The Muskingum Watershed Conservancy District (MWCD) approved two separate agreements Friday to provide water from several managed lakes in eastern Ohio for approximately three months to Antero Resources and Gulfport Energy Corp. for Utica Shale operations.
MWCD spokesman Darrin Lautenschleger told NGI’s Shale Daily the first agreement calls for the district to provide Denver-based Antero with up to 2 million gallons per day — at a rate of $6 per 1,000 gallons — from Seneca Lake, which is located in Guernsey and Noble counties.
Although the Antero agreement is for 92 days and the district could technically end up supplying Antero with up to 184 million gallons of water through mid-July, Lautenschleger said Monday that MWCD staff “believes it will not come anywhere close to that.”
Lautenschleger said Antero will use the water from Seneca Lake and other sources to create a private water system for Antero’s operations in the Utica Shale. The system, which will be comprised of about 10 water storage facilities connected by freshwater pipelines, is expected to cost the company between $50 million and $60 million.
Meanwhile, the agreement with Oklahoma City-based Gulfport calls for the MWCD to provide up to 25 million gallons of water from Clendening Lake in Harrison County through June 12. The company will pay $8 per 1,000 gallons.
“It’s important to note that both of these agreements have clauses in them that can reduce or stop the withdrawals, depending on certain parameters,” Lautenschleger said. “If lake levels reach certain points, we would have to reduce the withdrawals. If the lake levels reach still lower points, then they would have to stop. There are other parameters, too, so we have control over the amount withdrawn.”
In February the MWCD — a state government entity that controls an 8,000-square mile watershed covering about one-fifth of Ohio — 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).
The agency signed similar 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 in Carroll County for a bonus and royalties valued at $21.5 million.
“For water sales, all proceeds are being placed in a separate account to be used exclusively for surface water quality improvement projects in the watershed,” Lautenschleger said.
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. Piedmont Lake spans Belmont, Guernsey and Harrison counties.
In June 2012, the district said it would halt any future water sales for drilling until the U.S. Geological Survey (USGS) completed a study of whether three reservoir lakes — Clendening, Leesville and Atwood Lake in Carroll and Tuscarawas counties — could handle additional withdrawals. Two months later, the MWCD said it wanted the USGS to study Piedmont, Senecaville Lake in Guernsey and Noble counties, and Tappan Lake in Harrison County (see Shale Daily, Aug. 6, 2012; June 20, 2012).
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