Shale Lease Part of Budget Hearings

As budget hearings continue in Harrisburg the head of Pennsylvania’s Department of Conservation and Natural Resources says he’s not concerned about leasing out more state forest land for natural gas drilling – as long as the process is carried out responsibly. So far, 692,000 acres of state forest have been leased to private firms for drilling, but acting DCNR Secretary John Quigley says Pennsylvania has only seen the tip of the iceberg. He says when it comes to extraction activity on state-owned land, “Our experience so far in the Marcellus play is that wells have taken a year or more to come online. And we only have six producing wells from the Marcellus formation on state forest land now. So it takes a minimum of a year or so, under the most optimistic circumstances, before a well comes online. And once it comes online the royalties begin.” Indiana County Republican Dave Reed questioned Quigley about the issue during a recent House Appropriations Committee hearing. He asked if the governor’s budget includes additional leasing. He responded, “The governor’s budget anticipates $180 million of revenue from the Oil and Gas Revenue Fund to be transferred from the General Fund.” Reed responded, “OK. So it’s pretty safe to say that money’s got to come from somewhere. If you enact a moratorium, it’s going to be somewhat difficult to produce that money.”
“It would, however, be easy to produce with a severance tax,” responded Quigley.
32,000 additional acres were leased out last month, netting $128 million. Quigley says the most recent average leasing price was about four thousand dollars an acre – but that fee depends on several factors, including the price of natural gas and the quality of the land being offered.