Energy companies bid $128,400,000 million to secure drilling rights on 31,967 acres of rural Pennsylvania land.
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This is twice the revenue the state had budgeted, prompting fears by environmental organizations like Penn Future of a headlong rush to overrun public lands to tap into the rich Marcellus Shale.
Gas drillers offered an average of $4,020 per acre - almost twice the amount that such leases generated less than two years ago. The low winning bid was $2,437/acre and the high was $5,250/acre. By winning the these bids, they secure the right to extract natural gas from six tracts of state forest in north-central Pennsylvania.
Jan Jarrett, president of the advocacy group Citizens for Pennsylvania's Future, has previously called for a suspension of new leases until the impact of drilling could be measured.
"We believe that's enough," she said. "We believe there ought to be a moratorium on further leases on state land until a study can be done to determine what the impact is on the forests and the other uses of the forest."
To bring this issue into focus, and to help guage the impact on local communities and municipalities, Empowered Municipality has included links to the townships. state forests and companies involved.
ENERGY, JOBS AND CLEAN WATER ARE KEY ISSUES
It seems clear that the bidding process increased the revenue for the State. The one tract with one bidder was significantly below the average and all the other winning bids. This will emerge as a central issue in the upcoming Gubernatorial Race in Pennsylvania with Republican's State Attorney General Tom Corbett and State Representative Sam Rohrer and a large Decomcratic field including Allegheny County Executive Don Onorato, State Auditor General Jack Wagner, Philadelphia Businessman Tom Knox, and Scranton Mayor Christopher Dougherty.
This intense bidding further underlines the industry interest in the natural gas trapped in Marcellus Shale, a vast underground formation stretching from New York to West Virginia, and whose sweetest spots underlie much of Pennsylvania.
The new state leases, which are much more environmentally restrictive than the private-sector agreements, limit the drillers to building 123 well pads totaling no more than 645 acres on the six leases - about 2 percent of the land. Marcellus gas developers typically install multiple wells on each site, and tap into the mile-deep formation with a horizontal drilling technique that allows them to reach laterally for thousands of feet. This could also fuel intest in landowners to make deals with the energy companies and reap similiar rewards.
Landowners remain interested in this activity as well. To connect with others and find out about what is being offered and the issues to consider visit Natural Gas Forum for Landowners.
These leases now proivde for increased royalties of 18 percent for gas sold from the wells. Previous leases were the 12.5 percent state minimum. The drillers have a month to send their checks to the state treasury for the new leases, and the $68.5 million that exceeded the legislature's target will flow into the state's Oil and Gas Lease Fund, which under state law must be used for conservation purposes. Landowners also receive royalties from these leases and according to an industry sponsored report
"This study finds that the Marcellus gas industry in Pennsylvania generated $2.3 billion in total value added, more than 29,000 jobs, and $240 million in state and local taxes during 2008. With a substantially higher pace of development during 2009,economic output will top $3.8 billion, state and local tax revenues will be more than $400 million, and total job creation will exceed 48,000."
"This shows the industry's ability to generate wealth for Pennsylvanians," said Kathryn Klaber, president of the Marcellus Shale Coalition.
Acting secretary, John Quigley of the Department of Conservation and Natural Resources, thought of the successful auction as a mixed blessing, saying the windfall could further whet the appetite of policymakers to lease public land to derive immediate revenue without fully understanding the long-term environmental implications of gas development.
"As we sit here this afternoon, fully one third of the state forest is now leased for gas exploration," Quigley said in an interview yesterday. "I think that raises some important questions. How much is too much?"
Jan Jarret continued, speaking about the limited acreage that was offered, "unfortunately, this is only a partial victory, and dangerous times lie ahead," continued Jarrett. "The General Assembly's failure to adopt a severance tax on drilling in the Marcellus Shale formation in the face of more than $1 million in lobbying costs by the industry means that the people of Pennsylvania will continue to pay the price for the drilling with no compensation for the loss of our natural assets. With the Rainy Day Fund now depleted, nearly one out of 10 Pennsylvanians unemployed, and costs of government services increasing, it is the height of irresponsibility that our senators and representatives refused the new revenue from a severance tax similar to that charged in every other major gas producing state.
