No cheap skates at Penn State, thanks to donor

STATE COLLEGE, Pa. - Terry Pegula was a senior at Pennsylvania State University, closing in on a degree in petroleum and natural-gas engineering, when a certain National Hockey League team that was bare-knuckling its way to a Stanley Cup championship caught his imagination.

"It was the Philadelphia Flyers' style of play that got me into it," Pegula said Saturday as he sat on a sofa outside a private box at Beaver Stadium, where he was about to take in Penn State's football game. "Then I moved to western New York, and I became more or less a Buffalo Sabres fan."

In 1975, "the Flyers and Sabres played for the Stanley Cup, and it was difficult. I liked both teams."

If the passions of hockey fans could be measured in dollars, Pegula, Penn State Class of 1973, would be the runaway winner.

Born and raised in Carbondale, a struggling community that was the site of the country's first underground coal mine, Pegula donated the largest private gift in the university's history Friday. The $88 million donation was stunning, and so was the fact that Pegula gave it to fund the construction of a campus ice hockey arena and the creation of NCAA Division I ice hockey programs for men and women. Penn State now plays hockey on the club level.

Part of the money will endow 18 scholarships for the men and 18 for the women, the NCAA maximum. The arena is scheduled to open in December 2013.

Pegula, who said he was a geologist at heart, amassed his fortune when he sold East Resources Inc., a privately held exploration and development company in Warrendale, to Royal Dutch Shell for $4.7 billion this year.

He said the thought of funding the arena and teams had come to him four years ago during a discussion with friend Joe Battista, a former club hockey coach at Penn State and director of major gifts for the university's Smeal College of Business.

"I asked Joe, 'Why doesn't Penn State have a Division I hockey program?' " Pegula said. "Joe explained to me that getting money from Harrisburg is tough and for Penn State to go D-I, it would need a new arena because the present one is falling apart.

"He explained to me they'd need a lead gift - he didn't explain any amounts - that would be followed by subsequent gifts, and if there's enough you build the arena and you go D-I.

"I thought maybe I could be the lead gift. But with the economic downturn in '08, getting substantial gifts became more and more difficult. So it was apparent to me I was going to have to give more than a substantial gift. I had a lot of success with my oil and natural-gas business, and I sold my company this summer. . . . On the basis of that, I decided to fund all or the bulk of the project."

The size of the gift for athletics drew some online criticism from people who questioned Pegula's priorities when Penn State, like most state universities, continues to raise tuition.

Pegula indicated that more gifts to the university were ahead, and said he donated to charities, which he would not specify. He defended his decision on the basis of the 36 scholarships and the economic boom for the university community.

"I'm sending more kids to college," said Pegula, 59, who lives in Boca Raton, Fla. "The game of hockey is a character builder. It'll bring more business to this region.

"Why hockey? Why not something else? The old standard answer is because I wanted to. But this isn't the end of my giving. We'll be doing other things, give to the university or whatever. You can't do everything at once."

He added: "I'm dumping $88 million into the university that's going to create jobs for a couple years."

Pegula, who never played ice hockey, said he had lived through difficult economic times as a child in Carbondale, where, he said, he worked driving a water truck at a strip mine when he was 14. He said his father, Myron, had worked in the coal mines at a young age before becoming a truck driver and mechanic.

"I grew up poor. My family never owned our own house. We rented a house," he said. "I worked in the Carbondale mine fire when I was in high school. On top of the ground."

The Carbondale mine fire burned for 33 years before it was extinguished in 1965.

"They had to take all these houses out and dig big holes to put the fire out," Pegula recalled. "That was probably the start of my interest in rocks. I used to go over there and sit and watch them dig, and I got interested. I was hunting fossils and whatnot. Even though I'm an engineer I had a keener interest in geology. I'm actually a self-taught geologist. That's probably been my strength in building my business."

Pegula said that his family, including grandparents, had scraped together enough money to send him to Scranton Prep, and that he had hitchhiked the 15 miles to and from school each day.

"Some days I wasn't lucky getting rides," he said. "I remember some nights getting home at 10:30 at night and had to do my homework. I still have all my mother's checks she wrote to pay tuition. I think my first-year tuition was $412."

The sale of East Resources included a Marcellus Shale lease hold for more than 650,000 acres in the Appalachian Basin, a major contributor to the natural-gas supply in the United States.

An intense debate is taking place over the environmental and public-health impact that drilling the Marcellus Shale region for natural gas could have on drinking water. The Associated Press reported Friday that a consulting firm said it had found toxic chemicals that could cause cancer in the drinking water in Dimock, Susquehanna County. The firm said it would be impossible to determine if the cause was natural-gas drilling, known as "fracking." Shale deposits are hydraulically fractured to unlock natural gas thousands of feet underground.

Pegula, not surprisingly, defended hydraulic fracturing and said Pennsylvania was on the cusp of becoming one of the top producers of natural gas in the country. He said he would lobby for the oil and gas industry that has allowed him his good fortune.

"This is the tip of the iceberg of what's going to happen in this state because of the good fortune Pennsylvania has by sitting on top of the Marcellus," he said. "The state's got a great future because of this thing. I like to say there are landowners - hundreds, maybe thousands - who have hit the lottery and don't know it yet."