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Pennsylvania to Collect Royalties for Gas Under Public Waterways
Under a new policy by the Pennsylvania Department of Conservation and Natural Resources (DCNR), operators will be required to sign a lease and make royalty payments to the state for natural gas gathered from wells adjacent to navigable streams, lakes and waterways.
According to the DCNR, many waterways in Pennsylvania were designated as publicly owned in the late 1700s and 1800s, when they were used for commercial trade and travel. Pennsylvania received the mineral interests under the waterways when the Dam Safety and Encroachments Act was codified into state law in 1978. Rulings by the Pennsylvania and U.S. Supreme Courts have affirmed the designations.
The DCNR has developed an interactive map and posted a partial list of the state’s publicly owned streambeds on its website, but said identifying the waterways didn’t equate to a final determination of navigability under state or federal law. The agency conceded that some publicly owned waterways might not be listed and said it reserved the right to add to the list.
“The waterways identified herein [on the map and list] as having publicly owned streambeds have been compiled by the Commonwealth over time from various sources,” the DCNR said. “Identification is based upon information believed to be reliable and persuasive evidence of such ownership.”
DCNR spokeswoman Christina Novak told NGI’s Shale Daily that the agency is developing a standard agreement for operators to sign if they wanted to perform hydraulic fracturing (fracking) under a publicly owned waterway. She said the lease and royalty terms were still being formulated.
“We have put a policy in place that says we will be working with companies on agreements for compensation if they drill under public waterways. This wouldn’t result in any surface impact,” Novak said Monday. She added that wells would simply need to be drilled within range of a lateral. “The well pad would not necessarily have to be on public land per se. The compensation would be for that portion of [mineral interests] that underlies the waterway.”
Novak said the DCNR is concerned that publicly owned mineral rights could be hindering development, or that the state isn’t being properly compensated in areas where drilling is already taking place.
“We’re working on determining whether that’s the case,” Novak said. She added that regulators haven’t determined how many miles or acres of publicly owned waterways would be applicable to leasing, or how much money the state could receive from leases and royalty payments.
“The reason for the uncertainty is that [the designation of publicly owned waterways] dates back several hundred years,” Novak said. “It can be complicated to do research on.”
The DCNR said operators may also be required to secure a submerged lands license from the state Department of Environmental Protection before fracking can occur under a publicly owned waterway.
In 2010, Chesapeake Energy Corp. signed a $6.15 million lease and agreed to pay 20% in royalties to the DCNR for 1,500 acres under the Susquehanna River in Bradford County (see Daily GPI, Jan. 15, 2010). Novak said D&L Energy Inc. also signed a lease for underwater mineral rights in 2000, but did not have any other details.
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