"We have no way of knowing when our economy will rebound," said Jarrett. "But we are letting revenue slip through our fingers as the drillers proceed without a severance tax. Unless we want to see ourselves in exactly same standoff.
On Saturday, January 30, PennFuture is hosting the Marcellus Muster at Penn State University. This summit will include presentations by experts and legislative leaders, and discussion of how we can build a strong and effective citizens' campaign to ensure gas drillers pay their way, and protect our forests and water. Click Here to Register.
DETAILS ABOUT, CONTACTS FOR THE TRACTS
TRACT 001
Ulysses and Sweden Townships, Potter County
Susquehannock State Forest
7,441 acres were leased to Seneca Resources, Corp. for $3,125/acre, totaling $23,253,125
Other bidders were ExxonMobil Exploration Co. and Chesapeake Appalachia, LLC
MEDIA CONTACTS For Seneca Resources Corp.
New York:
Julie Coppola Cox
(716) 857-7079
Pennsylvania:
Nancy J. Taylor
(814) 871-8699
Contact for the PA Association of Township Managers County Association-Potter County
Ms. Helen Turner
Allegany Township
Phone: (814) 228-3444
TRACT 007
Chatham, Delmar, Middlebury & Shippen Townships, Tioga County
Tioga State Forest
10,493 acres were leased to Seneca Resources Corp. for $4,625/acre, totaling $48,530,125.
Other bidders were Hunt Oil, USA and Chesapeake Appalachia, LLC
Contact for Hunt Oil, USA
Ambassador Jeanne Phillips
Senior Vice President
Corporate Affairs and International Relations
Dallas, Texas
(214) 978-8535
Corporate Affairs
Contact for the PA Association of Township Managers County Association-Tioga County
Ms. Nancy Smith
Sullivan Township
Phone: (570) 549-7051
TRACT 416
Roulette & Eulalia Townships, Potter County
Susquehannock State Forest
3,698 acres were leased to Penn/Virginia Oil and Gas Corp. for $3,750/acre, totaling $13,867,500.
Other bidders were ExxonMobil Exploration Corp. and Chesapeake Appalachia, LLC
Contact for Penn Virginia Oil and Gas Corp
TRACT 323
Pine Township, Clearfield County
Moshannon State Forest
4,639 acres were leased to Exco Resources (PA) LLC for $5,250/acre, totaling $24,354,250.
Other bidders were Chesapeake Appalachia LLC and Flatirons Development, LLC.
Exco to Appeal Zoning Violation in Greenfield Township, Lackawanna County
Contact for the PA Association of Township Managers County Association-Clearfield County
Mr. William Lawhead
Lawrence Township
Phone: (814) 765-0176
TRACT 419
Lumber & Grove Townshship, Cameron County
Elk State Forest
2,952 acres were leased to Chesapeake Appalachia LLC for $2,437/acre, totaling $7,194,024
There were no other bidders on this tract.
Primary Contact for Chesapeake Appalachia, LLC
Tom Price
Senior Vice President
(405) 935-9257 tom.price@chk.com
Contact for the PA Association of Township Managers County Association-Cameron County
Mr. H.B. Von Hause, President
Lumber Township
Phone: (814) 486-1788
TRACT 737
Colebrook, Gallagher & Woodward Townships, Clinton County
Sproul State Forest
2,724 acres were leased to Adadarko E&P for $4,110/acre, totaling $11,198,364
Other bidders for Range Resources, LLC and Chesapeake Appalachia LLC
Contact for Adadarko
Corporate Public Affairs
John Christiansen
Manager, External Communications
832-636-8736
Recent News from Range Resources
Contact for the PA Association of Township Managers County Association-Clinton County
Mr. David Calhoun
Wayne Township
Phone: (570) 769-6024
