Proposal to drill under Deer Lakes Park headed to Allegheny County Council
A preliminary deal struck between Allegheny County and energy company Range Resources to drill for natural gas under Deer Lakes Park secured higher payments without ignoring environmental concerns, industry analysts said.
The county and Range, which with Huntley & Huntley submitted the lone bid, agreed to wider and more frequent testing of surface water near the well sites plus an assured $7.7 million and payments of possibly $3 million a year, County Executive Rich Fitzgerald announced on Monday.
Drilling activity, including the well pads, water storage and truck transportation, will occur on private property outside the park boundaries, Fitzgerald said.
“I'd say the county did pretty well for itself,” said Kris Vanderman, a Charleroi attorney who has worked on oil and gas leases.
Vanderman said he has worked on only one lease with similar water testing restrictions.
The proposed lease will go before County Council on Tuesday, where it will be subject to public hearings and debate within committees before a final vote, Vice President Nick Futules, D-Oakmont, said. Councilwoman Barbara Daly Danko, D-Regent Square, thought council members remained split in their support for the drilling under the parks.
“It doesn't really matter to us. We are opposed to fracking under county parks,” said Mel Packer, 68, of Point Breeze, a regular speaker at council meetings against drilling. “Nothing is going to change that.”
According to details of the proposed deal, the county will receive $4,000 an acre up-front for the 1,180 acres of Deer Lakes Park in West Deer and Frazer. Range will donate $3 million to the Park Improvement Fund in installments and pay 18 percent in royalties over the life of the lease.
The wells could produce natural gas for 30 to 40 years with about half the production occurring in the first eight years, said Matt Pitzarella, spokesman for Cecil-based Range Resources. Range estimates three well pads could reach under the park.
Pitzarella said a Tribune-Review analysis published in June that estimated county revenues at $40 million to $93 million is “in the ballpark” of how much the deal could net the county. The analysis was based on 16 percent royalties, not the 18 percent figure agreed to in the lease.
Range will limit noise and light pollution and pay for reconstruction and repairs to roads. Range will host two job fairs near the drilling site, Fitzgerald said.
“By the county entering into this lease, we are going to be improving the environment for the folks in this community,” Fitzgerald said, adding that Range would drill in the area with or without the county.
Steven C. Townsend, a Downtown attorney who represents landowners in natural gas deals and who has negotiated several leases with Range Resources, said private landowners have received half of what the county negotiated. He has negotiated similar environmental considerations for smaller pieces of private property.
“It sounds like a pretty decent deal,” Townsend said. “When you're doing these leases, the last thing you want to do is look at the money; you want to make sure the environmental restrictions are set forth.”
Fitzgerald said a public hearing is scheduled for 7 p.m. April 2 at Deer Lakes High School.
Aaron Aupperlee is a staff writer for Trib Total Media. He can be reached at 412-320-7986 or email@example.com.