DCNR: Move Cautiously On Leasing More State Forest Land For Drilling

Acting Department of Conservation and Natural Resources Secretary John Quigley today told the Senate Appropriations Committee the Commonwealth should move cautiously in leasing any more State Forest land for drilling because it will become more difficult in the future to maintain the balance between producing natural gas and generating revenues and keeping the sustainable practices certification of the State Forest system.
Sen. Jake Corman (R-Centre), Majority Chair of the Senate Appropriations Committee, agreed the state needs to be cautious. "If we don't put the right kinds of safeguards in place, shame on us," he said.
At the same time, Sen. Corman said projections he's seen about the royalties to be earned from just the leases already signed by DCNR say revenues will increase from an estimated $6 million in FY 2010-11 to over $300 million annually over the next 15 to 20 years.
Quigley also said he saw no reason why a proposed natural gas production severance tax would slow down gas leasing or drilling across the state considering the interest expressed in the last round of State Forest land leasing and the large investments made recently by companies in developing Marcellus Shale gas resources.
He noted that 90 percent of drilling activity occurs on private land and only about 10 percent on publicly owned land in the Commonwealth.
Sen. Corman commended Acting Secretary Quigley for keeping State Parks open and available for public use, even handling an over 13 percent increase in visitors, during a time when the Commonwealth was going through a severe budget crisis.
Acting Secretary Quigley said keeping the parks open came at a substantial cost in terms of reducing services significantly across the state and using Oil and Gas Fund monies to help pay staff and operating costs.
He said DCNR has reached the bottom in terms of cuts and any further reductions would mean not offering a quality park experience for the Commonwealth citizens. Quigley credited the dedicated women and men working at DCNR for keeping park services available to the public.
In response to questions, Acting Secretary Quigley touched on these topics during the Senate hearing--
State Park Drilling: In response to questions from Sen. John Rafferty (R-Montgomery) and Sen. Christine Tartaglione (D-Philadelphia), Quigley said the mineral and natural gas drilling rights for 75 percent of the land now used as State Parks is owned not by the public, but by private companies.
He said there have been several instances where the companies owning those rights have started to explore them in preparation for Marcellus Shale drilling. So far, he said, the impacts of those operations have been mitigated by surface rights agreements, but the activity is clearly picking up.
In contrast to State Park lands, Acting Secretary Quigley said, DCNR owns 75 to 80 percent of the mineral and natural gas rights under State Forest lands.
Gas Pipeline Impacts: Sen. Lisa Baker (R-Lackawanna) asked about the extent of natural gas gathering pipeline development and safety issues within State Forest lands.
Acting Secretary Quigley and DCNR Deputy Secretary for Parks and Forests James Grace said with six producing Marcellus Shale gas wells so far, there has not been much pipeline activity. However, Dr. Grace said many people believe the development of collection pipelines will become the largest environmental impact from gas well development in the future in terms of forest fragmentation and conflicts with the forest products industry and recreational users of State Forests.
Future Of Growing Greener Funding: In response to a question from Sen. Lawrence Farnese (D-Philadelphia) about needing more resources to develop Benjamin Rush State Park in Philadelphia, Acting Secretary Quigley said funding from the Growing Greener II bond issue runs out this year leaving only limited funding to support local and DCNR recreation improvement projects across the state.
Quigley said the real question is where we go from here in providing funding for these important projects which have direct economic benefit. Speaking for the agency, and not Gov. Rendell, he said he would welcome the opportunity to identify options for continuing Growing Greener-type funding.
Windmill Siting: Sen. Mary Jo White (R-Venango), Majority Chair of the Senate Environmental Resources and Energy Committee, asked about the status of leasing DCNR-held lands for wind farm development.
Acting Secretary Quigley said working with the industry and environmental groups through the Wind Energy Collaborative found there was relatively little potential for larger scale wind energy development on State Forest and Park lands. As a result, and with the pressures on the agency created by the Marcellus Shale natural gas leasing, he said they are putting off any attempts to get legislative approval to lease the land they own for windfarms.
Carbon Sequestration: In response to a question from Sen. Mary Jo White, Quigley said DCNR spent about $6 million on a study to determine the feasibility of developing a large scale underground carbon sequestration facility in the Commonwealth.
As a result of this work, they determined the geology of Pennsylvania was suitable for a sequestration facility, but the land area (and the mineral rights) needed to be assembled for a commercial carbon sequestration facility would make a project difficult.
For example, he said, an 800 megawatt coal-fired power plant would need an area of about 100 square miles for carbon sequestration over the 40 year life of the facility. With Pennsylvania's pattern of mineral ownership separate from surface rights owners, he said assembling a tract that large would be impractical. He said the agency is now looking at alternatives.
Gypsy Moth Spraying: Acting Secretary Quigley said, when asked by Sen. Baker, there will be no gypsy moth spraying this year as a result of budget cuts, however, Dr. Grace said the gypsy moth population has collapsed so he did not expect major damage to the Commonwealth's forests.
Timber Sales Collapse: Sen. Patrick Browne (R-Lehigh) asked why the projection of revenue from timber sales has decreased.
Acting Secretary Quigley and Dr. Grace said the timber market collapsed as a result of the downturn of the national economy and the housing market in particular. As a result, Dr. Grace said DCNR is selling the same amount of timber, but getting about half the revenue for it.
A copy of Acting Secretary Quigley's written testimony is available online. It is the same as presented to the House yesterday.

Note: Senate and House budget hearings can be seen live online on the PCN TV website Channels 1 and 2. Senate Hearings can be seen live and archived on the Senate Appropriations Committee webpage.