The Herald, Sharon, Pa.

Local News

May 18, 2012

Driller gets first local permit

MERCER COUNTY — Let the drilling – and fracking – begin here.

Kind of.

“The first step is kind of a wait and see,” said Richard Hunter, vice president of investor relations for Houston-based Carrizo Oil & Gas Inc.

While other companies are waiting and watching, Carrizo holds the first permit to drill and ultimately horizontally-fracture, or “frack” into the Utica shale to produce natural gas beneath Mercer County, state Department of Environmental Protection spokesman John Poister said.

He said the permit is for a tract in West Salem Township, but he didn’t have its exact location.

Hunter said Carrizo wouldn’t release that information to protect the owner of the property.

The DEP issued the permit on April 24 and it’s valid for one year, Poister said.

“I’m told there is other activity beginning to bubble up,” he said. “We’ll probably see some other permit applications in the coming (months).”

Receipt of a permit is “the first baby step toward drilling a well,” Hunter said.

Carrizo’s a “pretty small company” and isn’t trying to be a trailblazer in the county, Hunter said.

They “would prefer some of the larger companies” drill here first, “so we know what the risks are,” Hunter said.

“The company that drills first assumes the most risk,” he said. “We are doing our background work in order to eventually drill a well.”

The company is also looking at locations in Ohio where it may drill first, he said, noting it depends on which area’s government agencies are easiest to deal with.

“The least complicated answer will be the one to be getting drilled first,” Hunter said.

Carrizo has yet to drill into the Utica shale, a rock formation 8,000 feet beneath the surface of the earth believed to contain natural gas reserves that’s similar to, but deeper than, the Marcellus formation that’s caused a drilling boom in other areas of Pennsylvania.

Carrizo’s permit may mark the beginning of a boom to the county’s economy, county Commissioner John Lechner said.

“I know the drilling activity is going to come with an increased demand for services. It’s also going to bring increased demand for employment,” he said. “My long-range hope is that jobs work their way into this area.

“I’m excited from a personal perspective,” Lechner said.

He’s leased “all 12 of my acres in Hermitage” and is looking to lease more property he owns in Crawford County.

Commissioner Matt McConnell’s also leased some of his family’s land, McConnell said.

As commissioners, they’ve directed the county’s lawyer, Bill Madden, to look into leasing opportunities for county-owned land like the 142 acres adjacent to Interstate 80 at U.S. Route 19 in East Lackawannock Township that was once hoped to be a prime parcel for economic development and is instead commonly called the “gravel pit” because it’s leased to a sand and gravel supplier.

“I am going to estimate we have potentially 500 to 700 acres,” that could be leased, Lechner said.

Leases are fetching between $3,500 and $3,800 an acre, with $25,000 “disturbance fees” being paid to owners of land that becomes a drilling site, Lechner said.

“And the royalties are 17 to 18èpercent,” he said.

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