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In the middle of the energy-lease frenzy over the Haynesville Shale, the city of Shreveport has already leased much of its land -- at old prices.
That matter of bad timing means the city is getting get thousands, not millions.
In 2005, before word got out about the huge Haynesville Shale natural gas field in Northwest Louisiana, the administration of former Mayor Keith Hightower leased the mineral rights on the city's two airports and Cargill Park to a local energy company.
The price: $1 an acre, said Tom Dark, chief administrative officer for the current mayoral administration. That was the lone bid, Dark said today after reviewing City Hall records.
At the time, it appeared only one company was interested in drilling, Dark said. Alternate Energy Systems, a subsidiary of Hood Goldsberry oil, leased the land, Dark said.
Dark said the city was paid a little more than $5,000 for drilling rights. At today's prices, it could be in the millions.
That is not all the city is getting, however: Royalties from the wells that were drilled are paying the city between $400,000 and $500,000 a year, he said.
The current administration has to live with what it inherited with regard to the bonus payment, Dark said.
"We can't undo the lease; it's pretty much ironclad. We looked," Dark said. "We'd love to lease the 'deep rights' -- but the kind of clauses we'd tell landowners to put in their's right now are not in ours."
Dark said it wasn't a bad deal three years ago -- but that was before Haynesville.
But with energy leases now going for thousands per acre, Shreveport stands to miss out on as much as $30 million if it could lease the acreage at today's best prices, Dark said.
Dark said City Hall is no different from a lot of people who leased their land before the Haynesville Shale rush.
"The folks that did it, did it with their eyes open. They just didn't know what to look for and had no idea the shale stuff was coming," he said.
City Councilman Monty Walford, who was a member of the council that approved the lease, calls it a case of woulda, coulda, shoulda.
"If we could see the future, we could make much better decisions," Walford said. "In this case, we made the best decision we could at the time."
Dark said the lease will last as long as the wells produce. The city is hoping the drilling company will "flip" the lease to another company that can drill deep and increase the well's production and the city's royalties.
Bossier City has a lot better timing in leasing its mineral rights on city-owned land.
Bossier Chief Administrative Officer Lynn Austin said no leases have been signed. The city has hired an oil and gas expert to advise them on much to get. Bossier City has about 3,500 acres it could lease, he said.
Bossier has been approached by some energy companies about drilling, Austin said.
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