Ford City holds out for better terms on mineral rights
By Brigid Beatty
Published: Tuesday, Aug. 27, 2013, 12:51 a.m.
FORD CITY — Borough council on Monday delayed going forward with plans to lease the mineral rights of a parcel of land in North Buffalo in an attempt to get a better deal.
At Councilman Gene Banks' suggestion, council members plan to discuss the matter in an executive session within the next two weeks with experts in the gas and oil industry.
During the Aug. 12 meeting, council voted in favor of leasing the mineral rights of the former Ford City Dump (off Bunker Hill) to Penn Natural Resources — pending borough Solicitor Frank Wolfe's review and recommendation.
However, on Monday, Wolfe noted that there had been a problem with the initial lease proposal that was submitted and that it did not comply with the stipulation of drilling below the level of 5,000 feet (at the level or below the Marcellus shale line).
Wolfe provided council with a revised lease.
According to council President Lou Vergari, Penn Natural Resources agreed in the amended lease to give the borough $79,075 for leasing the63.26 acres for five years. He was unsure what the potential revenue would be if there were viable resources of gas or oil.
“That (sum of $79,075) is whether they drill or not,” said Vergari, adding, “They said they are going to drill.”
In addition, Vergari said, the company said it would contribute $10,000 to the borough for playground equipment — although Wolfe clarified that the promised contribution was not in writing.
Vergari noted that late last year, council hired an expert to negotiate with oil and gas companies on behalf of the borough. The proposal from Penn Natural Resources was the only proposal received in recent months. The sum will be closer to $75,000 after 5 percent is deducted to pay the negotiator.
Councilwoman Kimberly Bish raised concerns about an increase in truck traffic associated with drilling activities for the borough and on the proposed leased property.
Wolfe pointed out that the lease is a non-surface lease and that the company will not be able to drill or drive on the property and can only gain access by going under from adjacent properties.
“It's an environmentally sensitive area because it's a landfill,” Wolfe said. “You wouldn't want any activity on it.”
Vergari held up a map and pointed out the parcel in question, which borders the Allegheny River on one side and which is bordered on two sides by properties which have already been leased to the same drilling company.
Councilman Jerry Miklos questioned why the borough should pay “a middle man” to negotiate the deal.
“At least we're in the game here,” said Vergari, reiterating that the borough stood to gain $75,000 even without drilling.
Councilman Jerry Miklos and Mayor Marc Mantini both told council that each had spoken with experts in the field of oil and gas drilling. Mantini said he had reason to believe the borough could get more money than the proposed deal with Penn Natural.
Miklos told council he would coordinate getting everyone together for the executive meeting.
Vergari asked: “Will we be able to make a decision by the next meeting?”
“The offer (from Penn Natural Resources) may be gone by then,” Councilman Rob Mohney said.
In other business, council:
• Voted 5-1 to omit the second council meeting each month, beginning in September, and instead have only one regular scheduled meeting, to be held on the second Monday of every month. Vergari voted against the measure.
Mohney said council needed to keep to the agenda in order to prevent the monthly meetings from going on too long.
Monday's meeting was three hours long.
“We come to the table to do business and not to argue,” he said.
Brigid Beatty is a staff writer for Trib Total Media. She can be reached at 724-543-1303 or email@example.com.
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