By Rob Moritz
Arkansas News Bureau

LITTLE ROCK — Conway County Judge Jimmy Hart, who is president of the County Judges Association of Arkansas, says county leaders in the area of the Fayetteville Shale play in the north and central parts of the state are “caught between a rock and a hard place.”

On the one hand they are embracing the natural gas drilling that is going on in their counties, he says. It’s bringing millions of dollars and jobs to the region at a time when many areas of the country are struggling financially.

On the flip side, he says, the hauling of large equipment used in the drilling to the remote sites is wreaking havoc on many of their rural roads, and county judges are reluctant to press the issue with natural gas companies for fear of making them mad.

“It is a two-edged sword,” he said.

The problem is so bad in Faulkner County that Judge Preston Scroggin has come up with a plan for reducing the road damage, a plan he says won’t drive the drilling industry away.

“They’re going to tell us where these (drilling) pads are going, and we’re going to sit down with them and we’re going to map out a route on these roads and they’re going to stick to it,” Scroggin said last week.

Drilling industry vehicles that stray from the routes and cause damage to roads will then be required to pay for the repairs, he said.

Officials with the natural gas industry said last week they are willing to work with Faulkner and all other counties to try and reduce the damage done by their heavy equipment to rural roads.

“We’ve just got to try to get a handle on this, because when they come on some of these drilling sites they’re like an army of ants,” Scroggin said.

Scroggin said he has become frustrated with the continuing road damage, especially in the northern part of the county. In some cases, he has persuaded various gas drilling companies to return and repair the damages, but even that has become increasingly more difficult.

His county’s road crews can barely keep up with the normal repairs and maintenance, let alone the damages caused by the drilling equipment, he said.

“We have some roads that have been damaged for a year and a half and two years and have yet to be fixed,” he said.

“We’ve had some pads built and there are two or three different ways into it, and the contractors just kind of do what they want,” he said.

“We’re not going to charge anything and there will not be any permits,” Scroggin said. “All we want is for them to stay on the designated routes and fix the roads if they don’t.”

Hart said he likes the Scroggin’s proposal.

“What we’re needing to develop is a system where you say, “OK, this is the designated route you are going to use,’” Hart said. “We want to develop some protocols and also (want to see) the industry develop some regulations that say, ‘Contractor, this is the designated route, and if you get off that designated route and damage the road it’s (going) to cost you.’”

Marks Raines, spokesman for Chesapeake Energy, said his company is willing to work with the county officials.

“We’ve been doing that ever since we started … and we will continue to look at the designated routes, and if those are the routes they want to use then we’ll use them,” he said.

Raines also said his company is currently taking bids on a variety of road repair jobs on some of those rural roads.

“We know we’ve got several miles of roads that need to be repaired,” he said.
The damage isn’t limited to county roads, however.

Arkansas Department of Highway and Transportation Director Dan Flowers said recently that natural gas drillers has caused more than $200 million in damages to state highways in the region.

Trying to address that problem, the Arkansas Highway Commission in June authorized the department to use the agency’s revenue from the natural gas severance tax, about $33 million, to repair some of those roads.

The Legislature in 2008 raised the severance tax on natural gas from three-tenths of one cent per 1,000 cubic feet of gas to 5 percent of the sale price, minus the cost of treating and transporting the gas. The new rate took effect Jan. 1, 2009.

Ninety-five percent of the revenue goes toward road improvements, with 70 percent of that going to highways in the state, 15 percent to county roads and 15 percent to municipal roads. The remaining 5 percent goes to general revenue.

Revenue was projected at about $62 million during the first full year of the tax, but it has come in at about half that because of a significant drop in the price of natural gas.

“Nobody anticipated the kind of damage we’re seeing,” said department spokesman Randy Ort. “We don’t want to be negative because this is a huge boon to the state of Arkansas, but I don’t think anybody foresaw the amount of damage it was creating.”

Much of the $33 million from the highway department will be used to repair Arkansas
124, a major highway for natural gas industry vehicles, which cuts through Conway, Faulkner, Van Buren and Cleburne counties.

“We’re tickled to death the highway department is about to spend more than $30 million on 124,” Scroggin said. “It’s in pretty rough shape.”