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Cities Cash In On Leasing Land For Drilling

Monday, November 26, 2012 at 5:03 PM

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The term “shale-ionaires” describes people who’ve become instantly wealthy from leasing their land for oil and gas drilling. Now, some local government officials are interested in leasing city-owned property to cash in on the boom. But the idea of drilling on city owned lands and parks bothers many residents. On Tuesday, Youngstown’s parks and rec department will hold a meeting to allay fears about potential drilling there. Ideastream’s Michelle Kanu has this story about cities looking to drilling as a way to pad their coffers.

Photo Gallery

Youngstown officials say they don't intend to lease Wick Park or any other city park land for natural gas drilling. Once a busy intersection, this stretch of Wilson Ave. in Campbell no longer has traffic lights or street signs. Aluminum manufacturer Calex Corp was one of Campbell's biggest employers before shutting down in 2002.

A buzzing lawnmower is churning crispy autumn leaves into mulch on the 34 acre grounds of Wick Park, one of the largest city parks in Youngstown.  Residents use this sprawling landscape of oak trees, swing sets, and walking trails almost year around.

Environmental activist Susie Beiersdorfer says she and other concerned residents have been lobbying Youngstown officials for months to ensure the city doesn’t lease the mineral rights beneath this park—or any other city owned lot for that matter—to a company to drill for natural gas.

Beiersdorfer: “It’s about people being educated about the threat to the air, the threat to the water, the increased truck traffic, noise pollution, air pollution, this heavy industrial process coming into the urban area.”

To be clear, Youngstown officials say the parks will remain a drilling free zone, but it is likely that the city will lease other plots of land.  Earlier this month, city council granted the city authority to seek leasing offers from companies interested in drilling in the area.

City Council President Tito Brown says private landowners in Youngstown have been signing leases for months and, given state funding cuts, cities should be able to seize the opportunity to bring in revenue.

Brown: “We started thinking maybe there’s potential for the city to take that money and have it benefit the city residents and deal with some of our issues that we need to deal with from our economic shortfalls.”

Youngstown is just one of a growing list of municipalities considering leasing property for oil and gas drilling.  In Carroll County—the heart of Ohio’s Utica Shale drilling activity—county commissioners have raked in over $3 million dollars in lease payments.  In Trumbull County, the city of Warren brought in $300,000 from leasing part of a golf course last year.  And just east of Youngstown, the city of Campbell is also cashing in on their vacant property.

(sound of ringing bells fades in)

A block up from the Campbell Municipal Building, ringing bells at Christ the Good Shepherd Parish sing homage to the era when Campbell was known as the city of churches.  Once a bustling town of 16,000, many of those churches are now boarded up and the population has been cut in half since two major manufacturers shuttered in 2002. 

(sound of bells fades out)

Campbell has been in fiscal emergency for ten years, but City Administrator Jack Dill says he hopes the area’s fortunes will improve now that they’ve leased 161 acres to oil and gas company Hilcorp.  The city expects to receive a signing bonus of $800,000 next month.

Dill: “We couldn’t even pave a road for a long period of time.  Now with this amount of money coming in, that is going to be definitely put aside for infrastructure priorities, as far as putting in a new waterline, paving throughout the community, which is in desperate need.“

Dill says the city didn’t spend too much time deliberating, deciding it’s best to get what you can while the market’s hot.  He says he’s heard there’s already a drop-off in the amount of money oil and gas companies are offering per acre.

Dill: “If you snooze, you lose.  I mean you have to be on top of it.  It’s running so rapid and so fast, you have to be prepared, and you have to go after it.”

In Youngstown, Mayor Chuck Sammarone says its time his city starts cashing in like its neighbors.  Rampant unemployment and blighted neighborhoods have pushed people out of town and he wants to apply any leasing revenue toward demolishing vacant homes around the city. 

Sammarone: “We’re trying to get people to stay, or move back into the city, to strengthen our population so we can strengthen our tax base.  Well, until we clean up the neighborhoods, that’s not going to happen.”

Sammarone says he’s heard the protests from residents who are worried about the environmental risks of drilling, especially after a series of earthquakes shook the area last year, but he says the potential windfall could help make Youngstown a more desirable place to live.

Sammarone: “When I go around to some of these bad neighborhoods where there’s a number of nice people, nice homes, but having to live in an area where a number of the homes aren’t nice, they’re vacant.  You know what they tell me?  We’ll put up with earthquakes, clean up our neighborhood.”

Sammarone says he doesn’t plan to move as fast as the city of Campbell did, but he doesn’t want to miss out on any opportunity either.  The city will go through a bidding process and solicit offers from different companies over the next six months before making any decisions.

Tags

Energy, Shale, Environment, Government/Politics

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