Posts Tagged ‘Elk Lake School District’

School districts that sign a lease will receive money per acre, royalty checks on a regular basis.

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

There are school superintendents who would drool over the windfall Bill Bush received around January. But Bush, the superintendent at Elk Lake School District, is looking for an even bigger payday.

The district essentially made $127,500 for nothing when it signed a gas lease earlier this year for its 170 acres in Susquehanna County. The district received $750 per acre and royalties of 12.5 percent.

With lease offers hovering around $2,500 per acre in some areas, the deal doesn’t seem as equitable as it once did.

“We were excited at the time, but not now,” Bush said. “I think anybody who signed a lease prior to today probably wishes they had waited.”

Still, the district jumped on the offer, he said, because the company assured it would drill a well on district property, guaranteeing the district a handsome royalty check on a regular basis.

With a furor building over the potential of the natural gas reserves locked in a rock layer that stretches from New York to Virginia, the decision is one that many school districts in the area might have to soon consider. Bush said he believes Elk Lake is the first district to sign, but others aren’t far behind.

Tunkhannock Area School District recently agreed to join a group of Wyoming County landowners who are negotiating a gas lease. Dallas School District is also discussing lease options.Bush said Cabot Oil and Gas Corp. is planning to have a well online by the 2009-2010 school year. It’s unclear how much the district stands to gain from royalties, but surrounding areas “indicate strong reserves,” Bush said. “If we’re consistent with what the project is locally, it would certainly be beneficial to the district,” he said.

So far, Elk Lake is attempting to ignore its financial good fortune, Bush said. The money it already received went to the general fund and disappeared in the district’s almost $17 million annual budget. Instead of counting down the days until royalties start rolling in, people in the district are looking at them as an unexpected bonus if they come.

“I think everybody’s kind of reserving judgment to see how it comes out,” Bush said. “I think they’ve remained grounded.”

Bush has modest plans for the funds, such as building and grounds maintenance and upgrading technology.

Beyond the royalties it would receive from drilling, the district retained the rights to 200,000 cubic feet of gas each year, which it could use or sell at market price. At prices calculated by the federal Energy Information Administration, the district would make about $1,500 from its yearly allotment. The district is considering switching from its oil-fired heating system to a natural gas one, Bush said.

The district also reserved other land rights in about two dozen addendums to the lease.

“Environmental concerns were first and foremost,” Bush said, but safety and other issues were included.

Beyond the royalties, the district retained the rights to 200,000 cubic feet of gas each year, which it could use or sell at market price.

Copyright: Times Leader