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Wyalusing Council Okays Gas Lease Amendment

By David Keeler

Following an executive session during its Monday night meeting, the Wyalusing Borough Council unanimously approved a change in the borough’s gas lease with Chesapeake Energy covering approximately 650 acres the borough owns in Wyalusing Township’s Brewer Hollow.

By approving the change, the borough agreed to allow the drilling unit size to increase from the current 640 acres to an open-ended drilling unit with no acreage specified.

Council approved amending the lease with the provision that Borough Solicitor Jonathan Foster and Chesapeake negotiate adding a “Pugh Clause” to the agreement. The clause states that in the event some, but not all, of the borough’s property is included in a pooled unit also containing land outside the leased property, at the end of the borough’s lease term, Chesapeake would release any portion of borough property that is not included in the pooled area.

Discussions Monday night did not stipulate how the borough would proceed in the event that Foster and Chesapeake were not able to agree on adding the Pugh Clause to the lease.

Monday night was the second time council discussed amending its lease with Chesapeake. It also discussed the matter during a meeting held on June 28, but held off voting until its July meeting.

Chesapeake representatives Josh Brown and Isaac Dickson attended both meetings; Dustin Goldstar attended only the June 28 meeting.

Dickson outlined the advantages of a larger unit size, which he said although open- ended, the average was about 840 acres. He said the larger unit would result in the production of more natural gas “and you will have a share of that.”

Other advantages, according to Dickson, included:

— Fewer roads and pipelines, less surface acreage used and less environmental impact. “The fewer wells we have to drill, the fewer times we have to penetrate the water table,” Dickson said.

— A larger unit is more productive. “I can’t emphasize this enough,” Dickson said. “Your share of the royalties will be more than with a smaller unit.” At the June 28 meeting, Brown told council that its Brewer Hollow property was likely the largest leased area in Wyalusing Township.

— In larger units, lateral lines can run as far as 5,000 feet; in 640 acre units, lateral lines are restricted to 3,500 feet.

—Some of the borough’s 650 acres would likely not be developed in a 640 acre unit.

Dickson also told council that more lateral lines could be run in a larger unit and that could increase production and royalties for the borough. “I’ve seen well units where the north leg produced nine million cubic feet per day and the south leg produced two million cubic feet per day,” Dickson said. “It’s a huge discrepancy even within the same well unit. We’d all like to be part of the unit that’s producing nine million cubic feet per day, but the truth is we don’t know which is going to be the most productive. In a very real sense, all your eggs will not be in one basket, and you’ll have a greater diversity of sources for royalty income because they’ll be spread out over more acreage.”

Concluding his comments, Dickson told council, “There is a huge upside to modifying the agreement. More natural gas, more productive wells, fewer pad sites which will reduce the number of rigs and the number of trucks, less noise, less environmentally invasive. There are a lot of benefits besides the additional royalties that come from a more productive unit.”

Like many who signed lease agreements early on, Wyalusing Borough received far less money per acre than the current rate. The borough leased its 650 acres in 2006 for a total of $26,000 with Andarko Petroleum. At today’s rate of approximately $5,500 per acre, the borough would receive $3.57 million. Chesapeake purchased the lease from Andarko. Borough Council President George Anderson said the lease automatically renewed in April due to a clause that stated if drilling activity took place on an adjacent property the lease would renew. Anderson said it was activity on the adjacent Felter property that resulted in the lease renewing.

Former Wyalusing Borough Manager Wayne Felter urged council not to agree to the lease amendment unless it contained a clause stating that if Chesapeake pays other property owners more money to entice them to amend their leases, the borough should receive the same increased compensation.

Monday night’s 20-minute executive session was interrupted briefly when Carolyn Harrsch, who had apparently come to the meeting to renew her months-long debate with council over her not being allowed to park on Route 6, suffered some sort of a poor spell and required an ambulance. Laceyville Borough Police officers Joe Demuro and Patrick Butkiewicz assisted Harrsch, who was stricken while waiting in the borough hall vestibule.

Other business included:

—Hearing from Taylor Avenue resident Eric Reynolds, who attended the meeting with his daughter, Sarah, that speeding along Route 706 (Taylor Avenue) is continuing to be a major problem and threat to public safety. “Whatever you’re doing now isn’t working,” said Reynolds, who was formerly president of the borough council. Of all borough streets, Taylor Avenue draws the most complaints from residents about speeding traffic. Council plans to have police focus patrols in that area and will also relocate its radar sign to Taylor Avenue. The sign shows how fast approaching vehicles are traveling. Reynolds said that council has a legal responsibility to enforce the speed limit. “Right now there’s nothing,” he said.   Councilman Scott Snyder pointed out that the borough has been without police patrols for the last month and the situation would improve.

—Meeting Police Officer Patrick Butkiewicz who was introduced to council by Mayor Jean Reinhart. Butkiewicz will patrol Wyalusing Borough under an agreement with Laceyville Borough. A resident of Lake Carey, Butkiewicz grew up on a dairy farm in Jenningsville. He is also employed by the Wyoming County Sheriff’s Department and Dalton Borough. Laceyville Police officer Joe Demuro will also conduct patrols in Wyalusing on a limited basis. The contract with Laceyville calls for between 80 and 100 hours of patrols per month.

—Hearing from Reinhart that current U.S. Census data puts the population of Wyalusing Borough at 596 residents, 251 males and 345 females.

— Discussing briefly the ongoing street line painting that’s being done by Lines by Lew of Monroeton.

— Hearing from Kelly Bradley that PennDOT will conduct a study to see if limiting the use of jake brakes on Route 6 in the borough is warranted.

— Learning that plans are underway to demolish the barn on Gaylord Street owned by Dr. Lawrence Tama.

—Discussing the upcoming renewal of an agreement with Blue Ridge Cable allowing the company to provide cable service in the borough. The agreement will span 10 years.

—Unanimously granting a request from the Wyalusing Wine Festival for permission to provide parking for festival workers in a vacant lot at the rear of the borough cemetery. Council stipulated that the area be cleaned of litter within a few days of the festival and stated that it will allow parking there indefinitely until such time as council has use of the property.

—Discussing the repair of a damaged fire hydrant on Second Street near NAPA that has been out of service for months.

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