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Ohio Water District Agrees to Sell More Water to Antero

The Muskingum Watershed Conservancy District (MWCD) has agreed to sell more water to Antero Resources for oil and gas drilling in the Utica Shale.

On Friday, the MWCD's governing Board of Directors approved an agreement to sell 1.5 million gallons per day (gpd) from Seneca Lake to Denver-based Antero, at a rate of $6 per 1,000 gallons. The water will be withdrawn during a three-month period, from August through October.

In a letter Friday, MWCD Chief of Conservation Sean Logan advised the board that the district's chief engineer had recommended to reduce the daily maximum quantity from 2 million gpd to 1.5 million gpd, "due to the historical lower precipitation of these [three] months."

According to reports, the latest deal could amount to the MWCD selling up to 138 million gallons of water. Seneca Lake is in Ohio's Guernsey and Noble counties.

The new water deal is the latest chapter in a growing relationship between the MWCD and Antero. Last April, the district agreed to supply the company with up to 2 million gpd from Seneca Lake -- also at a rate of $6 per 1,000 gallons -- through mid-July (see Shale Daily, April 23). That deal provided up to 184 million gallons of water.

Two months earlier, the MWCD agreed to a non-developmental lease with Antero for 6,553 acres under Seneca Lake in exchange for a bonus and royalties amounting to $40.6 million (see Shale Daily, Feb. 21).

Gulfport Energy Corp. has also concluded agreements with the MWCD. In May, the district agreed to sell up to 38 million gallons of water to Gulfport for three months at a rate of $8 per 1,000 gallons (see Shale Daily, May 22). That deal followed another between the two in April, when 25 million gallons were sold at the same rate.

MWCD spokesman Darrin Lautenschleger told NGI's Shale Daily that the district sold 15 million gallons of water to oil and gas companies in 2012. By comparison, through last week the MWCD has already agreed to sales totaling 20.1 million gallons, a 34% increase.

"Keep in mind that this is a small fraction of the billions of gallons of water than are in the reservoirs," Lautenschleger said Monday. "It's also a small fraction of the number of gallons that would have been required for all of the wells in the state of Ohio."

The MWCD is a state government entity that controls an 8,000-square mile watershed, covering about one-fifth of Ohio.

The district has signed non-developmental leases with Gulfport in 2011 and Chesapeake Energy Corp. in 2012. Gulfport paid the MWCD a $15.6 million bonus plus royalties for 2,800 acres at Clendening Lake, while Chesapeake purchased the leasing rights to 3,700 acres at Leesville Lake for a bonus and royalties valued at $21.5 million.

Last September, the MWCD said it would consider temporary water sales from Clendening and Piedmont lakes during their upcoming drawdown, an annual event during which billions of gallons of water are released downstream to protect against flooding (see Shale Daily, Sept. 25, 2012). The board said terms of the temporary sales, including price and amounts to be sold, would be discussed in future negotiations with the industry.

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