Wednesday, August 31, 2011

Lease payments from natural-gas frackers increasingly offset school districts' budget cuts

More and more school districts in areas rich with gas-bearing shales are leasing land to gas drilling companies to alleviate budget shortages, Ben Wieder of Stateline reports. (Pennsylvania Department of Environmental Protection photo)

Blackhawk School District, 40 miles northwest of Pittsburgh, recently agreed to lease 160 acres to Chesapeake Energy at $2,000 per acre upfront and an additional 15 percent royalty on any profits from gas extracted, Wieder reports. The standard royalty is 12.5 percent. With a state funding reduction of $800,000, Jerry Wessel, the district's business manager, told Wieder, "The natural gas lease will help the budget situation some in the short term but hopefully even more over the long haul."

Other school districts see the benefits too. Last year, eight Texas districts received more than $5 million in bonuses and royalty payments from lease agreements with Cheseapeake.

While lease agreements may fill a financial void for many districts, environmental concerns about hydraulic fracturing continue. Pennsylvania has toughened well-casing and drilling regulations and joined other shale-rich states in requiring disclosure of certain chemicals following what industry and environmental officials refer to as "isolated incidents" of fracking spills, Wieder reports. New Jersey Gov. Chris Christie recently vetoed a bill to ban fracking, instead suggesting a one-year moratorium and further study. New York is currently under moratorium but is expected to relax it, except in the area that supplies New York City's water. (Read more)

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