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Shale industry impact being felt in city

February 22, 2012
By DAVE GOSSETT - Staff writer (dgossett@heraldstaronline.com.) , The Herald-Star

STEUBENVILLE - City Council felt the financial impact of the shale industry Tuesday night when members learned Chesapeake Exploration started buying raw river water from the city's filtration plant Tuesday and heard legislation introduced to lease the former city landfill to Hess Ohio Development for oil and gas drilling.

Mayor Domenick Mucci announced tanker trucks from Chesapeake started loading untreated river water at the filtration plant site Tuesday morning.

"We will be shipping them water 24 hours a day for 14 straight days for a well site near Richmond. The untreated water will be used for fracking at that particular well site," said Mucci.

Members of council agreed to a five-year agreement earlier this month to sell up to 700,000 gallons a day of treated wastewater, untreated river water and potable water to the energy company a day.

"We plan to use the revenue from the sale of the water to stop leaks and improve our water system," City Manager Cathy Davison said at a special council meeting on Feb. 8.

Sixth Ward Councilman David Lalich proposed an ordinance agreeing to lease the 110.6-acre former city landfill near the Jefferson Airpark to Hess Ohio Development for shale drilling operations.

Hess agreed to pay the city $5,400 an acre, or a total of $597,256.20, for an initial five-year lease and 19 percent royalties.

"We asked attorney Joe Corabi to assist us in negotiating this lease with Hess because of his experience regarding the shale industry leases," explained city Law Director S. Gary Repella.

The council finance committee had met with a Hess representative in January to discuss the lease offer.

Brent Riggle, project manager of Mason Dixon Energy, said at the January meeting his company has already signed leases for mineral rights below Fernwood State Forest, the Mingo Sportsman Club and the Jefferson Sportsman Club.

"The city-owned property would fit in very nicely with our holdings. The time frame for your property is still in the exploratory stage. We have just completed a well in Wayne Township that looks promising. I am trying to give you the best deal I can. You are in a pretty good situation," Riggle said.

According to Riggle, his company will be looking for Utica shale gas and oil deposits.

"Our goal is to produce a lot of gas from Utica shale. We are hoping this area will have gas, oil and wet gas. We have drilled 10 Marcellus wells in Belmont County and southern Jefferson County and are now looking for Utica shale," explained Riggle.

Second Ward Councilman Rick Perkins asked Repella to include language in the ordinance to ensure all profits from the lease agreement be used for the permanent closure of the landfill in order to meet an Ohio Environmental Protection Agency mandate.

In other business during the brief sunshine meeting, Lalich also proposed two ordinances to authorize the city manager to advertise for bids for the University Boulevard storm sewer improvement project and the wastewater treatment plant final clarifier and raw sewage pump upgrades.

City Engineer Michael Dolak said the projects will be advertised in March and bids will be opened in April.

"We hope to start work on both projects later this year," said Dolak.

The project legislation was introduced on an emergency basis.

A resolution in support of the Jefferson County Local Government Innovation Fund Project was proposed by Councilman at Large Kenny Davis.

And, Fourth Ward Councilwoman Angela Suggs introduced a resolution proclaiming March as Developmental Disabilities Awareness Month.

 
 

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