Water authority approves fracking leases in Hempfield, Washington townships

Municipal Authority of Westmoreland County board members on Wednesday approved new lease agreements for local energy companies to drill for natural gas, including at a site near the Beaver Run Reservoir in Washington Township.

The new contracts come as the authority continues to ban the sale of water from the reservoir used for fracking activities amid ongoing drought concerns.

“We are still not selling water from the reservoir for fracking. There might still be fracking going on, but it’s with water being trucked in from other places,” authority business manager Brian Hohman said.

Leases were awarded to Apex Energy for two properties owned by the authority in Hempfield. The authority will receive a one-time $2,500 payment and 18% royalties for all gas sold by the company that is produced from the Hempfield wells.

MAWC’s board also amended an existing deal with Olympus Energy that allows the company to drill deeper under property at the reservoir site. The authority earns 14% royalties for gas produced at 87 shallow and 55 deep wells on and near the reservoir property.

Royalties from sales of natural gas once were a major profit center for the authority and were expected to generate about $4 million during the past 12 months. Lower gas prices and reduced drilling resulted in a nearly 75% decline in gas royalties during the 2023-2024 fiscal year that ends March 31.

Hohman said the authority, through the first 10 months of the current fiscal year, has earned just $1.1 million in natural gas royalties.

Joe Mediate of Penn Township told authority board members he feared water used for fracking near the reservoir contributed to decreased water levels and led to the 9% rate hike approved last month for water customers.

“The next thing you know, you’re asking us to conserve water so you can catch up and then you’re going to approve contracts to three more companies,” Mediate said.

Authority officials said sales of water for fracking was halted after it imposed voluntary conservation measures in November for more than 56,000 customers north of Route 30. They are served through the Beaver Run Reservoir, where precipitation deficits over the previous year left the 11.4 billion gallon reservoir at less than half its capacity.

The authority has more than 120,000 water customers in Westmoreland, Allegheny, Armstrong, Fayette and Indiana counties. The southern half of the authority’s service area is supplied with water processed from a plant along the Youghiogheny River near Connellsville.

Mandatory conservation for the northern half of the authority’s customer base was implemented in December, but, as rains and snow increased throughout January, the authority dialed back the requirement for customers to save water and reinstituted a call for voluntary conservation.

Water levels have lagged during a relatively dry February, and officials said conservation mandates could return if drought conditions persist.

“Water levels at the reservoir directly correlate with precipitation levels, and there was very little snow this time last year. We hope for a better spring,” Hohman said.