DCNR Offers 31,968 Acres Of State Forest For Gas Leasing

The Department of Conservation and Natural Resources acting Secretary John Quigley today unveiled a responsible plan for leasing state forest lands that, he said, balances the state's environmental and fiscal obligations on behalf of the public.
The department will open six tracts of land, totaling approximately 31,967 acres, for a lease sale of subsurface oil and gas rights. The tracks are located in the Elk, Moshannon, Sproul, Susquehannock and Tioga state forests in Cameron, Clearfield, Clinton, Potter and Tioga counties.
In announcing the plan, Quigley said the department was especially diligent in evaluating which tracts to make available and that the nearly 32,000 acres constituting the upcoming lease sale represent just a small fraction of the state's 2.1 million acres of state-owned forest land.
"Our approach to making state lands available for natural gas drilling has always been to limit the impact on the surface and on other uses of the land," said Acting Secretary Quigley. "We've been exceptionally mindful of our obligations as we developed this plan to balance our environmental responsibilities and the budget."
"For about a year, DCNR has been working to prepare a lease sale. We chose these tracts of land after extensive environmental reviews to protect the health of the forest now and in the future, to allow for gas and timber extraction and public recreation, and to keep ecosystems intact that support a diversity of wildlife and plants. In total, these tracts represent a little more than 1.5 percent of our total state forest land," Acting Secretary Quigley said.
Prospective bidders must provide to DCNR proof of registration to do business in Pennsylvania before 5 p.m. on Saturday, Dec. 12. Pre-qualified bidders may submit sealed bids for leases on each of the six tracts to DCNR until 2 p.m. on Tuesday, January 12, 2010, at which time the bids will be opened publicly.
A list of bidders and the award decisions will be posted the DCNR Web site within 24 hours.
Leases will be awarded to the highest bidder based on the amount of the first year's land rental. A lease covers annual land rental amounts and possible royalties to be paid based on the volume of gas extracted.
This lease sale requires a minimum bid of $2,000 an acre and royalties of 18 percent.
Revenues generated from a lease sale go to the Oil and Gas Lease Fund. The fiscal year 2009-10 budget requires DCNR to raise $60 million from a lease sale on state forest lands.
"Only a small portion of the total acreage will be used for well site location," Acting Secretary Quigley said. "For each tract, we have identified the number of well pads that will be allowed and we will encourage developers to use existing roads. Additionally, there are portions of the tracts that cannot be developed on the surface in order to protect wild or natural areas, ecosystems, water bodies, recreational opportunities, and visual impacts from vistas and trails."
Lease sales are developed by first receiving recommendations from natural gas drillers on which tracts of land they are interested in developing to ensure there is interest in areas. DCNR then conducts a comprehensive environmental review to make certain no environmental risks are present.
Additional environmental reviews are done when developers apply for the permits necessary to drill a well.
Gas companies are required to submit competitive bids for the offered state forest acreage. Highest responsible bidders may then be issued contracts, but DCNR retains ownership and complete control of the land.
The primary lease term is 10 years, although that term may be extended based on the production of any wells on the tract. A gas well may produce for several decades or more.
Since 1947, the department has held 73 lease sales, the last of which was in 2008. Currently, about 660,000 acres of state forest are under lease for gas production, with about 750 wells in production. Click here for more information.