PITTSBURGH (AP) — The county that includes Pittsburgh could reap more than $73 million by leasing a public park for gas well drilling, a newspaper reported Sunday.
The Pittsburgh Post-Gazette obtained documents that show Range Resources and driller Huntley and Huntley sent a proposal to Allegheny County Executive Rich Fitzgerald last month that list a signing bonus of $3,000 an acre and a 17 percent royalty on future sales.
Range Resources spokesman Matt Pitzarella said royalties could be generated for decades, and there will not be an impact on Deer Lakes Park.
The plan is to reach the gas through horizontal drilling from neighboring properties so rigs will not be located on county property.
Fitzgerald told the paper he will not confirm details about negotiations while talks with the company are being conducted.
The signing bonus would be guaranteed, but Pitzarella said royalties realized from drilling depend on pipelines and other infrastructure.
“The county stands to receive $35 million given current infrastructure availability in that part of the state, with the potential to exceed $70 million,” Pitzarella said.
Fitzgerald said proceeds could fund needed improvements to the park, where all six bathrooms are padlocked and shelters are dilapidated.
Pitzarella told the paper the companies have built four well pads near the park and drilled 19 wells over the past five years. More are planned.
“We are constructing additional pads near the park, with or without the county’s lease,” Pitzarella said. “If they are not in this unit, they will become what is commonly referred to as a doughnut hole, meaning they are surrounded by producing leases and thereby locked out of royalties.”
State Sen. Jim Ferlo, D-Allegheny, said environmental concerns and unknown effects outweigh any benefits, including the money.
“I’m adamantly opposed to drilling,” Ferlo said. “I work with Rich Fitzgerald. I respect him, but I think he’s taking the quick way out. We’ve seen this at the airport and now we’re threatening county parks.”
Earlier this year, the Allegheny County Airport Authority signed a lease with energy company Consol to drill at least 47 wells on 9,300 acres at Pittsburgh International Airport. The county will get $50 million and 18 percent of all gas sales, an amount estimated to reach $450 million over the next 20 years.
Range Resources has a similar deal in Washington County to drill at Cross Creek County Park. The county gets a 17.5 percent royalty rate, based on a lease renegotiated last year for the 2,700-acre park, and is receiving about $500,000 per month in royalty payments for about 30 wells. An additional 15 wells are planned.