Agency to lease land for drilling royalties
Posted on Monday, May 12, 2008
The Developmental Disabilities Services Board sold more than 7, 000 acres in Logan County to the Boy Scouts 32 years ago. But the division, a part of the Department of Human Services, retained mineral rights to the land and recently learned that someone was interested in leasing the mineral rights.
On Wednesday, the state land commissioner’s office will open bids on the mineral rights to the Logan County land. The division stands to make at least $ 223, 000 in bonus payments for the lease in addition to royalties from any natural gas extracted from the land.
If the mineral rights are leased, the division will be one of a handful of state agencies that have received revenue from leasing land to those interested in drilling for natural gas in or near the Fayetteville Shale.
The Logan County land near the Booneville Human Development Center lies just outside the Fayetteville Shale, a natural-gas formation that stretches from north-central Arkansas to the Mississippi River. Companies will invest as much as $ 100 billion to drill in the shale during the next decade, a natural gas executive recently said, bringing thousands of jobs and billions of investment dollars to the state.
The Developmental Disabilities Services Board voted Thursday for the Land Commission to start the process of leasing mineral rights for another 480 acres in Logan County.
Other agencies that have leased mineral rights within the Fayetteville Shale include the Game and Fish Commission, the Department of Arkansas Heritage, and the Highway and Transportation Department, said Jerry Bradshaw, mineral leasing officer in the Real Estate Division of the Commissioner of State Lands Office.
Game and Fish has received more than $ 3 million from lease bonus payments, far exceeding the $ 20, 000 that the Heritage Commission received and the $ 23, 000 that the Highway and Transportation Department received from leasing mineral rights in the Fayetteville Shale area. But Game and Fish has leased mineral rights for fewer acres than it expected when drilling in the Fayetteville Shale began in 2005.
“We had a lot of high hopes when that thing first started developing,” said Loren Hitchcock, deputy director of Game and Fish. “We just assumed that if we owned the surface, then we owned the minerals. That didn’t pan out to be the case always.” For instance, a natural gas company was “really interested” in the 9, 000 acres that Game and Fish owns at the Ed Gordon / Point Remove Wildlife Management Area in Conway County. But Game and Fish owned the mineral rights to only 165 acres. The agency did lease the mineral rights that it owns and received a $ 600 per acre bonus, but no wells have been drilled yet, Hitchcock said.
The Game and Fish Commission likely will use the mineralrights-lease money to purchase more land or for capital improvements, Hitchcock said.
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