In a pair of decisions likely to hinder natural gas development in portions of Pennsylvania, Gov. Ed Rendell placed a moratorium on drilling on state forest land and the Department of Conservation and Natural Resources (DCNR) and Department of Environmental Protection (DEP) announced a new policy requiring well operators working on state park and forest land to identify all areas of their tracts that will be disturbed by development activities.

In a move that could be seen as retribution for state Senate Republicans’ negotiating tactics and opposition to a proposed natural gas severance tax, Rendell on Tuesday signed an executive order placing an immediate ban on leases for oil and gas development on any land owned and managed by the DCNR.

“Failing to protect these acres will significantly alter the ecological integrity and the wild character of our state forest system,” Rendell said. “That would devastate our ecotourism industry and jeopardize the green certification upon which the state’s forest products industry depends.”

Rendell’s decision is significant because acreage left for leasing in the state is dwindling. The moratorium, which bans leases requiring new surface disturbances, was put in place to protect the “pristine nature” of publicly owned forests, a Rendell spokesman said.

Approximately 700,000 acres of Pennsylvania’s 2.2 million-acre state forests are currently available for natural gas extraction, Rendell said. When completely developed over the next 30 years, those leased lands would include about 1,000 well pads and as many as 10,000 wells.

Approximately 1.5 million acres of Pennsylvania state forest land sits atop the Marcellus Shale. In August DCNR said there was no unleased state forest acreage suitable for natural gas development remaining in the Marcellus Shale area (see NGI, Aug. 16).

Rendell said the executive order was necessary because the Pennsylvania Senate failed to pass legislation that would have instituted a moratorium on state forest land leases (see NGI, May 10).

“Drilling companies’ rush to grab private lands across the state has left few areas untouched by this widespread industrial activity,” Rendell said. “We need to protect our unleased public lands from this rush because they are the most significant tracts of undisturbed forest remaining in the state.”

The moratorium was necessary because the impact of the “increase in the acreage of state forest and state park land that will be used for gas development as a result of activity in the Marcellus Shale formation cannot be fully understood or predicted at this early stage of development,” according to the executive order.

Gas development in the Marcellus “will significantly increase openings in large blocks of currently contiguous forest canopies,” while “changes to surface and groundwater hydrology resulting from the increased drilling activity and the fracturing process required to develop gas in the Marcellus Shale formation will need to be carefully monitored as drilling progresses to evaluate potential impacts.”

“We simply cannot risk subjecting these sensitive and high-value tracts to the same kind of environmental accidents and mishaps that have happened on private lands elsewhere in the state because of the drilling industry’s poor practices,” Rendell said.

“Nearly half of the state forest land overlaying the Marcellus Shale formation is already leased; more leases would fragment the habitat and destroy the very essence of the forests, along with our valuable outdoor tourism industry that attract hunters and anglers from across the nation,” said Jan Jarrett, CEO of the environmentalist group Citizens for Pennsylvania’s Future. The state’s Senate should take Rendell’s lead and return to Harrisburg to pass “a robust severance tax on drilling,” Jarrett said.

Rendell’s announcement came in the wake of failed negotiations over the severance tax and one week before an election that could change the face of the state’s General Assembly. Rendell, a Democrat, has said Pennsylvania’s Republican-dominated Senate hasn’t negotiated a severance tax on natural gas drilling “in good faith.”

The House passed legislation (SB 1155) in September that included a 39 cents/Mcf tax rate (see NGI, Oct. 4), but Senate Republicans said that rate was too high. Some Republicans called for a 1.5% tax for a well’s first three years and then increasing that to 5%. Rendell, who had previously proposed a tax rate that would levy a 5% tax on the gross value of gas extracted plus 4.7 cents/Mcf, recently voiced his support for a compromise plan that would implement a 3% tax rate in fiscal year 2010-2011, a 4% tax rate the following year and 5% thereafter. Democrats agreed to consider the proposal, but Senate Republicans stuck to their 1.5-5% proposal. Rendell has since said the tax “clearly is dead” this year (see NGI, Oct. 25).

Also last week, DCNR and DEP said they were instituting a joint policy that establishes clear procedures for evaluating the impacts of oil and gas drilling on state park and forest land as part of DEP’s standard well-permitting process, the agencies said.

Based on well operators’ identification of areas that will be disturbed by development activities, DCNR will recommend measures to minimize impacts. Impacts to be considered will include threatened and endangered species habitat, wildlife corridors, water resources, scenic viewsheds, public recreation areas, wetlands and floodplains, high-value trees and regeneration areas, steep slopes, pathways for invasive species, air quality, noise, and road placement and construction methods.

Well operators will be required to submit a DCNR Environmental Review to DEP as part of well permit applications. Applications that do not include sufficient information to allow DEP to consider the impacts on state park and forest lands will be considered incomplete, the agencies said. DCNR will provide a letter if it is in agreement on recommended response measures; if there is no agreement, DEP may address the concerns with permit conditions.

The policy is needed because Pennsylvania does not own the mineral rights to 80% of state park land and about 15% of state forest land, according to DCNR Secretary John Quigley, who said 60 state parks are located above the Marcellus Shale formation.

“To manage development of oil and gas drilling where the Commonwealth does not own the mineral rights, we needed a formal process in place to ensure that natural gas well operators properly coordinate with DCNR,” DEP Secretary John Hanger said. “This will help us determine the impacts of proposed oil and gas wells on state parks and forests before they submit their well permit applications to DEP.”

With access to Pennsylvania’s Marcellus Shale acreage at an increasing premium, state officials have been scrambling to find out who owns the subsurface rights to nearly 1.7 million acres of state game and park land (see NGI, Aug. 30). The Pennsylvania Game Commission manages 1.4 million acres of game land and DCNR controls 283,000 acres of park land, but who owns the rights to any natural gas, oil or minerals that may be found beneath all of that acreage is not as easy to determine.

“Coordination is especially important on the areas of our state parks and forests where DCNR does not have the controls that would be put in place by a lease agreement,” Quigley said.

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