District will receive $500,000 up-front payment if gas is found beneath the school property, then 17% royalties
Pittsburgh’s East Allegheny School District gave the thumbs up to natural gas drilling on middle school property to raise much needed funds for education, KDKA Television reported yesterday.
Under the lease agreement, EQT Corporation (ticker: EQT) will explore 170 acres owned by the East Allegheny School District for natural gas. The lease agreement calls for EQT to make an up-front payment of $500,000+ if gas is found. The school district will receive proceeds of “17% of whatever is being earned by EQT,” district solicitor Dan Beisler told KDKA.
Under state law, EQT won’t be able to drill within 500 feet of Logan Middle School, but the 170 acres under lease should provide ample space for drilling without disrupting school activities.
The district is facing a budget deficit in excess of $1.1 million and needs revenue, KDKA reported. The district hopes this solution is a way to avoid a tax hike.
Some neighbors and environmental groups expressed concern over an industrial activity so close to a school, but it’s not the first time this has been done.
Oil and gas companies have developed drilling and completion methods that are very safe, fast and quiet when drilling near developed areas. In Greeley, Colorado, Synergy Resources (ticker: SYRG) successfully drilled and completed a well on leased property near a school soccer field and finished the project in less than three weeks with minimal disruptions.
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