The state’s just finished budget calls for raising almost $100 million by expanding leases for gas development in state forests – even though leases the state has already issued are far from tapped out.
Environmental groups complain that Gov. Tom Corbett’s plan to open thousands more acres of state forest to gas development – and allow drilling in state parks for the first time – is poorly timed and ill advised.
“We don’t believe the forests and state parks should be used like an ATM machine,” said Cindy Dunn, a former deputy secretary for the state Department of Conservation and Natural Resources who is now president of the environmental group PennFuture.
Dunn noted gas companies already hold private leases for state park land but have not tapped any.
In western Pennsylvania, mineral rights have been recognized as valuable for more than a century. As a result, when the land establishing the state park system was acquired, the property and mineral rights had sometimes been separated before the sale.
Corbett’s executive order calling for nonsurface impact leases – which allow drilling from neighboring property but don’t allow drilling pads, pipelines or other equipment to be installed – “sets a terrible precedent,” Dunn said.
Gas companies have drilled 568 wells in state forests since Pennsylvania held three lease offerings from 2008 through 2010 under the Rendell administration. A state analysis in June found that deals with gas companies under those old leases would allow development of another 2,400 wells.
With potential for that amount of activity, environmentalists say creating new leases just to close a budget gap is poor policy.
The Department of Conservation and Natural Resources is asking for at least $3,000 an acre for leases – meaning it needs to let about 25,000 acres to come up with the $75 million originally proposed by Corbett.
Dunn said the 19,000-acre Ohiopyle State Park in Fayette County may be most vulnerable. It’s in the area of southwestern Pennsylvania that has become popular with drillers because of its access to “wet gas,” a fuel that is heavy in propane, ethane and butane.
The future of Corbett’s plan will likely be decided Tuesday. That’s when the Senate is set to vote on a law implementing the state budget that includes language authorizing the new leases, said Rep. Greg Vitali of Delaware County, Democratic chairman of the House Environmental Resources and Energy Committee. Vitali has been among the most outspoken critics of the gas lease plan in the Legislature.
“The Senate vote on Tuesday is, for all practical purposes, the last chance to stop Corbett’s ill-considered drilling plan,” said Vitali.
If the plan passes, the state would collect money from the gas leases in two ways. The first would be in upfront payments based on the size of the leased property. Landowners then receive ongoing payments tied to how much gas flows from a well on their property.
The state hopes to get at least 18 percent in production royalties on the new leases it issues. But Patrick Henderson, Corbett’s deputy chief of staff and point person on energy issues, said the budget estimate is a conservative one that doesn’t anticipate money from royalties tied to production.
And boosting the revenue estimate to $95 million doesn’t mean the state actually will need to lease more land, he said. But administration officials believe gas companies are eager to latch onto state forests based on the “level of interest” they’ve seen.
State officials know some gas companies are holding leases on neighboring property and are eager to sign leases for adjacent parcels of state forest, Henderson said. Drilling horizontally underground allows one well to tap gas across property lines. Gas companies throughout the Marcellus Shale region often combine neighboring parcels into a single production unit.
But that worries environmentalists.
“Our state lands shouldn’t be a magnet for industrial activity,” said Dunn. “And that’s what this is.”
Even if new leases only allow drilling underground, increasing the number of wells will add traffic, noise and pollution to sensitive areas, said Nels Johnson, deputy state director of the Nature Conservancy of Pennsylvania.
“Additional state leases could harm important forest, river and rare species habitats that have been protected for all Pennsylvanians to enjoy,” he said.