- Associated Press - Monday, January 26, 2015

CHARLESTON, W.Va. (AP) - West Virginia officials have opened millions of dollars in bids to drill for oil and natural gas beneath state-owned lands, including waterways and a wildlife management area.

In one of the biggest offers the state Department of Commerce opened Friday, Jay-Bee Production Company bid amounts ranging from $5,000 to about $16,300 to drill underneath 303 acres of Jug Wildlife Management Area in Tyler County, or about $4.5 million total.

The leases for Marcellus and Utica shale mineral rights, which allow for hydraulic fracturing, commonly called fracking, are a new undertaking for the state.

So far, only one lease agreement has been finalized - a $6.2 million deal letting Antero drill below 518 acres at the Conaway Run Wildlife Management Area in Tyler County, said Department of Commerce spokeswoman Chelsea Ruby.

On Friday, several other bids were submitted:

-Antero Resources Inc. bid $2.3 million for 283 acres of the Jug wildlife area.

-Noble Energy offered about $685,000 total to drill beneath 134 acres of Fish Creek and adjacent land in Marshall County.

- StatOil USA Onshore Properties Inc. bid $9,000 per acre to drill under a two-mile section of the Ohio River in Wetzel County.

For all deals, the state requires an additional 20 percent royalty on what’s extracted. The leases run for four years.

The actual drilling and storage of equipment will be done off of state land. Currently, the mineral money must go to the Division of Natural Resources.

The state is negotiating with high bidders on three other sections of the Ohio River, and one will go back out to bid.

Noble Energy has bid $4.9 million on one 1,400-acre tract, while Gastar Exploration would pay $542,500 to lease a separate 155-acre tract.

Statoil USA was the high bidder on another Ohio River section, worth $1.2 million over almost 1,400 acres.

Additionally, Triad Hunter rescinded its offer on two parts of the Ohio River because the company wouldn’t comply with the state’s terms. Those sections are going back out to bid.

Originally, Triad Hunter offered to pay $17.8 million up front, plus 18 percent royalties, for a much larger section of the river.

Several environmental groups have opposed the Ohio River drilling, since millions of people depend on the river for drinking water.

State officials have stressed that the drilling will be done a mile underneath the river.

Horizontal drilling under rivers is generating revenues in other states. In March 2014 and in 2010, Chesapeake Appalachia paid Pennsylvania $10.5 million for five-year leases to drill beneath two sections of the Susquehanna River, not counting royalties.


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