Pennsylvania Gov. Edward G. Rendell said Tuesday the Department of Conservation and Natural Resources (DCNR) finalized a natural gas lease agreement, which would allow the state to meet its need for revenue from drilling next year, while also fulfilling its obligation to protect Pennsylvania’s natural resources.
Under the agreement, Anadarko Petroleum Corp. paid $120 million to access 32,896 acres that are surrounded by tracts of land now held by leases for which drilling companies already hold lease agreements. Because the newly leased tracts mostly may be accessed by gas operations on the adjacent tracts, the amount of new state forest surface area that must be disturbed is minimized, Rendell noted.
Other than the agreement, Pennsylvania would not have to make any additional state forest land available to reach its revenue goals for natural gas drilling in the 2010-2011 fiscal year.
“This is a responsible approach that meets our revenue targets and limits the impact of additional natural gas exploration in our state forests,” said Rendell. “We do not need to expand our drilling footprint in state forest lands to meet our revenue goals because these parcels are already surrounded by other leased acres.
“They also are within areas leased in the 1970s and 1980s by DCNR, but not all the acreage was drilled because technology wasn’t available to exploit Marcellus Shale deposits.”
To develop the acreage, DCNR and Anadarko agreed to certain provisions to ensure that there is minimal impact on the surface. “Horizontal drilling technologies allow Anadarko access to most of this acreage from already disturbed areas on their adjoining leased lands,” Rendell said.
The newly leased acres cover 11 tracts in the Moshannon, Sproul and Tiadaghton state forests where Centre, Clinton and Lycoming counties meet.
For 27,185 acres on 10 tracts, Anadarko agreed to pay $4,000 per acre, consistent with the average price paid during DCNR’s January competitive lease sale. For the remaining 5,711 acres on one tract, the state will receive $2,000 per acre because the geology underneath is not as promising for gas production, said officials.
The lease of the 11 tracts totals about $120 million. DCNR’s January lease sale generated $128 million, with $60 million of the amount earmarked for the General Fund budget and the additional $68 million applied to a target of $180 million to help balance the state budget for the fiscal year that begins July 1.
“With this agreement negotiated and the money in the bank, we can safely be on board with the moratorium which passed the House and is now in the Senate,” the governor said of HB 2235. “If the Senate passes the legislation and it comes to my desk, I will sign it.”
In response, environmental advocate Citizens for Pennsylvania’s Future (PennFuture) said it welcomed the agreement.
“The agreement with Anadarko will diminish the damage to our forest land because this lease involves land that was already available for drilling, and in some cases has already been disturbed by previous shallow well gas drilling,” said PennFuture CEO Jan Jarrett. “Now we’ll see what the Senate will do…
“The three-year moratorium and study bill passed the House by a healthy bipartisan vote of 157-33 and was supported by more than half of the Republican members of the House,” Jarrett noted. “Surely there are Republican senators who would also support the bill if only they get the chance. We urge the Senate leadership to bring the bill up for a vote as soon as possible.”
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