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State reaps $582M windfall on gas drilling in state forests

| Thursday, April 17, 2014, 12:30 a.m.

Private natural gas and oil wells in state forests pumped $582 million into Pennsylvania budgets in five years, more than tripling the combined revenue of the prior 60 years, state forestry officials said on Wednesday.

Royalty and lease payments for 2008 through 2012 came largely from 191 new drilling pads that tap into Marcellus and other shale gas reserves, according to the first Shale-Gas Monitoring Report from the Department of Conservation and Natural Resources.

The revenue matches Gov. Tom Corbett's hopes for natural gas development on public lands, said his energy executive, Patrick Henderson. He said Corbett projects about $120 million in ongoing royalties for the 2014-15 budget year and wants to raise $75 million more through new forest leases that would not be permitted to disrupt additional public surface area.

“It's been a significant, significant benefit to the commonwealth. It's $120 million in revenue that wasn't there three, four years ago,” Henderson said. The state budget approaches $30 billion a year.

Income from state forest wells supports the Pennsylvania general fund and the DCNR, which began the forest monitoring program in 2010 when shale exploration gained speed.

A 15-worker team approved by Corbett keeps track of gas development and its effects on state forests, which account for about 15 percent of all shale gas produced in Pennsylvania.

The team's findings help DCNR officials revise forest management practices as gas extraction proliferates on public land, said department spokeswoman Christina Novak. About 568 wells were drilled in Pennsylvania forests by December 2013, with the state projecting an eventual total of 3,000.

“Everything you see in terms of current impacts is going to be multiplied,” said PennFuture CEO Cindy Dunn. The Harrisburg-based environmental group opposes additional gas drilling on state lands.

Then-Gov. Ed Rendell signed a moratorium in October 2010 that suspended the writing of new leases for gas drilling in state forests. The moratorium remains in effect, and Dunn said observers have yet to discover the full impacts of existing leases and wells.

The 268-page DCNR report released on Wednesday covers mostly preliminary findings. Novak said reviewers so far have found no significant impact on water quality.

But the report notes 308 violation notices that state environmental regulators wrote over state forest gas extraction from 2008 through 2012. Shale gas production on the lands is “neither benign nor catastrophic,” DCNR Deputy Director Daniel Devlin said in the report.

“Oftentimes, trends, or effects, are not evident for years or decades,” he wrote.

Travis Windle, a spokesman for the Marcellus Shale Coalition industry group, underscored the financial impact of drilling. He said the industry has generated more than $2 billion in taxes in Pennsylvania.

“It's a false choice to suggest we can grow our economy or produce clean-burning natural gas. This report further confirms that fact,” Windle said.

Adam Smeltz is a staff writer for Trib Total Media. He can be reached at 412-380-5676 or asmeltz@tribweb.com.

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