Columbiana County’s oil and gas boom could lead to long- overdue infrastructure improvements.
Because of a deal to lease 550 acres for drilling, county coffers will be boosted by $3.2 million, in bonus payments and royalties that will total 20 percent of gross income from producing wells.
The initial plan is to use the bonus money to try to complete some of the county’s capital improvement projects that have been put off for as long as 100 years, said Mike Halleck, board of commissioners president.
The county’s agreement is with Chesapeake Exploration.
“We’re going to pave the parking lot at the county courthouse, repair the heating system in the courthouse and put a new roof on the county jail,” he said. “We also want to start a rainy-day fund.
The county is also looking at increased health care costs for employees, Halleck said.
There are no plans for any tax reduction based on the lease bonus or royalty payments. Tax rates already are low in the county, he said. No property tax goes to the county government; commissioners replaced it years ago with a half-cent sales tax increase.
Though some residents oppose drilling, it has been a “godsend” to the economy in Columbiana County, Halleck said.
“People talk about Chesapeake, but they’ve been nothing but responsive and easy to work with for us,” he said.
County Commissioner John Payne says the county needs to be judicious in using the lease bonus money and royalties, focusing on capital improvements.
“I would not support using any of this money for day-to-day operations,” he said. “We especially need to look at the big picture.”
The drilling industry will create a stronger economy for the county, and some of the money could help enhance the infrastructure, including water, electric and roads, Payne said. He added the revenue also could be used to recruit new business, Payne said.
The key is for the county leadership to determine what businesses will “marry up” with the oil and gas development occurring within the county, Payne said.
“One potential use [of bonus and royalty funds] would be a loan fund for businesses,” he said.
Another possibility would be to provide some expected royalty payments to townships to help them pay for road improvements, Payne said.
The oil and gas companies will pay for roads they use, but with state-funding cuts, other township roads could fall into disrepair, he said.
Tim Weigle, a Unity Township trustee and candidate for county commissioner, said he supported the county’s effort to lease land for mineral rights.
“We leased township land. It’s sort of like found money,” he said.
The county should use the bonus payments and any potential royalties to pay for capital improvement projects, Weigle said.
“Government has wants and needs. It should take care of the needs before it starts looking at the wants,” he said.
Unity Township leased only 14 acres of land, but the bonus money was placed in a capital-improvement fund, Weigle said.
Counties and townships have lost much revenue from state-government budget cuts. But most importantly, local government should use money from oil and gas companies to pay for projects that arise unexpectedly, he said.
“The key is the county needs to use a private-industry approach and try to plan five to seven years ahead to try and discover upcoming costs,” Weigle said.
With that type of planning, the bonus and royalty money could be used for truly unforeseen costs, he said.
The idea of the county helping townships with infrastructure improvements may be impossible, Weigle said.
“Until the county knows what it’s going to receive in royalties over the long term, I don’t think they can afford to share money with townships,” he said. “It may be possible after the long-term royalties are known.”
According to Ohio Department of Natural Resources records, Columbiana County ranks second in Ohio in drilling permits issued. ODNR has approved 47 drilling permits in the county.