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The Northeast ONG Marketplace leaseholders. But the watershed district is a public government agency. Thus, its finances, including lease bonuses and royalty payments, are public records. The district covers 8,000 square miles, or about 20% of Ohio. It manages 16 reservoirs and dams along with the U.S. Army Corps of Engineers. The system is designed to provide flood protection and water conservation. The district, based in New Philadelphia, owns 54,000 acres of land in eastern Ohio.

OHIO WATER DISTRICT GETS NEARLY $212 MILLION FROM UTICA DRILLING By: Bob Downing The Muskingum Watershed Conservancy District remains one of the biggest beneficiaries of shale drilling in Ohio. The public agency has earned $200 million in lease bonuses and royalties on natural gas and liquids from its first 29 Utica Shale horizontal wells in which the district has a financial share, according to Jackie Stewart of Energy in Depth-Ohio, a prodrilling industry group, in a recent report. The district, the biggest leaseholder in eastern Ohio, earned $200.15 million from 2011 through 2015, she noted. It received $239,296 in 2009 and $273,321 in 2010 before drilling really started in Ohio. That grew to $15.9 million in 2011, $22.1 million in 2012, $46.3 million in 2013 and $109.6 million in 2014. 2015 a down year It dropped to $5.7 million in 2015 due to less drilling and production declines on some of the wells drilled on its property or nearby land, plus lower prices for natural gas and liquids that reduced royalties paid to leaseholders. The deals are proof that “conservation and shale development can work hand-inhand,” Stewart wrote. A Kallanish Energy examination revealed the district received an additional $7.6 million in 2016 in lease bonuses and royalty payments from Utica drilling. Water sales cause bounty to jump That brings the shale drilling payments to the district to $207.75 million. But that total jumps to nearly $212 million with an added $4.1 million in water sales to drillers since 2012. The number of Utica Shale horizontal wells in which the district has a financial interest has grown to 50, said spokeswoman Barbara Bennett. The leases and royalty payments have been “a game-changer, no doubt,” executive director John Hoopingarner told the Akron Beacon-Journal newspaper in 2014. Leases with big producers The district’s leases were with Chesapeake Energy, Gulfport Energy and Antero Resources, three of the biggest players in the Utica. Most lease bonuses and royalty payments are secret deals between drillers and

Improvements being made The district is using the shale funds to make $167 million in improvements to modernize its public parks, campgrounds and marinas within the 18-county district that stretches from Akron to the Ohio River along the Tuscarawas and Muskingum rivers. That includes five recreational parks – Atwood, Charles Mill, Pleasant Hill, Seneca and Tappan — and two marinas: Piedmont and Seneca. Completing the needed improvements began in 2015 and will take roughly seven years. The district also eliminated an $80 million maintenance backlog on district facilities. It is also developing a new system of trails to connect the lakes. Stewart calls the district’s mineral leasing a win for taxpayers who benefit from improved recreational facilities, and for drillers who can tap oil and natural gas. Deals signed for reservoir drilling The district has signed leases with drillers at four of its reservoirs: Clendening in Harrison County, Leesville in Carroll County, Seneca in Guernsey and Noble counties and Piedmont in Belmont and Harrison counties. Those four leases together cover roughly 24,000 acres. There has been talk about a fifth lease of roughly 7,600 acres at Tappan in Harrison County, but no deal has been completed, Bennett said. No longer bare-bones Prior to the shale leases, the agency was described by officials as a bare-bones public agency that survived on recreational fees. Now it is an agency with dreams and plans. The district has also made $4.13 million since 2012 selling hundreds of millions of gallons of water from its reservoirs to Utica Shale drillers. The drillers paid $4.25 to $9 per thousand gallons of water to hydraulic fracture, or frack, their wells. The peak year was 2015, with $1.57 million paid for the water. It sold 360 million gallons of water through eight contracts, roughly 0.5% of water available. Drillers in the Utica Shale typically need roughly 5 million gallons of water per well, the same amount of water used annually by 48 four-person households. Together the district’s reservoirs usually contain 68 billion gallons of water in the summer. Drillers used temporary water lines from the reservoirs to drill sites to reduce truck traffic. In Harrison County alone, those water lines replaced 18,000 water truck trips, Stewart said. The district also has a financial interest in 277 vertical-only wells that have been drilled on its property or neighboring property in the last 81 years. They produce royalty payments of up to $300,000 a year. The district, in a recent report, indicated district officials “foresee the future of MWCD on solid ground for the next 80 years.” For more energy-related news and analysis, visit www.kallanishenergy.com

The Northeast ONG Marketplace - Summer 2017  

The only monthly publication directly mailed for free to over 10,000 industry professionals operating in the northeast U.S. shale plays.

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