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Range Close to Securing Drilling Lease on Allegheny County, PA Parkland

Marcellus Shale heavyweight Range Resources Corp. has almost completed a long-awaited deal with Allegheny County, PA, to drill for natural gas underneath the 1,180 acre Deer Lakes Park, about 20 miles northeast of Pittsburgh.

Allegheny County Executive Rich Fitzgerald called the deal one of the "most comprehensive nonsurface leases that has ever been crafted in Pennsylvania."

Although it still needs the approval of the county council, which is reportedly split on the matter, the terms of the lease would land the county a $4.7 million bonus payment. It also would eventually establish a $3 million park improvement fund in addition to 18% in royalties that could generate between $40 and $90 million over the term of the five-year lease.

County officials have been reviewing Range's proposal and deliberating with area stakeholders for months. After Range's leasing agent Huntley & Huntley Inc. helped prompt the county to release a request for proposals on the parkland last September, Range was the only producer to submit a plan.

The transaction comes at a time when Allegheny County, home to about 1.3 million people, and other parts of southwest Pennsylvania are experiencing an increase in unconventional drilling, as exploration and production companies target a liquids-rich swath of the Marcellus Shale (see Shale Daily, Dec. 12, 2013).

Range spokesman Matt Pitzarella said the county council could vote on the agreement within the next month and if granted final approval, the company would apply for permits and could begin operations later this year.

"I believe with the county's participation we would be able to add an additional five laterals around 9,000-10,000 feet in order to fully develop the county's acreage from adjoining surface locations," Pitzarella said.

He added that the company has several well pads in the area surrounding Deer Lakes Park, where it has drilled nearly 20 wells in recent years. Range already has nearly one million net acres under lease in Pennsylvania, and prior to the agreement, it had 81,000 acres under lease in Allegheny County, according to Fitzgerald.

The Deer Lakes lease prohibits any drilling inside the park. It would also require the Pennsylvania Department of Environmental Protection to increase water testing in the area. Range would be required to coordinate with local school districts so that any additional traffic generated by its operations near the park would avoid school bus routes.

Additionally, noise and light reduction measures were included in the lease to minimize park impacts and the aesthetic value of a look-out point. Range also would be required to pay for any repairs on county roads in the area and hold two job fairs for residents in the county.

A public hearing is scheduled April 2.

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