Aug. 20--A solution to some of Pittsburgh's money problems could be just below the surface.
Leasing the drilling rights to natural gas trapped in a portion of the Marcellus shale formation under Pittsburgh's 2,000 acres of parks could net the city $6 million to $16 million in one-time access fees and potentially millions more in royalties if officials make deals similar to those struck elsewhere in Western Pennsylvania and Texas.
"It's something we would be willing to look into," said Mayor Luke Ravenstahl's spokeswoman Joanna Doven, noting that the city is up against a $15 million to $30 million budget deficit.
"Access fees should start at $7,000 to $8,000 an acre if the city's going to do this," said Duquesne University professor Kent Moors, an authority on oil and gas finance and policy.
Moors said that's much higher than the $3,000- to $4,000-per-acre prices private and public land owners got in past years because unleased land "is becoming a premium."
Drilling in urban areas ruins roads from heavy tanker truck traffic and creates noise when drillers use high-pressure water to fracture shale and release gas, a process called fracking. Those issues merit extra compensation, he said.
"The drilling process will be extremely invasive," Moors said. "You want to get a maximum amount of return out of the access for drilling."
Spokeswomen for the city's Urban Redevelopment Authority and Ravenstahl's office said officials have not been approached about leasing public land.
But drillers have courted many governments in Western Pennsylvania, which have eagerly cashed in.
North Fayette supervisors leased 164 acres of land this month -- including two parks and the site of its municipal building -- to Range Resources of Ft. Worth, Texas, for $3,000 an acre and 17.5 percent of revenues from any wells drilled there, said Brian Temple, director of development.
Temple said the township signed the lease because many adjacent private property owners already had done so and it could use the $492,000 for infrastructure needs. He said the township limits when drilling may occur during the day and requires drillers rebuild damaged roads.
In Washington County, officials are beginning to see the fruits of a 2003 lease that paid the county $17,500 up-front and $10 an acre for rights to 2,800-acre Cross Creek County Park and its lake.
Nine wells have been drilled. Royalties are bringing in $96,000 to $122,000 a month.
Half the money is going to build roads to access the expansive park, develop a horse riding trail, build a boat launch and put in new shelters and bathrooms, said Lisa Cessna, executive director of the county's planning commission. The department's $850,000 annual budget could not otherwise afford those "big ticket" projects, she said.
"There's still noise and dust," Cessna said. "We had a leak issue once before, culverts have been crushed and sometimes it can be frustrating, but we've gotten lucky."
Environmentalists worry that chemically treated water used in fracking could harm the environment around drill sites.
Elizabeth Schneider of Lincoln Place, an anti-drilling activist, said a Chesapeake Energy official at a recent meeting in Lawrenceville tried to allay fears that drilling would begin soon in the city.
"We've always looked at that as, well, maybe not for right now," she said.
Roy Kraynyk, Allegheny Land Trust executive director, said drilling companies have approached him several times to sign leases. The group hasn't ruled out permitting horizontal drilling, but it would not allow drilling directly on its land.
The nonprofit is weighing the financial gain against the dangers to 1,500 acres of green space it protects in Allegheny and Washington counties.
"We're in a position where the revenue is very, very attractive but we also have a mission to protect woodlands and streams," Kraynyk said.
For some airports, natural gas is offering new revenue opportunities
Execs. announced the 12 finalists Wednesday at a networking conference.
Officials at Dallas/Fort Worth Airport, the world's third-busiest, are taking cues from a tiny airfield in south Fort Worth to pump big bucks out of the ground.
By the end of the year, Dallas/Fort Worth Airport's 18,000 acres could become home to dozens of natural gas wells as airport officials look for ways to pump up nonaviation revenues.