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Schools opt to drill their own gas wells

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PITTSBURGH — After suffering through a winter of sky-high natural gas prices, a school system near Pittsburgh has decided to drill its own.

The school board in Penn Hills, a community of 50,000 in the heart of Pennsylvania coal country, has struck a deal with Penneco Oil Co. to sink as many as 10 natural gas wells under the district's eight schools.

The school system would get 12.5 percent royalties plus a fixed share of the gas — not enough to supply all of its energy needs, but enough to cut its heating costs in half and delay a tax increase.

Last school year, it cost $450,000 to heat the schools, in part because of runaway natural gas prices almost six times higher than normal.

"We might as well tap our own gas and use the savings," said Barry Patterson, a school board member. "I'm not sure it will eliminate the need to buy any gas, but whatever the savings, we will gladly accept them, so will the taxpayers."

The gas wells still need city and state approval. Officials hope to have the first well producing as early as next month in Penn Hills, which is about 10 miles from downtown Pittsburgh.

Other schools around the country and in Pennsylvania have leased drilling rights over the years, but this could signal a resurgence in the practice.

"In view of the higher prices that we've seen, it kind of makes sense for them to do something. It could be a happy marriage," said Terry Jacobs, president of Penneco.

In oil patch states like Oklahoma and Texas, oil and gas wells dot the landscape.

"We have got oil wells and gas wells producing next to schools, churches, restaurants, you name it," said Mickey Thompson, executive vice president of the Oklahoma Independent Petroleum Association.

And at least two other districts in western Pennsylvania have gas wells on school property.

About five miles from Penn Hills, the Plum Borough district has three wells — one about 500 feet from an elementary school — that have been producing gas since 1996. Officials said the wells helped them avoid last winter's energy crunch and earned $11,000 in royalties last year.

On the Net:

Penneco Oil Co.: www.penneco.com

Penn Hills School District: www.phsd.k12.pa.us/