Central Bradford Progress Authority votes to accept $172K gas lease, subject to conditions
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Review Photo/JAMES LOEWENSTEIN Attorney Mark Smith, who serves as the solicitor of the Central Bradford Progress Authority, explains some final changes that need to be made to the authority's gas lease. Looking on is Charlotte Sullivan, a member of the board of directors of the CBPA.
BY JAMES LOEWENSTEIN
TOWANDA - Fortuna Energy Inc. would pay $172,520 to the Central Bradford Progress Authority under a gas lease that the authority approved Wednesday.
At a special meeting on Wednesday, the board of directors of the Central Bradford Progress Authority voted unanimously to approve the lease, subject to several final changes being made to the lease.
Under the terms of the lease, Fortuna would pay the Central Bradford Progress Authority $4,000 per acre to lease the natural gas and oil rights on 43.13 acres owned by the authority, said Central Bradford Progress Authority (CBPA) President Paul Kreischer.
Fortuna would also pay the CBPA a 20 percent royalty on the gas that is extracted from underneath the land, he said.
The CBPA properties included in the lease are the 25-acre former Sayre Railyards site in Sayre, which is in the final stages of an environmental clean-up; a 14-acre property off Leisure Drive in Wysox Township; and the former Penn-Troy industrial site off Railroad Street in Troy, said Tony Ventello, executive director of the CBPA.
The CBPA's office building at One Progress Plaza in Towanda, and the land on which it sits, is not included in the lease, Ventello said.
Because the CBPA wants to see economic development occur on the land, the lease does not allow Fortuna to drill wells on the properties, Ventello said.
"We don't want anything to impede putting jobs ... on the sites," Ventello said after the meeting.
"Job creation is critical," he said.
One change that the CBPA wants to make in the lease is to remove language that would allow Fortuna to drill injection wells on the land to dispose of waste water that had been used in hydraulic fracturing.
The board also voted to remove language from the lease that would allow Fortuna to establish a gas storage facility on the property.
In addition, the CBPA wants to amend the lease to specify that no gas pipes can be installed near the surface on the properties, because it could interfere with economic development of the sites.
It will now be up to Fortuna Energy to decide if it will accept the amendments to the lease, Ventello said.
Fortuna had originally offered the CBPA $5,500 per acre on the land that is included in the lease, Kreischer said.
However, at the request of the CBPA, the lease was later revised to stipulate that no drilling could occur on the properties, he said.
Because the lease is now a sub-surface lease, Fortuna has reduced its per-acre payment to the CBPA to $4,000, Kreischer said.
The CBPA wants to reinvest the money from the lease into the sites, Ventello said.
"This is an opportunity to plow money back into the properties to do something that will benefit economic development," he said.
Gas lease money could be used, for example, to help pay for the environmental cleanup at the Sayre rail yard site; to make infrastructure improvements at the sites; or to make other improvements that would prepare the sites for economic development, he said.
It is possible that some of the gas lease money could be also used for an economic development project at another location, Ventello said after the meeting.
The Central Bradford Progress Authority is a government-funded economic development agency based in Towanda.
James Loewenstein can be reached at (570) 265-1633; or e-mail: jloewenstein@thedailyreview.com.
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