Two communities in suburban Pittsburgh voted against a proposal for their regional park authority to sign a five-year, non-surface lease with a land brokerage firm this week, effectively killing the deal.
In separate votes on Tuesday and Thursday, council members in the boroughs of Ben Avon Heights and Emsworth respectively and unanimously turned down a proposal between Pittsburgh-based Energy U.S. and the Avonworth Community Organization for Recreation and Development (ACORD), a regional park authority of which both boroughs are members. The agreement could have led to Marcellus Shale drilling under ACORD Community Park, a 119-acre property that is run by the authority (see Shale Daily, April 12).
"I felt the deal presented to us was not a good deal, but every council member had his or her own reason for voting against the proposal," Ben Avon Heights Council President Mark Davis told NGI's Shale Daily on Friday. Energy U.S. "dangled this deal in front of us and said we had to sign it right now or they would pull it off the table," he said.
The ACORD executive board voted 3-2 in favor of the deal on April 7, but it needed to be approved by four of the five communities it represents. Ohio Township had approved the lease on April 4, while the borough of Ben Avon is scheduled to meet Tuesday and Kilbuck Township meets April 26.
Davis was critical of the terms set forth by Energy U.S. Although the firm would have paid $2,500 an acre ($297,500 total) for the rights to the gas under the park plus 15% royalty fees, the firm was not required to pay until the end of the year, when it hoped to sell the acreage to the highest bidder. The lease also had a provision allowing the firm to automatically renew it after five years, bypassing the five ACORD communities.
"It would have locked up the park authority from negotiating with anybody else for six months while [Energy U.S.] tries to go and peddle the deal," Davis said. "We all had to agree, or they could have just walked away and the park would have lost six months."
Paul Getz, vice president for the Emsworth Borough Council, confirmed for NGI's Shale Daily Friday that his council had also opposed the deal, 7-0.
Energy U.S. did not respond to a request for comment.
ACORD Board Chairman Ed Gould told NGI's Shale Daily last week that Energy U.S. had presented him the lease on March 30 with a one-day deadline to sign, with the understanding that it would be void if rejected by the board or two of the five ACORD communities. Gould also said Energy U.S. had 600,000 leasehold acres in western Pennsylvania.
"It's my understanding that Energy U.S. has been presenting this deal to everybody in the vicinity of the park," Davis said, adding that he had also heard that enough acreage had been secured near the park that "they could go ahead and drill if they choose."
Both Gould and Davis indicated that the authority would continue to try to sell the park's mineral rights as a way to raise revenue. Range Resources and Chesapeake Energy have been mentioned as companies interested in the rights to ACORD Park.