DALLAS - Tulsa officials are looking into the possibility of using revenue generated through oil and gas drilling on city-owned property to help finance a proposed $1.6 billion, 10-year street improvement program.
Councilor Bill Martinson said the city's share of the drilling lease payments and royalties from any oil and gas produced on its properties may not be significant, but every source of revenue should be explored before asking taxpayers to finance the street improvement program.
"We're looking into it," he said. "Right now oil and gas drilling in the city is prohibited, so we're looking to see what needs to be done and even if the city has the mineral rights to the land it owns."
Drilling inside Tulsa's city limits has been banned since 1906. City officials said if drilling were allowed inside the city limits, it would be restricted to city-owned land with no drilling on private property.
Martinson said the move was not prompted by requests from energy companies to drill in the city, but by the need to improve Tulsa's transportation infrastructure.
"We are trying to come up with a comprehensive, long-term plan to bring our city streets back to a good, overall condition," he said. "We have to look at virtually every aspect of the process, and how we are going to be able to fund it."
According to the Oklahoma Corporation Commission, wells in Tulsa County produced 307,000 barrels of oil and 584 million cubic feet of natural gas in 2006.
In late January, Martinson outlined a proposed street improvement program that would be financed with $600 million of general obligation bonds and $1 billion in sales tax revenue. He said a more formal financing package should be ready for council review by late spring.
"It's been a good exercise," Martinson said. "We want to make sure that when we fix the streets we don't cause problems in other areas that are currently being funded."
The city typically allocates a large portion of its GO bond proceeds to public safety and parks. Under Martinson's original proposal, all GO proceeds would be dedicated to street improvements and upgrades.
He said the first step in generating revenue from oil and gas drilling is to determine if Tulsa actually has the mineral rights to its parks and other property.
The city attorney's office is in the process of reviewing abstracts for Mohawk Park in northern Tulsa to see if the mineral rights came with the deeds.
City attorney Deirdre Dexter said the 2,820-acre park, one of the largest municipal parks in the nation, was pieced together from smaller parcels. There are approximately 30 abstracts that trace the history of each individual parcel, some of which involve hundreds of documents.
Oklahoma City allows oil and gas drilling and production within the city limits, on public as well as private land. Budget director Craig Freeman said in 2007 the activity generated $3.2 million for the city.
"We put the money into our capital budgets, depending on where the drilling and production occurs," he said. "Last year we received $2.6 million for activity on airport land that went to the airport trust, and $660,000 for the parks."
Freeman said the revenue included drilling lease payments and production royalties.
