A bill that would have placed a three-year moratorium on leasing of state forest land in Pennsylvania’s Marcellus Shale for natural gas exploration, drilling or production was referred to a committee Wednesday by the state’s Senate, which effectively killed the legislation for now.

The State Forest Natural Gas Lease Moratorium Act would have given Pennsylvania “a timeout to study the consequences of drilling in our state forests,” according to State Rep. Greg Vitali, who authored the legislation.

The Pennsylvania House of Representatives had approved the bill by a 157-33 vote. The Senate chose not to take up the bill, instead referring it to the Environmental Resources & Energy committee.

The amended version of the bill, which had originally called for a five-year leasing moratorium (see NGI, March 29), would have put in place a three-year moratorium. It would also have required a comprehensive environmental impact study by the state Department of Environmental Protection (DEP) and a study on the environmental, economic and societal impacts of drilling in state forests. The bill would have given the Department of Conservation and Natural Resources (DCNR), which already regulates activity in the state’s Marcellus acreage, sole discretion to determine which land should be leased for gas drilling after the moratorium ended.

Pennsylvania has already leased 692,000 acres of state forest land in the Marcellus to drilling companies, according to Vitali, who said only nine gas wells have been drilled on state forest land.

Gov. Edward Rendell last Monday renewed his call for a 5% severance tax on natural gas extraction in the Marcellus Shale to help close a more than $1 billion state budget deficit. The Democratic governor has repeatedly asked the General Assembly to consider the tax proposal, which was tabled last year during testy budget negotiations for fiscal 2010 (see NGI, Feb. 15; Jan. 18; Sept. 7, 2009).

“From our perspective, it’s still alive,” a Rendell spokesman told NGI. “The governor repeatedly calls for it, making the case that Pennsylvania needs to end its status as the only major natural gas producer without this tax.”

Speaking at the two-day Marcellus Shale policy conference at Duquesne University in Pittsburgh last week, DEP Secretary John Hanger said drilling for natural gas in the huge Marcellus Shale reserve presents Pennsylvania with potential problems.

“Some in the industry say, ‘don’t worry about drilling in the Marcellus,’ but I say, ‘worry,'” Hanger said. “Natural gas drilling is an industrial activity — there is no such things as no impact from natural gas drilling.”

“We still have 180,000 acres of abandoned mine lands that probably will take another century to clean up, and 5,000 miles of streams impacted by acid mine drainage. In each case, there was a company responsible for the problem,” Hanger said.

Public policy, laws and regulations on the books years ago weren’t sufficient to make companies responsible for today’s problems clean up their mess, according to Hanger. “Done badly, policies and regulations could mean a return to the past,” he said.

In November DCNR said it was making nearly 32,000 acres of additional state forest land available for natural gas leasing (see NGI, Nov. 16, 2009). The department said it would open six tracts of land in the prolific Marcellus Shale play, totaling about 31,967 acres, for a lease sale of subsurface oil and gas rights. DCNR has held 73 lease sales since 1947, the last of which was in 2008.

The U.S. Geological Survey has estimated that the shale contains as much as 50 Tcf of natural gas. A recent study estimated that the Marcellus will generate $13.5 billion per year in economic value and create 175,000 jobs in Pennsylvania by 2020, according to members of the state’s Public Utility Commission (see NGI, March 15).

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