Pennsylvania Republican Gov. Tom Corbett could soon issue an executive order to lift a nearly four-year moratorium on new oil and gas leases in state parks and forests that would continue to bar new leases for surface operations, but offer operators access to the mineral rights under state land from wells on adjoining private land.
Corbett first proposed lifting the ban in February as part of his $29.4 billion 2014-2015 budget (see Shale Daily, Feb. 6). Pennsylvania Energy Executive Patrick Henderson told NGI's Shale Daily that Corbett knew then that he would have to issue an order sometime before July if he hoped to include the estimated $75 million in additional revenues from the new leases in the budget.
Corbett's predecessor, Democrat Ed Rendell, signed an order banning any new leases for state forest and park land just before he left office in 2010 (see Shale Daily, Oct. 27, 2010). Operators have continued to drill and develop such acreage under leases issued before the moratorium.
"Drilling would not be allowed on any land we lease in forests and parks," Henderson said. "The commonwealth owns a lot of land that is adjacent to private property where oil and gas development is already occurring no matter what we do. Under our proposal, instead of drilling in one direction, you could also drill under state-owned land, which would benefit the commonwealth too."
Henderson said a timeline for the executive order does not hinge on the state's gubernatorial election in November (see Shale Daily, Jan. 28). He said it must be issued by July when the state's fiscal year begins so the revenues could be realized in the next budget. By the same measure, Henderson said an order would likely be issued in the coming weeks so time can be provided for lease negotiations.
The ultimate aim of an order, however, is to prevent any additional surface disruption in state forests and parks, Henderson said. Since February, the administration, along with the Pennsylvania Department of Conservation and Natural Resources (DCNR), which oversees state-owned land, has been gathering stakeholder input from the industry and environmental groups, including a public meeting before DCNR's natural gas advisory committee last week.
It has also been considering what would constitute surface operations unrelated to drilling, such as seismic testing or construction activities, under an executive order.
According to a report released last week that examined the impact of oil and gas drilling in state forests (seeShale Daily, April 16), DCNR said that 388,000 acres are under lease to oil and gas companies there. Since it began managing such leases in 1947, thousands of vertical wells have been drilled, while 568 horizontal wells have been drilled since 2008 when the state conducted its first competitive lease sale.
Despite concerns that non-development leases would be of little interest to operators, Henderson said the industry has expressed a desire to access state-owned mineral rights from adjacent privately-owned plots.
Meanwhile, the state only owns about 20% of the land in public parks, with the rest owned privately, Henderson said. As a result, the state has yet to sign an unconventional lease for mineral rights under a state park, and operators have recently cited instances in which such leases would be beneficial, he said.
Corbett's proposal also comes at a time when production in the Marcellus Shale is approaching 15 Bcf/d and as environmental advocates step up their calls for greater regulatory oversights.
"We remain unequivocally opposed to additional leasing of our state parks and forests for natural gas drilling," said PennFuture President Cindy Dunn in a statement made last week responding to DCNR's report. "Carefully managed industrialization is still industrialization, so the need for a moratorium on leasing of state forests and parks to drillers remains."
Henderson said a proposal like Corbett's and a new executive order could foster a discussion about what makes sense from a conservation standpoint, especially in instances that require more drilling pads to bypass state-owned land.
"We're trying to encourage people to understand the practical realities of oil and gas development and its benefits to the commonwealth," he said.