MWCD finalizes Seneca oil, gas lease; receives $6,200/acre signing bonus

muskingum watershed

NEW PHILADELPHIA, Ohio — The Muskingum Watershed Conservancy District (MWCD) board of directors approved an oil and gas lease for more than 6,000 acres of its property at Seneca Lake in Guernsey and Noble counties,

The lease with Antero Resources of Colorado, approved at the board’s Feb. 15 meeting, prohibits any surface development on MWCD property and adds protections to adjacent private properties.

The MWCD will receive a signing bonus of $6,200 per acre and a share of 20 percent of the royalties on gross revenues of oil and gas produced from its property, according to the lease terms.

“With the attention that the Utica Shale has produced here in Eastern Ohio, the MWCD demanded that any leasing of the Seneca Lake region include the strongest safeguards possible and be completed in full view of the public,” said Sean D. Logan, MWCD’s chief of conservation.

A copy of the lease agreement between the MWCD and Antero Resources has been available on the MWCD’s website since mid-January.

No well pads on property

Under the lease terms, there will be no well pads, lease roads or pipelines on MWCD property, and surface operations on adjacent lands where the MWCD shares in the well. Lands also leased by Antero and located within a half-mile of MWCD property also will be subject to the environmental safeguard terms of the lease, Logan said.

The MWCD will have an opportunity to review erosion control and engineering plans, and the lease contains surface operation requirements to reduce the impact to the lake community, such as specifications on the drilling operations, reclamation procedures and light and sound controls.

Public input

The conservancy district held a public meeting in Senecaville in October, and also invited comments about the lease through email, fax or regular mail. A total of 20 comments were received and staff members have followed up with many of those people to provide additional details.

About 170 “signatures” opposing any oil and gas development also were sent to the MWCD through on an online petition drive sponsored by an environmental website.

Other MWCD leases

The Seneca lease is the third large-acre lease that the MWCD has entered into during the Utica Shale development (along with Clendening Lake in Harrison County in 2011 and Leesville Lake in Carroll County in 2012).

The MWCD has used a portion of the signing bonus funds to pay down its debt and to invest in improvements for public access and to its recreational facilities.

The MWCD has identified more than $80 million worth of deferred maintenance, compliance issues and needed upgrades at its facilities.

Assessment reduction?

The board of directors also has instructed the MWCD staff to review the conservancy district’s long-term financial forecast to determine if a reduction in the maintenance assessment collected by the MWCD from property owners in its 18-county region is warranted.

While the MWCD has not yet received royalty payments from any of its three Utica Shale leases, all available projections are being analyzed to determine if any assessment reductions are warranted, said John M. Hoopingarner, MWCD executive director/secretary.

The assessment, which generates between $10 million and $11 million annually for projects that maintain the condition and operation of the system of flood-reduction dams and reservoirs in the Muskingum River Watershed, is reviewed annually by the MWCD board of directors.

Any reductions for 2014 must be approved and submitted to county auditors near the end of September.

Other leases

The MWCD has managed oil and gas leases on its properties for its entire 80-year history as a part of its overall natural resources stewardship program. There are approximately 275 traditional (Clinton development) wells that generate royalties.

The MWCD, a political subdivision of the state, was organized in 1933 to develop and implement a plan to reduce flooding and conserve water for beneficial public uses in the Muskingum River Watershed, the largest wholly contained watershed in Ohio.

A significant portion of the reservoirs are managed by the MWCD and the dams are managed for flood-risk management by the federal U.S. Army Corps of Engineers.

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