Council vote may come soon on city’s oil, gas deal

Marietta City Council could vote as early as next week to advertise for bids to lease up to 95 acres of city property to oil and gas interests, according to an announcement during Wednesday’s lands, buildings and parks committee meeting.

“Be prepared next Tuesday to give your final opinions on taking bids for all five parcels of land,” committee chairman Harley Noland, D-at large, told his fellow council members after a lengthy discussion about the proposed lease of city acreage to Tulsa, Okla.-based Protege Energy III.

If a majority of the council members agree to pursue the lease arrangement, the measure could come up for a vote during the next council meeting at 7:30 p.m. March 6 in the community building at Lookout Park.

At issue is an offer from MNW Energy LLC, an investor/buyer for Tulsa, Okla.-based Protege Energy III, to lease 35 acres of city property that would be included among 6,100 surrounding acres for a horizontal hydraulic fracturing operation that would be located on property outside the city limits.

The offer, made by MNW last month, is to lease the city property for $4,750 an acre, plus a 17.5 percent royalty based on any product Protege would retrieve from the drilling operation.

“That $168,000 up-front money would be a great windfall for the city,” said Councilman Michael Mullen, I-at large.

He noted that owners of the 6,100 acres surrounding the city property will be leasing their land to the oil and gas company, so the drilling operation will take place whether the city decides to lease or not.

“So this is going to happen anyway,” Mullen said.

Although MNW Energy had not agreed to lease more than the original 35 acres of property as of Wednesday, the city administration has recommended offering an additional 60 acres of municipal land for lease to the shale oil and gas industry.

The committee members agreed that if the lease is to be put up for bids, the entire 95 acres should be offered.

The original 35 acres included parcels of city-owned land located behind the Walmart complex and along Goose Run Road in Marietta Township.

The additional 60 acres would include city garage property off Alderman Street, Buckeye Park property, and the Kroger Wetlands off Acme Street.

“We’re still well within the 60-day window to accept the offer, but council needs to do something with this soon in order to qualify for the up-front money on the lease,” said city law director Paul Bertram III.

A quick straw poll of the six council members present during Wednesday’s committee meeting resulted in three members, Noland, Mullen, and Mike McCauley, D-2nd Ward, in support of the lease.

Two council members, Kathy Downer, D-at large, and Tom Vukovic, D-4th Ward, opposed the lease, and one member, Roger Kalter, D-1st Ward, said he did not know which way he would vote.

The seventh council member, Steve Thomas, D-3rd Ward, was not present during Wednesday’s meeting.

In other business Wednesday, city engineer Joe Tucker and development director Andy Coleman asked council’s permission to apply for a Surface Water Improvement Fund grant in the maximum amount of $150,000 from the Ohio Environmental Protection Agency to make stormwater drainage improvements in the Rathbone area off Muskingum Drive.

Tucker said the grant could be awarded without requiring matching funds from the city, but he noted other entities would be competing for the grant money and any match the city could provide would improve Marietta’s chances of obtaining the SWIF grant.

“Ohio EPA has set aside a total $1.8 million for SWIF grants this year, and another $2 million in grant funding will be available in 2015,” Tucker said.

Coleman said the city should pursue the funding, even though the chance of obtaining the money this year could be slim, because applying now would at least get the city’s name on the list of municipalities interested in the grant.

Streets committee chairwoman Downer said legislation approving the grant application would be introduced during next week’s council meeting.