Columbus
Dispatch....
Unclear ownership of
mineral rights may hurt state’s revenue hopes for drilling in parks
By Spencer Hunt
Sunday, May 8, 2011
Plans to make millions of dollars by opening up state parks to drilling
could be limited by the relatively small amount of natural-gas rights
Ohio actually owns.
Of the 115,300 acres of state parks, the Ohio Department of Natural
Resources estimates that it owns the gas rights for 34,590 acres.
That’s less than one-third of the state park land that could be opened
to drilling if lawmakers approve one of several proposals.
In many cases, the state doesn’t know who owns the natural-gas rights,
said Gene Wells, real-estate administrator for the Ohio Department of
Natural Resources. Access to natural gas is covered by mineral rights.
“Some of these lands were purchased in the 1920s,” Wells said. “It was
not an issue back then to clearly identify what our mineral interests
were.”
It’s definitely an issue now.
Eager to tap natural gas in the deeply buried Marcellus and Utica shale
deposits in Ohio, energy companies are offering landowners as much as
$1,500 an acre for the mineral rights. Gov. John Kasich and Natural
Resources officials say that the proceeds from drilling would help
whittle down a $560million maintenance backlog at state parks.
Landowners lease access to the mineral rights and collect royalty
payments from any gas the wells produce.
But if the state doesn’t own the rights, it can’t make any money.
In many cases, there are old leases that give companies “surface
access.” This could force the state to allow drilling despite having no
mineral rights or chance of royalties.
Wells and Thomas Stewart, executive vice president of the Ohio Oil and
Gas Association, said leaseholders could argue that they have the legal
rights to drill in some of the state’s parks right now.
“It’s always been the case that that possibility existed,” Stewart said.
Environmental advocates who oppose such drilling say that fact raises a
red flag.
“Drilling in state parks is going to make more headaches than money for
the state,” said Jennifer Miller, spokeswoman for the Ohio chapter of
the Sierra Club. “It’s just a plain bad idea.”
Some of the mineral-rights owners are well-known. Wells said the Army
Corps of Engineers holds the rights to thousands of acres, mostly for
parks centered on reservoirs, including Alum Creek State Park in
central Ohio.
Wells said the federal agency has told him it will not allow drilling.
Corps officials did not return calls for comment.
Columbia Gas Transmission Corp. holds leases on much of the mineral
rights beneath Mohican, Malabar Farm and Hocking Hills state parks. The
company currently uses old wells in the parks as storage sites for
natural gas, Wells said.
In an email, the company said it has not subleased rights to drill into
the Utica shale beneath any of its storage sites at state parks. The
company wrote that it has subleased mineral rights beneath natural-gas
storage areas across the United States to oil and gas companies.
In many cases, Wells said, Natural Resources doesn’t know who holds the
mineral rights or what lease agreements might still apply to sites. To
find out, the state would have to perform title searches in county
recorder offices statewide.
For example, the state owns the surface rights to 627.5 acres in Tar
Hollow State Park, but it has no idea who holds the mineral rights.
“On a case-by-case basis, we’d have to look at the (ownership) history
and go from there on what we would allow,” Wells said.
Most of the mineral rights that state parks officials have confirmed
are concentrated in Salt Fork State Park in Guernsey County. The
20,756-acre state park is surrounded by oil and gas wells.
It’s unclear how much money the state could make if it opened state
parks to drilling, but Stewart said the income would be substantial.
“It is 34,000 acres,” he said. “That’s a lot of acreage.”
Sen. Keith Faber, a Celina Republican who co-sponsored one of the bills
that would allow drilling on public lands, said he would support
drilling no matter how much the state stands to make.
“Just because the state doesn’t get the money, you shouldn’t limit the
drilling,” said Faber, the second-highest-ranking Republican in the
state Senate. “Ohio still benefits from a vibrant oil and gas industry
and from the jobs that are created.”
Jack Shaner, a lobbyist with the Ohio Environmental Council, said the
risks of pollution and ecological harm outweigh the potential economic
benefits.
“I think most Ohioans would be outraged to learn that the state may not
be able to control what goes on in our parks,” Shaner said.
“Instead of figuring ways to allow the industry to scheme their way
into our parks, the door should be firmly closed.”
Read it at the Columbus Dispatch
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