Wednesday, May 17, 2017

Benedum Airport Authority considers shale gas lease: North Central West Virginia Airport (KCKB), Bridgeport, Harrison County, West Virginia

BRIDGEPORT — Members of the Benedum Airport Authority on Wednesday discussed entering into a lease agreement for the rights to the Marcellus shale gas under the North Central West Virginia Regional Airport property.

The measure was conditionally approved by the Authority, pending further negotiations.

Dean Ramsey, the Authority’s attorney, brought the proposal before the board during its monthly meeting.

The five-year agreement between the Authority and natural gas company Arsenal Resources would bring in a $282,864 initial fee with additional revenues from royalties to follow, Ramsey said.

The process of gas removal, which would be done using horizontal drilling, would occur at depths of more than 6,000 feet and would not affect airport operations, Ramsey said.

The lease would only apply to a 188.5-acre section of the airport’s more than 500 acres of property.

“Its a standard oil and gas lease,” Ramsey said. “If the terms of the royalties are appropriate, it will be acceptable to airport.”

Ramsey said Arsenal initially approached the airport with idea to lease its shale gas rights and offered 14 percent royalties.

The board authorized Ramsey to enter into negotiations with Arsenal to try and secure a royalty rate of 15 percent.

“We will have to get a response from them,” he said. “Fifteen percent is not standard in every lease, it is a negotiated thing that varies.”

Authority President Ron Watson said he supported the lease agreement.

“I think it's certainly a revenue source for us,” he said. “If our legal counsel has already reviewed it and feels that it is in our best interest, what do we have to lose? It’s $250,000 we didn’t have before.”

Watson said the Authority was confident in Ramsey’s ability to secure the best deal for the airport.

“We’ll do the best we can with negotiating the fees,” he said. "We are always looking for new revenue sources. We’ve got it, it's laying there, why not reap some benefit?”

Airport Director Rick Rock said many other airports routinely enter into shale gas lease agreements to create new sources of revenue.

“It’s very common with airports, especially within our region. It’s been a great source of income for airports.”

The money from the lease will go towards normal airport operations, Rock said.

“It gives us the opportunity to have some additional funding that we can utilize to maintain and improve the infrastructure of the airport,” he said.

Rock said he expects the negotiation process to favor the airport.

“Right now they’re at 14 percent and we feel that there is room for them to move in our favor,” he said.

Rock informed the authority that carrier Allegiant Air will be changing its flight schedule in November of 2017. 

Currently the carrier offers flights on Thursdays and Sundays, but will change its schedule to Mondays and Fridays.

Rock said the change was for passenger convenience. 

"Its known most travel occurs on Mondays and Fridays," he said.  

Also during the meeting, Rock suggested the possibility of adding a stand or small shop to the airport's terminal that would sell concessions to travelers.

Rock said the proposed venture could sell travel-sized bottles of liquor and other alcoholic beverages to passengers to create additional revenue for the airport.

The issue was tabled by the Authority until airline regulations on alcohol and alcohol consumption could be further researched.   

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