Shreveport again may try to lease mineral rights
Shreveport again may try to lease mineral rights
By Adam Kealoha Causey • acausey@gannett.com • July 15, 2009
Shreveport may play the mineral leasing game again in hopes of increasing revenue this tough budget year.
City Council members this week indicated they want to put about 700 acres, mostly roads and rights of way, in the southwest part of the city on the state Mineral Board's docket as soon as possible.
"To me, this is a golden opportunity," Council Chairman Ron Webb said.
But Mayor Cedric Glover called for a halt.
Chesapeake Energy Corp. has asked for Shreveport to seek bids, although that does not mean the company automatically will win them.
And Glover's beef is with Chesapeake Energy. The company that handles its local bargaining with landowners, Twin Cities Development LLC, no longer will negotiate with neighborhood associations and other groups. He asked Kevin McCotter, Chesapeake Energy's director of corporate development in Louisiana, to push Twin Cities Development to change that policy.
"It seems almost un-American not to allow neighbor working with neighbor," Glover said.
Group negotiations kept some property owners from being able to cash in on 2008's big lease bonus payments, McCotter said.
Caddo saw as much as $30,000 per acre last year. Shreveport and Bossier City were behind other local governments then in trying to let the state auction its property. Last summer's Haynesville Shale spending frenzy saw the DeSoto Police Jury and Caddo Commission rake in $28 million and $17 million, respectively. By October, the price of natural gas had fallen, and northwest Louisiana's twin cities saw nil in the way of offers on thousands of acres.
This time around, Shreveport will seek a minimum of $1,500 per acre in lease bonuses and 25 percent royalties for three-year contracts.
That's much lower than last summer, but another recent influx of natural gas cash into Caddo coffers could hearten Shreveport.
The Mineral Board's sale July 8 brought Caddo more than $1 million in up-front payments for about 150 acres. That's an average of about $7,000 per acre. At that rate, Shreveport could see almost $5 million if there are takes on all of its property.
The Mineral Board, which leases property for municipalities, requires deadlines for cities to advertise that they are seeking bids. The soonest Shreveport's land could appear on the board's agenda is September. But to make that, the city must publish its intentions to lease by July 28, the day of the City Council's next scheduled meeting.
Webb said he may call a special meeting before then so his cohorts can vote to let the Mineral Board do its job. Otherwise, Shreveport would have to wait until the Mineral Board's meeting in October.
"Get what you can get while you can get it is what I'm looking at," Webb said. "It's kind of like when you sell your house. You get market value at the time."
Shreveport's $6 million in cuts from this year's $450 million budget have kept most city pools closed, frozen city worker pay and prevented departments from purchasing vehicles. Last year, city leaders said they likely would use oil and natural gas money to increase the amount in the operating reserve, a major savings account.
By Adam Kealoha Causey • acausey@gannett.com • July 15, 2009
Shreveport may play the mineral leasing game again in hopes of increasing revenue this tough budget year.
City Council members this week indicated they want to put about 700 acres, mostly roads and rights of way, in the southwest part of the city on the state Mineral Board's docket as soon as possible.
"To me, this is a golden opportunity," Council Chairman Ron Webb said.
But Mayor Cedric Glover called for a halt.
Chesapeake Energy Corp. has asked for Shreveport to seek bids, although that does not mean the company automatically will win them.
And Glover's beef is with Chesapeake Energy. The company that handles its local bargaining with landowners, Twin Cities Development LLC, no longer will negotiate with neighborhood associations and other groups. He asked Kevin McCotter, Chesapeake Energy's director of corporate development in Louisiana, to push Twin Cities Development to change that policy.
"It seems almost un-American not to allow neighbor working with neighbor," Glover said.
Group negotiations kept some property owners from being able to cash in on 2008's big lease bonus payments, McCotter said.
Caddo saw as much as $30,000 per acre last year. Shreveport and Bossier City were behind other local governments then in trying to let the state auction its property. Last summer's Haynesville Shale spending frenzy saw the DeSoto Police Jury and Caddo Commission rake in $28 million and $17 million, respectively. By October, the price of natural gas had fallen, and northwest Louisiana's twin cities saw nil in the way of offers on thousands of acres.
This time around, Shreveport will seek a minimum of $1,500 per acre in lease bonuses and 25 percent royalties for three-year contracts.
That's much lower than last summer, but another recent influx of natural gas cash into Caddo coffers could hearten Shreveport.
The Mineral Board's sale July 8 brought Caddo more than $1 million in up-front payments for about 150 acres. That's an average of about $7,000 per acre. At that rate, Shreveport could see almost $5 million if there are takes on all of its property.
The Mineral Board, which leases property for municipalities, requires deadlines for cities to advertise that they are seeking bids. The soonest Shreveport's land could appear on the board's agenda is September. But to make that, the city must publish its intentions to lease by July 28, the day of the City Council's next scheduled meeting.
Webb said he may call a special meeting before then so his cohorts can vote to let the Mineral Board do its job. Otherwise, Shreveport would have to wait until the Mineral Board's meeting in October.
"Get what you can get while you can get it is what I'm looking at," Webb said. "It's kind of like when you sell your house. You get market value at the time."
Shreveport's $6 million in cuts from this year's $450 million budget have kept most city pools closed, frozen city worker pay and prevented departments from purchasing vehicles. Last year, city leaders said they likely would use oil and natural gas money to increase the amount in the operating reserve, a major savings account.
Views: 57
Replies to This Discussion
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Permalink Reply by The_Baron on
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Idiots.
If they weren't so greedy the first time, they probally would have done quite well.
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Permalink Reply by NA on
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I hope the city fares well. I read recently that due to budget issues they weren't able to open a few of the local pools.
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Permalink Reply by The_Baron on
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How about, none of the pools except Southern Hills. That one dosn't even count since the City had to allow a private company in to get that one open. But its okay, we are going to build a Dog Park!! Because thats what you do when you can't afford what you got, build more stuff!!!
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Permalink Reply by Checkmateking on -
But they need that money now Baron! So they can shore up this years bloated budget. Politicians and government will be the death knell of this country, I was born and raised in north Shreveport, thank god we moved to Bossier to get away from the crime and idiocy. Most of all the land they are putting up for lease happens to be ROW's roadsides etc. Basically worthless in terms of unit interest.
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Permalink Reply by The_Baron on
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I don't disagree.
My only problem is that they could have gotten a much better price if they hadn't set a minimum bid so high the first time.
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Permalink Reply by Oil Neophyte on
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Correct me if I am wrong but it has alway been my understanding that a r-o-w was just a right to use the surface and did not come with mineral ownership. The minerals under these r-o-w's are owned by someone other than the city. So my question is, how can the city lease a right of way? The oil company is only interested in leasing the individual/entity that would own the minerals. They could care less about the r-o-w but save for it might have some affect on surface operations that they might have planned.
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Permalink Reply by The_Baron on
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It all depends on the instrument that conveys the Right of Way to the government enity.
The neat thing about right of ways, is if the private enity conveying the right of way to the government, is smart enough to reserve the minerals, these minerals are not subject to prescription!!
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