DUBOIS – The City of DuBois City Council gave its okay to move forward with Marcellus gas wells on its watershed property near the reservoir.
The next step would have the company find out who owns the mineral and gas rights to the land. Something the council is unaware of currently. The company, which also has oil and gas rights in Treasure Lake, is primarily interested in the shale formations.
The City of DuBois will receive an advance royalty of $500 per acre and a 15 percent royalty rate on gas, should DuBois own the gas rights of the land.
When prior advances had been mentioned that had been offered to other entities, City Solicitor Toni Cherry explained that most of those companies have already spent their budgets for advances.
“There is no longer the kind of money for that kind of advance,” said Cherry. “It is much more favorable for the City of DuBois to lock in a favorable royalty rate.“
Cherry explained that the large advances were good if something fell through afterwards that prevented drilling, but that the royalty rate is more important should the company begin extracting gas. Still, Cherry explained that $500 an acre isn’t that bad.
“At this point it appears to be much wiser to grab that bird in the hand, and get that cash. If you multiply $500 times the amount of acres the City of DuBois has, it is still an exceptional, and certainly very beneficial to the City of DuBois to have that,” said Cherry. “That is general fund money. That’s not water fund money. That’s not sewer fund money. That’s into the city’s coffers to create its capital fund, to augment its capital fund.”
When a member of the audience expressed concern over the drilling near the reservoir, City of DuBois Mayor John “Herm” Suplizio explained that DuBois retains first right to refuse drilling at any location.