Posts Tagged ‘county property and supply office’

More than 650 acres are available. Drilling firms being contacted directly.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

Luzerne County began seeking bids Monday to lease more than 650 acres at Moon Lake Park for natural gas drilling.

In an effort to entice a bidder, county engineer Joe Gibbons said he is contacting drilling companies directly.

“I’m trying to swing it in our favor. I’m sending e-mails out to the gas industry to see if anyone’s interested in receiving a set of bid documents,” he said. “It’s up in the air because the commodities are in the tank right now. … I’m kind of optimistic. I hope we get somebody.”

Potential bidders can review and pick up the documents at the county property and supply office in Penn Place at 20 N. Pennsylvania Ave., Wilkes-Barre. The bids are due by 2 p.m. April 23, but must be pre-qualified by April 9.

The proposal is modeled, Gibbons said, on that used by the state Department of Conservation and Natural Resources.

The request for proposals was structured, he said, so that the county receives several revenue sources from the deal and retains authority over where drill pads would be located in the park. “The last thing I want to do is make the place look like an open construction site. I want to maintain its recreational integrity. It’s just a unique project,” he said.

The county would receive income from the rental of the drilled acreage; the sale of the timber felled when preparing the drilling sites; other marketable fluids, such as methane or oil, that are extracted from the drilling; and storage fees for gas that is stored when an exploratory well is drilled, but capped until it can be hooked up to a pipeline, he said. “They can have the storage, that’s fine, but we get the storage rental,” he said.

All bidders would have to offer at least 16 percent royalties on the price at the well head for any marketable fluids it produces, he said.

The winning bidder will offer the highest initial-year rental fee for the acreage, he said, which was set for at least $500 per acre. After that, the fee drops to between $10 and $20 per year, he said, but there is a stipulation that drilling begin within a year.

The winning bidder would post three bonds, including one to ensure the site is restored after drilling concludes, he said. “I put restrictions on where they could take water from and how much they could take, even above and beyond what DEP (the state Department of Environmental Protection) would issue in a mining permit,” he said.

The bids would also have to be pre-qualified to ensure they are from actual drilling companies planning development and not land-holding companies expecting to resell the land, he said. “If we do get a lease, I want to deal directly with the gas company. I don’t want to go through a middle man,” he said.

Copyright: Times Leader