Saturday, March 12, 2016

Briefing: DCNR Leasing Of Stream, River Bottoms For Natural Gas Development

A question came up at the House and Senate budget hearings for DCNR and DEP on how much leasing the Department of Conservation and Natural Resources did of river and stream bottoms-- submerged lands-- in spite of the fact Gov. Wolf signed an Executive Order on January 29, 2015 putting in place a moratorium on leasing more State Park and Forest land for natural gas development.
DCNR is the state agency authorized to enter into leases for the development of oil and gas wells beneath streams and river beds-- submerged lands-- owned by the Commonwealth, whether or not they are within any State Park or Forest lands.
Submerged lands are generally defined as the area lying below all navigable waters between the ordinary low water marks-- picture a ribbon of ownership going across the landscape.
This area can vary in width from a few feet to hundreds of feet across a major river like the Susquehanna.
DCNR has a list of these navigable streams and an interactive map of streams posted on its website, although others may fit the definition.
This authority is distinct and separate from the authority DEP has to grant rights-of-way across (over or under) state-owned rivers and streams for utility and pipeline crossings, bridge abutments, docks and other encroachments onto submerged lands through a Submerged Lands License Agreement.  These agreements require payment of a fee to the state since the applicant is using state property.
DCNR adopted a formal policy on leasing submerged lands for natural gas development.  Without a lease to use these publicly-owned lands, natural gas drillers would be appropriating publicly-owned property without paying for it.
DCNR has a list of the 24 submerged lands natural gas leases it has executed so far on its website.
The first lease was executed in May of 2010 between DCNR and Chesapeake Appalachia for 1,538 acres under the Susquehanna River in Bradford County.  The lease payment was for $6,152,000.  
The next largest lease was also between DCNR and Chesapeake Appalachia for $4,368,000 for 1,092 acres under the Susquehanna River in Bradford and Wyoming counties in March of 2014.
There have been three submerged lands natural gas development leases executed during the Wolf Administration, according to DCNR’s website--
-- June 2015: $695,600 for 173.9 acres under Loyalsock Creek, Lycoming County;
-- January 2016: $24,400 for 6.1 acres under the Cowanesque River, Tioga County; and
-- January 2016: $287,200 for 71.8 acres under the Allegheny River, Armstrong County.
The total value of the submerged lands leases so far is $21,543,617, which goes into DCNR’s Oil and Gas Lease Fund, for 3,803.3 acres of stream and river bottom; or just over $5,664 per acre.
DCNR publishes a notice in the PA Bulletin each time a submerged lands lease is executed to provide the public with notice.
To put this in context, the Rendell Administration leased 137,000 acres of State Forest land for shale gas drilling during its tenure and when the market was at its peak.  
In October 2010, just days before the gubernatorial election, Gov. Rendell signed an Executive Order putting in place a moratorium on leasing more State Forest or Parks land for shale gas development.
No additional shale gas leasing on State Forest or Parks was done during the Corbett Administration, although an Executive Order issued in May 2014, replacing Gov. Rendell’s moratorium Order, would have allowed non-surface disturbance leasing, if there were drillers interested.   
The Fiscal Code bill passed as part of the budget in July 2014 included a provision promoted by Senate and House Republicans requiring DCNR to lease thousands of additional acres of land to bring in at least $95 million to help balance the state budget that year.
No additional leasing was ever done because the market was already going south by that time.
As noted, Gov. Wolf signed an Executive Order in January 2015 imposing a moratorium on further shale gas leasing on State Forest or Parks land.
Obviously, all three administrations continued to lease state-owned submerged lands for natural gas development.
For more information on submerged lands leasing, visit DCNR’s Shale Gas And Publicly-Owned Streambeds webpage.  More information is also available on the existing State Forest shale gas leasing program on DCNR’s Natural Gas Development and State Forests webpage, including its program for monitoring the 1,600 acres of its 2.2 million acres of State Forests affected by shale gas leasing.

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