By SUSAN EVANS
The Tribune-Democrat
EBENSBURG
June 24, 2008 11:02 pm
—
After weeks of research and legal considerations, officials in the county seat are ready to seek formal bids for natural gas drilling rights on 1,260 acres of borough-owned land.
The move is the latest step in Ebensburg’s progress toward negotiating a mineral lease that borough leaders hope could mean as much as $1,000 per acre, or a total of $1.2 million in a lump payment.
The borough was approached in April by Western Land Services of Ludington, Mich., and council members met with the company at least once.
But questions arose about whether the borough was required to use a bidding process before negotiating a lease, and last month council members agreed to draw up a formal request for proposals.
That document was approved by Borough Council on Monday, and bids will be submitted before further negotiations take place, borough Manager Dan Penatzer said.
Once bids are received, officials will select what they term the two “most attractive” proposals and then negotiate further for a five-year lease.
The winning bidder will be selected by the end of August, and the borough is requiring a lump sum payment within 60 days.
The borough is hoping for royalties at more than 15 percent, Penatzer said.
Western Land is one of several companies making offers to the region’s farmers and rural homeowners to lease their land for gas well drilling.
Competition for oil and gas leases in Somerset and Cambria counties is the most competitive it has been in 20 years.
The stimulus is the recently discovered 6,000-foot-deep Marcellus Shale, an untapped reservoir of natural gas.
Penatzer has not disclosed the initial price offered by Western Land Services or specifics of the conditions being offered.
State officials earlier this month advised property owners to consult an attorney before signing any lease and said that annual rentals offered range from a few dollars to hundreds of dollars per acre.
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