News From Terre Haute, Indiana

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September 24, 2013

City approves oil drilling agreement

Current landowners would retain mineral royalty rights

TERRE HAUTE — The Terre Haute Board of Public Works and Safety approved a lease agreement Monday between the city and Pioneer Oil Co. Inc., the company planning to drill for oil on property owned by Indiana State University.

Pioneer must seek leases with downtown landowners whose property might be sitting atop oil reserves, including ISU and the City of Terre Haute.

The lease, approved by the board without dissent, established royalty payments for the city equal to 15 percent of the gross sales proceeds actually received by Pioneer for the first 75,000 barrels of oil sold. It will be 19 percent for the next 50,000 barrels and 22 percent for all additional barrels, the lease states.

Total royalty payments are divided among property owners whose land sits on the reserves. Royalties typically total one-eighth of the gross proceeds from a well, according to the website, oil-gas-leases.com. However, royalty amounts are subject to negotiation among the parties, the website states.

The lease also contains a signing fee of $20 per acre to be paid to the city or $100, whichever is greater.

ISU got permission last year from the Terre Haute Board of Zoning Appeals for Pioneer to drill for oil on the eastern edge of campus. Some pre-drilling work has already started, including the drilling of a water disposal well, construction of fencing and landscaping. Pioneer currently has active wells at the University of Southern Indiana.

n The Board of Works also opened bids Monday for more than a half-a-million-dollars of new fire fighting equipment used to help firefighters breath in hazardous environments.

The board opened a bid for a little more than $504,000 from AFC International Inc., a DeMotte, Ind. company, for self-contained breathing equipment. A second bid was received from Hoosier Fire Equipment Inc., a Valparaiso company, for $546,000.

A third company, 5 Alarm Fire and Safety Equipment, opted to enter no bid, although a representative of the company attended the meeting.

The equipment includes 150 self-contained breathing packs, masks and other items, said Jeff Fisher, fire chief, speaking after the meeting in City Hall. Financing will come from ambulance fees, he said.

According to standards published by the National Fire Protection Association, the city’s self-contained breathing equipment is due for replacement at the end of this year, he said.

Reporter Arthur Foulkes can be reached at 812-231-4232 or arthur.foulkes@tribstar.com.

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