City to begin natural gas drilling at Silver Oaks Place

Betz Rund

High unemployment rates coupled with shrinking budgets have left cities like Kent with only two options: Lose money or get creative.

So far, the city of Kent is choosing to go with the latter.

City staff members put their heads together, rolled up their sleeves and found an answer in the gas wells that could potentially create an additional revenue source.

In 2008, the city entered into a lease agreement with Cutter Oil Company, a small, family-owned company, to install a natural gas well on city property. A second lease agreement was signed in 2009 to drill a well near the Silver Oaks Place apartments, which will be drilled first.

Prior to 2004, municipalities were able to regulate gas and oil wells within their respective limits.

“The regulations from city to city to city made it hard to drill,” said Eugene Roberts, director of Public Service for the city of Kent.

In 2004, the Ohio Legislature made changes to the law and took the regulation control from the hands of the cities and municipalities. This gave authority to the state, creating a new division within the Ohio Department of Natural Resources, which regulates natural gas and oil wells.

Per state regulations, wells east of state Route 91 must be drilled at a depth of 4,000 feet and requires a certain amount of surrounding acreage.

It takes roughly 40 acres of land to supply a natural gas well.

Roberts also explained that a driller does not need permission from the city to drill a natural gas well, but they do need the permission of the landowner.

Ward six councilwoman Tracy Wallach said she was unsure if this was the right direction for the city to go.

“It will be beneficial in terms of generating revenue to offset other costs,” Wallach said.

While Cutter Oil is financially responsible for the drilling and operations of the well, Kent will receive a $10,000 spud fee for the first year as well as a head price for the first 300,000 cubic feet of gas delivered by the well each year.

In essence, the city will be receiving the first 300,000 cubic feet of gas free every year. Cutter Oil will cut the city a check for a certain amount.

Roberts explained that natural gas is measured in MCF, or per thousand cubic feet. For instance, if the price is $2 per thousand cubic feet, then Cutter Oil will write the city a check for $600,000.

If the well is a “good producer,” the city could potentially make more than $25,000 during the first year of operation.

The total amount given to the city, about 15 percent of the total revenue, is divided into percentages based on land size and given to landowners. Since the city owns the largest amount of land, it will receive roughly 10 percent of the total amount.

Roberts said landowners don’t have to participate, and a few have chosen not to.

The owner of Silver Oaks Place will receive a percentage of the revenue, however, the residents of the individual apartments will not.

The city’s share of the revenue is expected to go toward building the new College Tower Lift Station with Sanitary Sewer funds, a project that has been in the works since 1988.

On April 28, approximately 35 to 40 residents of Silver Oaks Place attended a meeting held to answer any questions and concerns about the project.

Wallach said many of the concerns being raised during the meeting had to do with the safety of the members of the community and the safety of the environment. Many were concerned with the leakage or runoff of chemicals into an underground aquifer.

CJ Cutter, who has a reputation for keeping a clean drill site, tried to put residents’ minds at ease. He explained that he seals his wells tightly and the chemicals he uses are not nearly as harmful to the environment as some chemicals other wells use.

“Today’s technology can manage and minimize the risk,” Roberts said.

As an added step, Roberts will be meeting with members of the Ohio Environmental Prowtection Agency as well as the Army Corps of Engineers to make sure the wetlands in the area will not be at risk.

Wallach, who has a vested interest in the well because it falls within her ward, said her main concerns had to do with drilling in an area where the strata underneath the city is primarily sand and sandstone.

“Environmentally I was a little leery, but after I talked with the owner of the company, I felt better,” Wallach said.

Drilling is slated to begin sometime during June or July this summer.

Contact public affairs reporter Betz Rund at [email protected].