lakes Park, Tribune-Review research shows — an amount that could pressure county officials to make a deal quickly and look more closely at opportunities in other county parks.
County officials, who have spent years exploring the possibility of shale gas drilling on county land, are weighing an offer from Huntley & Huntley Inc. that could access all of Deer Lakes Park from wellheads outside its borders.
County Executive Rich Fitzgerald called officials in Washington County to arrange a tour of Cross Creek Park, where Huntley's drilling partner Range Resources has wells.
“We've gotten interest in just about every park land,” Fitzgerald said, declining to say what terms he would need to agree to support drilling. “There's a window. There's a window of opportunity or a window of lost opportunity.”
Nearly all of the county parks are surrounded, or close to it, by a mix of old and new gas leases, Fitzgerald said.
“That's just terrible,” said Libby Kaufman, of Elrama, who visited Round Hill Park on Friday. “As parents, you spend so much time teaching your kids the basics — washing their hands and watching out for falls and germs. We shouldn't have to worry about what's going on under the ground every time we take a trip to the park.”
Kaufman, 34, frequents Round Hill Park with her little girls, Anna and Morgan. Situated on 1,100 acres in Elizabeth Township, the park houses 17 picnic groves, a live animal exhibit and the Allegheny Farm Corps, a volunteer–based production farm that donates crops to the Greater Pittsburgh Community Food Bank.
Davitt Woodwell, executive vice president for the Pennsylvania Environmental Council, said it's up to the county to influence the terms of the leases, citing concerns about potential hours of operation, road construction, truck travel, surface disturbance, water sources, noise and waste removal.
Most drilling occurs more than 5,000 feet below the surface, Woodwell said. Groundwater rarely is deeper than 500 to 1,000 feet. He suggested the county impose water testing beyond regulatory requirements before and after drilling begins to account for any possible changes in quality.
“You have to make sure you have the weight and power to protect any particular values you have before you start,” he said, “then make sure those values are represented in the lease.”
A Huntley official did not respond to requests for comment.
The Tribune-Review reviewed promotional investor information from Range, which Huntley said would need three well pads to access nearly all 1,180 acres in the park, spanning Frazer and West Deer. Lawyers and geologists examined the terms Huntley offered landowners in the area and the number of wells they would need to access Deer Lakes.
Range said its wells reach about 3,000 to 4,000 feet sideways for its horizontal hydraulic fracturing operations. That would mean about 13 to 20 wells to drain the park's gas resources, geologists said. Range's information said its wells drilled nearby last year hold a lifetime estimated return of 5 to 10 billion cubic feet per well. That would produce between 65 and 150 billion cubic feet of natural gas at Deer Lakes.
Monroeville-based Huntley has offered royalties of more than 16 percent for large-parcel owners, which would produce for the county about $40 million to $93 million at current gas prices. Its up-front bonus has been $1,000 to $2,500 an acre, which would produce another $1 million to $3 million.
“It depends on how many of these (wells) are online, but that's certainly well within the possibilities,” said Steven C. Townsend, an attorney who represents some of the landowners. “As soon as the money (estimate) comes out, there's going to be a lot of pressure to get the deal done, and H&H is going to get it because they are the only deal in town.”
Huntley, working as the minority partner with Texas-based Range, has been leasing land and building a pipeline system around the park, its officials said in interviews this week. It offered that as an incentive, saying that if the county makes a decision within about six months, it could use a pad on one of those neighboring properties to start drilling into Deer Lakes Park next year.
A map University of Pittsburgh researchers produced in 2010 shows the two companies leased large tracts around other county parks, including Round Hill in Elizabeth and Settlers Cabin in the western suburbs.
“We have interest in allowing county taxpayers to experience the same benefits … as taxpayers have in Washington County, but nothing is finalized at this time,” Matt Pitzarella, spokesman at Range's Cecil offices, said in an email.
Range has one environmental violation for its work at Cross Creek county park in Washington County, which it first received permits for in 2007, state records show. A complaint inspection in March 2010 turned up potential water pollution work that didn't have a permit, but it was resolved the same day with no fine issued, according to Department of Environmental Protection records.
Range had a diesel spill nearby, but it did not result in long-term damage and the work has been largely positive, said Larry Maggi, Washington County commissioner. He said he got the call from Fitzgerald on Thursday to set up a tour and plans to show Allegheny County officials docks, playgrounds and walking trails the county added at the park because of the gas royalties.
“It's minimally intrusive,” Maggi said, noting that the wellhead and tanks left from the work take up less than a half acre of space. “We studied all the ramifications. We looked at everything that could go wrong, all the positive things. Our experience with the wells has been positive.”