Shale Daily / NGI All News Access

No Plans to Lift Pennsylvania Forest Drilling Moratorium

Removing a moratorium on new drilling in Pennsylvania state forests is not a priority, the acting secretary of the Department of Conservation and Natural Resources (DCNR) told a state Senate committee during confirmation hearings earlier this month.

"The moratorium is still in effect on any additional drilling on forest lands, and we're not having any discussions about that right now," Richard Allan told the Senate Environmental Resources and Energy Committee. "We are looking at protecting the surface impact, and updating our monitoring of the companies that are doing drilling. That is our primary focus right now."

The committee unanimously approved Allan's confirmation.

Although the Department of Environmental Protection (DEP) is the main permitting agency for oil and gas activities in the state, the DCNR manages 1.5 million acres of state forests and 60 state parks that sit atop the Marcellus Shale formation. With drilling development expanding, that land promises to be a major revenue generator for Pennsylvania, but conservationists worry about the impact of widespread development, not only drilling but also the gathering lines needed to connect wells to market.

This year, leasing revenues have already helped the DCNR avoid closing state parks, Allan said.

Allan estimated that the Oil and Gas Fund, which collects revenues from development on state lands, would have $27 million by June. He expects that to increase to around $65 million in the coming fiscal year because of Marcellus Shale activities.

"If a fraction of the wells that have been drilled become producing wells, that possibly would go up to maybe double that amount," Allan said, noting that the volatility of natural gas prices made it difficult to predict future revenues.

Approximately 700,000 acres of state forests are currently under lease, but then-Gov. Ed Rendell enacted the moratorium on the remaining 800,000 acres last October after lawmakers failed to pass a severance tax on natural gas (see Shale Daily, Oct. 27, 2010). Shortly after being elected last fall Gov. Tom Corbett promised to gradually lift that moratorium, but more than three months after his inauguration it still remains in place (see Shale Daily, Nov. 15, 2010).

The Corbett administration, however, did rescind an October 2010 policy requiring well operators to coordinate with the DCNR on an environmental review as part of the DEP well permit application (see Shale Daily, Feb. 23, Oct. 29, 2010).

Allan defended that decision, which drew criticism from environmental groups, describing it as redundant because the DCNR already conducts an environmental assessment on every parcel it plans to lease and the DEP does similar work.

State Sen. Edwin Erickson, a Philadelphia-area Republican, questioned whether the expected influx of gathering lines threatened to fragment state forests, but state Sen. Gene Yaw, a Republican from northeast Pennsylvania, noted that all development to date, including both drilling and pipeline construction, covers less than 2% of all state forest land.

Allan said pipeline companies would have to meet the same standards as drilling companies.

The DCNR recently released a 156-page set of guidelines and best practices for oil and gas activities on state forest lands, covering everything from seismic work, to drilling pads and water disposal, to roads and pipelines, to site restoration.

Pennsylvania only owns 85% of the subsurface rights of state forests and 15% of the subsurface rights to state parks, but Allan said the DCNR would be able to effectively manage private activity on public lands through its surface rights.

Allan previously served as the executive director of the Institute of Scrap Recycling Industries for its members in Pennsylvania, Maryland and Delaware, and served on the boards of the Pennsylvania Environmental Council and the Pennsylvania Resources Council. He was also a member of Corbett's transition team for energy and environmental issues.

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