Despite calls for a moratorium on leasing state forests to Marcellus Shale gas drillers, additional public acreage may be placed on the block next year to raise more millions for the state.
After the state's offering Tuesday of 32,000 acres that generated $128.5 million - twice the revenue budgeted - Senate Republicans in Harrisburg say they already have an agreement in place to raise $180 million next year from additional gas leasing.
And Gov. Rendell, speaking to a reporter yesterday, did not rule out directing the state's Department of Conservation and Natural Resources to lease high-value parcels to generate income.
A budget deal struck in October to derive more income from gas leasing next year will set up a renewed clash with conservationists over how to best generate state revenue from the Marcellus, a deep formation that the gas industry is touting as one of the world's most promising natural gas plays. The mile-deep shale lies under much of Pennsylvania.
John Quigley, acting secretary of the DCNR, on Tuesday called for policymakers to evaluate the environmental effects of gas drilling before leasing more land. About 692,000 acres of the state's 2.1-million-acre forest system are already under lease. Only a handful of wells have been drilled, but about a hundred are expected to be drilled this year.
Rep. Greg Vitali (D., Delaware) yesterday called for the state to enact a severance tax on each unit of gas produced from Pennsylvania wells rather than leasing additional public land.
"We need to go real slow at this and not look at the parks as a cash cow," he said.
Rendell yesterday called the Marcellus "a very sensitive area" and expressed concern about growing polarization over the issue.
"We don't have to make the false choices of either drawing a line in the sand and saying no more drilling under any circumstances . . . and cutting off what does have the potential to put tens of thousands of Pennsylvanians to work," he said.
He suggested the state might generate the greatest income in the future by targeting tracts the drillers identify as the most attractive, "while at the same time taking significantly less acres of land."
The debate was sparked by Tuesday's offering of six tracts of state forest in north-central Pennsylvania to meet a legislative mandate to generate $60 million this year.
Bidders offered $128.5 million. Once the wells are developed, they will also generate royalties for the state of 18 percent of the gas produced.
The $68.5 million surplus generated this week will remain in the state's Oil and Gas Lease Fund and be applied toward a $180 million commitment that legislators and the governor agreed in October to raise next year from gas leasing, said Patrick Henderson, executive director of the Senate Environmental Resources and Energy Committee.
Henderson, an aide to Sen. Mary Jo White (R., Venango), the committee chairwoman, said White regarded the $68.5 million surplus as "an early down payment" on next year's budget.
"Her expectation is that there will be another lease offering later this year," Henderson said.
Quigley, the DCNR chief, said in an interview Tuesday that he was concerned that a rush to lease state forests could threaten tracts that have slowly recovered under state stewardship after being denuded by private timbering a century ago.
"That land was devastated by a wave of resource extraction," he said. "And without maintaining the balance that so far we have successfully done, we could go right back to where we were 100 years ago."
Meanwhile, novel ways to earn Marcellus money continue to present themselves.
The state is negotiating to lease state-owned rights underlying the Susquehanna River to a driller that has leased private land along the waterway. The shale would be accessed by horizontal drilling from the adjacent lands.
Quigley in December told the Senate energy committee that the leases could generate more than $10 million in initial payments, plus royalties. The locations and driller's identity will be disclosed when the deal is done, he said.
DCNR would use $2 million of the income to stave off the closure of 24 state parks this year because of budget cuts, Quigley told legislators.
The Susquehanna River Basin Commission has not received an application to drill beneath the waterway, said Susan Obleski, the commission's spokeswoman.
"Given the distances that horizontal wells reach," she said, "there is probably drilling already taking place under rivers and streams."
Contact staff writer Andrew Maykuth at 215-854-2947 or email@example.com.
Staff writers Diane Mastrull and Amy Worden contributed to this article.