Officials: Gas Leasing May Ease Budget Woes

Washington, PA Observer-Reporter
22 October 2009
By Cara Host, Staff writer
chost@observer-reporter.com

WAYNESBURG - Commissioners hope leasing the natural gas rights to several county-owned properties will help them balance the budget and avoid a property tax increase next year.

At their meeting today, commissioners are expected to sign an oil and gas lease agreement with Tanglewood Exploration LLC. The Fort Worth, Texas-based company will extract natural gas from under the county fairgrounds, airport and several other properties in Franklin Township. In return, the county will receive 20 percent in royalties.

"We can't sit here and promise there won't be a tax increase, but this is certainly going to help," Commissioner Pam Snyder said at the agenda meeting Wednesday.

Tanglewood will not set up drilling rigs on any county-owned land. Instead, the company will drill on adjacent parcels and use horizontal drilling techniques to extract gas from the county properties.

Greene County may have been able to get more money if it allowed a company to drill directly on its property, but commissioners wanted to avoid that scenario for safety and aesthetic reasons.

About a year ago, county officials began soliciting proposals from drilling companies willing to work under those restrictions. Tanglewood was the only serious suitor.

Eventually, the county will receive monthly royalty checks from Tanglewood. The amount will largely depend on the size of gas deposits. Tanglewood should be able to provide an estimate once it completes a seismic survey of the area. In the meantime, the county will receive an advance on its royalty payments.

That cash infusion will undoubtedly help the county's finances as accountants prepare next year's budget, but the gas lease will probably not cure all of the county's financial issues.

"We're taking a lot of hits this year. The coal values are down. Our health-care costs are up. Cuts in the state budget will also affect us," Snyder said.

The advance will probably offset the drop in revenue from coal, but county leaders will still have to deal with the other shortfalls.

"It's going to be a tough budget process. There's no doubt about that," Snyder said.

Tanglewood will tap Marcellus Shale deposits under 399 acres of land at the airport, fairgrounds, Historical Society museum, jail, Wal-Mart shopping development, old Curry home and other properties. The company will have a year to survey the area and begin drilling.