North Huntingdon could get nearly $7K for gas rights under township land

A natural gas production company wants the gas rights to a 4½-acre parcel owned by North Huntingdon.

The company, Apex Energy, is offering the township a lease worth $1,500 per acre — equal to $6,760 — to drill into township-owned land abutting homes along a portion of Peregrine Drive.

“It’s not going to be Jed Clampett money,” C. Zane Keslar, senior lease acquisition agent for Apex Energy, told the township commissioners. The reference to the popular 1960s television show about a hillbilly striking it rich from finding a pool of oil on his property drew some laughter from those who recalled the series.

The terms of the five-year lease, what gas companies term as “participation lease” are not negotiable, Keslar said following the meeting. Apex Energy wants the township to sign over its mineral rights by June 30, Keslar said.

“It’s the same terms we give everyone,” Keslar said.

The lease also would give North Huntingdon monthly royalty rights of 16% on the sale of the natural gas, without any deductions for various production and transportation costs on the pipeline, Keslar said. Royalty rights, which usually range from 12.5% to 18%, Keslar said. Royalty rights typically are based on the gross revenue generated from the sale of the natural gas, which fluctuates in price, depending on market conditions.

Keslar said after the meeting that Apex Energy has the rights to renew the lease after five years, but any royalty check the township receives within that five-year period, automatically renews the lease.

Apex plans to drill down 8,000 feet — about 1½ miles — from a well pad near St. Edward Parish on Herminie Road in Sewickley Township, then drill horizontally toward the pocket of methane off Barnes Lake Road. From that well pad, the company intends to drill seven wells into the Marcellus shale reserve, which is a 250-foot thick pocket of methane, Keslar said.

The well pad is about 3½ miles from the township property, and no above-ground operations will be conducted there. The drilling will end at the township property and will not extend beneath the houses on Peregrine Drive, Keslar said after the meeting.

When questioned by Commissioner Fran Bevan about possible impact on water supplies, Keslar said the water might be about 500 to 800 feet below the surface, well above the drilling depth for the natural gas.

The water that resurfaces after being used under high pressure to fracture the shale to release the methane will be shipped from the well pad site for treatment, Keslar said.

The chemicals used in the fracking water and the minerals brought to the surface have been a point of controversy since gas companies started drilling into the Marcellus shale reserves decades ago.

Apex Energy also identified a .5-acre parcel that the North Huntingdon Township Municipal Authority owns and would be along the route of the drilling. The township municipal authority last week signed a lease with Apex, Keslar said.

Michael Branthoover, municipal authority executive director, could not be reached for comment Tuesday.