School Officials Explore Gas Drilling
Facilities Director William Henley (right) explains the school district's history with gas drilling at the Finance Committee meeting April 14.
by Jonathan Weaver
Govenor Tom Corbett’s proposed state budget have made a lot of public employees and services nervous, including the school districts – and Armstrong School District was no exception.
District Superintendent Stan Chapp said school officials hope the Governor’s proposal can be altered.
“Since Gov. Corbett’s budget address, we’ve been working closely on our budget to address the shortfalls that present themselves. Statewide opinion polls do not support the drastic reduction in funding for the public schools – in fact, based on those polls, we’re hopeful the state House and Senate make some adjustments in funding or vote ‘no’ on the budget in the present form,” Chapp said.
Because of that budget, school board officials are exploring alternative revenue sources – one of those being Marcellus Shale gas drilling.
Facilities and Property Services Director William Henley started looking into the Marcellus Shale process five months ago after meeting with two Kittanning drilling companies – Snyder Bros. and MDS Energy.
The district currently has a lease agreement with Snyder Bros. for gas deposits, with two wells being drilled on the West Hills school complex property, and asked representatives if they wished to drill for Marcellus Shale or at other school-owned properties.
District facility workers receive 600,000 cubic feet of natural gas free within their lease agreement – estimated to sustain the West Hills Primary and Intermediate schools for three months.
Henley said international oil companies are preparing to bid on gas wells because of the area’s gas deposits, but board members have to act soon.
“It’s like the stock market – all the lease agreements they are putting them on the marketing block in December. The big oil companies, like BP and Exon, are going to be coming out and bidding on these lease agreements – because of the Marcellus Shale,” Henley said.
The school district first leasing their properties for gas wells June 20,1985, when the school district signed a lease agreement with Turmoil, Inc. – which has since been purchased by Eastern American Energy Corporation , with its East Coast operations set up in Charleston, West Virginia – for gas drilling services at Shannock Valley Elementary, Dayton Elementary and Elderton K-12. There are two gas wells currently at Shannock Valley Elementary.
Henley explained why there are no wells on the Elderton site.
“It didn’t allow enough clearances, setbacks on that property for them to drill or look into that, but that doesn’t alleviate that maybe somewhere in the future that they could not do Marcellus Shale
EXCO Resources officials are also to be contacting about possible drilling opportunities after Henley learned about their $1,500 contract in Manor Township.
Henley said EXCO has contacted the school district about the possiblity before.
“Back in 2009 of December, we were offered from EXCO a lease agreement for the Lenape site,” Henley said. “At that time, they wanted to lease our property, which is approximately about 50 acres, for $1 and then also give us a royalty of 1/8th paid through thousand cubic feet of gas marketed off of that property,” Henley said.
The offer was withdrawn by former-School Superintendent William Kerr.
Henley added drillers often depend on community affiliation or location.
“There are opportunities out there, but it’s not like people are knocking on our door wanting our property. West Shamokin is a large area, but there’s no one around there that does Marcellus Shale,” Henley said.
Board Solicitor Gary Matta is now reviewing the contract so that the school district can utilize the gas on the West Hills site they receive instead of from their original provider, T. W. Phillips of Butler.
Even if gas agreements are made, Henley said he would still like to keep T.W. Phillips’ business card.
“I would like to keep T.W. Phillips as a back-up,” Henley said.
Armstrong School District Board President Rose Stitt had some questions based on her own knowledge of Marcellus Shale drilling.
Finance Committee Member Rose Stitt brought forward many questions about the wells, including their depth, safety concerns and ensuring fair prices. She said Henley should make sure the district is getting a good deal.
“Any company that has gas on our line is making money and I feel for the taxpayers, we shouldn’t be paying any wellhead price,” Stitt said.
Tonight, Monday April 18, school board directors are also to hear a presentation from Municipal Revenue Service officials about receiving delinquent tax revenue.
District Business Affiars Director Eric Brandenburg explained.
“Down at the county, they have delinquent real estate taxes say back to 2004. Every year, there are delinquent taxes not collected,” Brandenburg said. “In a sense, they would give us all this back all at one time.”
Brandenburg said school district officials would receive an estimated $3 million by the one-time service.
Chapp said he will keep school directors informed about all revenue sources.
“We’re working very hard on this and hope to bring forward some more information to the board or the public in the near future,” Chapp said.
Armstrong School District | jweaver April 18, 2011
By tax_poor, April 18, 2011 @ 8:05 AM
Closing EHS = savings $3.5 million per year
Return $80 million = cost 1.5 million per year
seems like a no brainer to me. close EHS and save $2 million per year or borrow $80 million and save $38,000. hmmmmm. now if we close EHS we can drill a marcellus well and get royalties from that for the next 30 years. That would take away some of the strain from the budget cuts. not all, but its a real good start.
By ASDpayer, April 18, 2011 @ 8:47 AM
Does this seem like we don’t know what the budget will be next year? Looking for money in gas wells, tax payments that suddenly appear, and phantom accounts. It would be nice to see the budget for next year, the next five years.
By GetSmart, April 18, 2011 @ 2:20 PM
So, apparently we are planning as though the $5.1 Million in exhausted stimulus money will magically re-appear the following year?
I don’t think so!