EAST LIVERPOOL - The Columbiana County Port Authority plans to lease some more of its property for shale gas development.
The port authority board agreed at this week's meeting to lease an additional 44 acres to Chesapeake Exploration, a subsidiary of natural gas giant Chesapeake Energy, for $1,800 an acre and 15 percent royalties. This will generate a signing bonus of $79,200.
This is substantially less than the $4,000-per-acre mineral rights lease the port authority board entered into for with Chesapeake just two months ago for other property, but Port Authority CEO Tracy Drake said this reflects the changing landscape as Chesapeake finishes up leasing property and shifts its focus to drilling wells.
The 44 acres represents the portion of the 36-mile railroad owned by the port authority that lies in neighboring Beaver County, Pa. The former Youngstown & Southern Railroad, which the port authority is in the process of selling, connects Boardman in Mahoning County and Darlington, Pa., with the majority running through this county.
The 142 acres leased in March to Chesapeake represented railroad property that lies within this county. This $568,000 in bonus money for that lease is to be used to pay down some of the port authority's debt.
Drake said they are also working to lease the Mahoning County portion of its railroad right-of-way to Chesapeake.
In other business, the port authority renewed its agreement with the environmental consulting firm of Tetra Tech NUS to continue groundwater monitoring at the former Eljer Plumbingware property in Salem. The cost is $9,500.
The port authority purchased the 326,000-square-foot complex for $250,000 and turned around and began leasing it to Salem Logistics to operate. Drake said in recent months companies in the shale gas industry have expressed interest in leasing space at the complex.
The port authority also formally accepted a $3.5 million loan awarded it by the Ohio Department of Development to fund continued improvements at the riverfront industrial park in Wellsville.
Most of the money will be used for improvements to benefit industrial park tenant CIMBAR Performance Minerals, which entered into a joint venture with Anchor Drilling Fluids USA to produce drilling fluid on site for the shale gas industry.
The state controlling board approved the loan two weeks ago, which will be forgiven when certain criteria is met, including CIMBAR and Anchor spending $6.8 million of its own money on the project, and the creation of 20 jobs.
Board member Tim Weigle asked Drake how confident he was the criteria would be met for the loan to be forgiven. "Do you really feel we'll meet those goals and we won't be stuck" repaying the loan, he asked.
"I have no worries," Drake said, noting CIMBAR and Anchor have already invested $6.5 million on the project.