CHARLESTON, W.Va. — The state Division of Natural Resources could be the big winner from lucrative natural gas drilling bids being reviewed this week by the state Department of Commerce.
Four bids were opened last Friday for drilling underneath the Ohio River on state-owned property near Pleasants, Wetzel and Marshall counties. State code currently funnels the proceeds to the DNR. State Commerce Secretary Keith Burdette said the agency has been directed by Gov. Earl Ray Tomblin to set up a separate account for the funds. MetroNews asked Burdette if struggling state parks might benefit from the money.
“It could do a lot of good things for a lot of things,” he said. “No question about it, the state parks might be able to make a little hay with some of this.”
Burdette had to ask the legislature for emergency funding for the parks system earlier this year.
The financial numbers in the bids from the four drilling companies are being crunched this week. Burdette said the royalties for the state in each bid are between 18 and 20 percent and the upfront per acre bonuses range from $211 per acre to $8,425 per acre. The leases range from 3-5 years.
“One of the bonus plans alone would net the state, up front before any royalties, somewhere in the neighborhood of 17-million dollars. That’s just an upfront number,” Burdette said.
The drilling will take place one mile under the Ohio River but the drilling pads won’t be on state property. Burdette said the companies that submitted bids already have drill sites close to the river, some less than two miles away.
Burdette said the state owns property and mineral rights in other locations that could be good for drilling. He said Gov. Tomblin recently released three other tracts for bidding. Burdette said it’s likely the property under the Ohio River would bring in the most money.
“We think some of these bids are probably at the top of the market and we’re encouraged,” Burdette said. “The keenest interest is in the wet zones of Marcellus where we are producing not just natural gas but natural gas liquids of ethane, propane and butane. We think these are some of the most coveted tracts but there may be some others.”
The state has sold mineral rights for 100 years and leases for drilling under the Ohio River began about 25 years ago but not to the current level of interest which is tied to development of horizontal drilling and the Marcellus shale.
Eight different environmental groups in West Virginia and Ohio have expressed concern to the governor about the under river drilling. They fear drinking water could be harmed.