East Palestine ready to talk with drilling industry

September 14, 2012

EAST PALESTINE, Ohio - Village Manager Pete Monteleone will look into oil and gas lease representation through Salem-based Buckeye Mineral Development LLC.

The for-profit company is owned by Bob Rea, who is also director of the nonprofit Associated Landowners of the Ohio Valley that serves the county.

The organizations negotiate oil and gas leasing terms on property owners' behalf before the interested exploration companies.

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Monteleone was authorized to address the issue during a recent Village Council meeting. Councilman Fran Figley said he spoke with Rea recently about the village considering a land lease.

The talks of signing a non-drill lease began among council around the end of last year.

Village Solicitor Shirley Smith said she met with BP Oil representatives and platted out the village's acreage. She said they discovered there was slightly more than was originally recorded. The newly discovered land adds about 13 acres to the already existing 135 acres of park land and 32 acres of cemetery land.

In addition to speaking with BP, Smith has also spoken with officials from Royal Dutch Shell and Chesapeake Energy about a possible lease.

"I'm primarily meeting with BP at this time," she said, adding she believes Chesapeake is waiting to find out what the other companies are offering the village before making a dollar offer.

Again, despite Figley's prompting, she declined to state publicly how much the village could reap through a lease.

"It has been my understanding and opinion that dollar amounts remain confidential," she said, although she did admit to disclosing the amounts during executive sessions held with council.

Figley then told council about meeting with Rea and said the Buckeye Mineral Development (BMD) has estimated the village could reap at least $5,000 per acre and 18 percent royalty on any oil or gas recovered from the municipal property.

He gave council members a copy of the proposal from Rea that included the revenue estimate and a statement from Rea that now is "a good window of opportunity" for East Palestine to participate in land leasing.

The organization would negotiate terms with major oil and gas exploration companies on the village's behalf for a fee percentage. Earlier this month the village of New Waterford approved contracting with the BMD for representation.

Smith said she spoke with Rea early on when council began discussing a lease but he didn't appear to be interested at that time.

Figley said Rea is now "enthusiastic" about the opportunity for the organization to work with the village. "He pointed out it was important that we make a move."

Rea could not be reached for comment.

Council approved authorizing Monteleone to gather more information from Rea about the BMD representation. Meanwhile, Smith will continue pursuing the other options and present council with her findings to Monteleone and council.



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