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Pennsylvania Town Mulls EXCO Lease Proposal

The borough council of Ford City, PA, about 40 miles northeast of Pittsburgh in Armstrong County, is considering a proposal from EXCO Resources Inc. to lease nearly 300 acres of borough land for Marcellus Shale gas drilling operations.

Under terms of the five-year lease, the borough would receive about $861,000 for the drilling rights to three parcels of land currently used for industrial purposes, and a little more than 10% royalties for any gas produced.

As is the case for so many small jurisdictions across the state, Ford City must weigh the promised benefits of the project -- revenue and jobs -- against its potential downsides, Mayor Marc Mantini told NGI's Shale Daily.

"We've lost in the last 50 years probably 5,000 jobs or more. We have streets that need repaired; we have infrastructure that's broke; we own our own water plant from the old days of the factory that was built in 1923, so it's 90 years old, and we've got no money to repair them. So when somebody comes up and throws this kind of money out, it's very tempting. But you have to be judicious." The borough's biggest concern, Mantini said, is protecting its water supply.

"We have this great, clean aquifer here. There may be more potential energy [in the Marcellus and Utica shales] than in the Arabian Peninsula, but we have to look out for the resources that we have, the water especially...Could this be a boom? I hope so, but we have to safeguard this water supply."

An EXCO representative spoke at a sparsely attended public meeting in the borough Monday night. A second hearing is planned by the borough council. Only two of Ford City's 3,400 citizens attended the first meeting, Mantini said. The turnout was disappointing, but EXCO was open to questions and offered to take Ford City residents on tours of its existing drilling facilities, he said.

"The ideal thing is that they'd get this stuff out safely, it reindustrializes our area, and we live happily ever after," Mantini said.

Armstrong County has produced some promising results recently. In September EQT Corp. reported its Rosborough 590259 well had a 24-hour initial production of 15 MMcfe from 4,060 feet of stimulated pay (see Daily GPI, Sept. 30). EQT holds nearly 34,000 acres in the county.

EXCO recently announced that it plans to add to its Marcellus Shale portfolio under a $459.4 million agreement with Chief Oil & Gas LLC (see Shale Daily, Dec. 23). EXCO would acquire more than 50,000 prospective net acres, primarily in Lycoming and Sullivan counties in northeastern Pennsylvania.

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