The Two (Drilling) Faces of PA Gov. Ed Rendell
Is Pennsylvania Gov. Ed Rendell pro- or anti-drilling? Darned if I can tell. In some ways he has encouraged and allowed drilling to flourish in PA under his watch, something PA landowners should be thankful for. But it seems he has to keep some in his own party appeased, so he often talks down drilling. In typical politician fashion, he talks out of both sides of his mouth. The latest example is today. One headline trumpets that Rendell has signed a deal with Anadarko for $120 million (Anadarko to pay Pennsylvania $120 mln for drilling – Reuters) to allow drilling on an additional 33K acres. But another headline says Rendell backs a stop to further leasing of PA public lands (Rendell backs halt to gas leasing in public lands – CBS/Channel 21), as if he’s champion of the anti-drillers. What gives?
Well, it’s the same Ed Rendell on the same day walking a tightrope. He did indeed sign a deal with Anadarko to lease land that is supposedly surrounded by other public land already leased for drilling and so, as the thinking goes, the newly leased land won’t be “disturbed” all that much since most of the drilling operations will be from adjacent land. But now that he’s got his fist-full of $120 million, he immediately announces he’s now on board with no further leasing (after today, of course). Methinks he’s not going to make either side happy—but then he’s not running for re-election. What a strange character, that Gov. Rendell.
Press release from Gov. Rendell’s office putting the master spin on today’s high-wire act:
Harrisburg – Governor Edward G. Rendell announced today that the Department of Conservation and Natural Resources has finalized a responsible natural gas lease agreement by which Pennsylvania will meet its need for revenue from drilling next year, while also fulfilling its obligation to protect Pennsylvania’s natural resources.
Under the agreement, Anadarko Petroleum Corp. has paid the commonwealth $120 million to access 32,896 acres that are surrounded by tracts of land for which drilling companies already hold lease agreements. Because these newly leased tracts can largely be accessed by gas operations on the adjacent tracts, the amount of new state forest surface area that must be disturbed is minimized.
Other than the agreement, the commonwealth will not have to make any additional state forest land available to reach its revenue goals for natural gas drilling in the 2010-11 fiscal year.
“This is a responsible approach that meets our revenue targets and limits the impact of additional natural gas exploration in our state forests,” said Governor Rendell.
“We do not need to expand our drilling footprint in state forest lands to meet our revenue goals, because these parcels are already surrounded by other leased acres,” Governor Rendell said. “They also are within areas leased in the 1970s and 1980s by DCNR, but not all the acreage was drilled because technology wasn’t available to exploit Marcellus Shale deposits.
“In order to develop the acreage, DCNR and Anadarko have agreed to certain provisions to make certain there is minimal impact on the surface. Horizontal drilling technologies allow Anadarko access to most of this acreage from already disturbed areas on their adjoining leased lands.”
The newly leased acres cover 11 tracts in the Moshannon, Sproul and Tiadaghton state forests where Centre, Clinton and Lycoming counties meet.
For 27,185 acres on ten tracts, Anadarko agreed to pay $4,000 per acre, consistent with the average price paid during DCNR’s January 2010 competitive lease sale. For the remaining 5,711 acres on one tract, the commonwealth will receive $2,000 per acre because the geology underneath is not as promising for gas production.
The lease of the 11 tracts totals about $120 million. DCNR’s January 2010 lease sale generated $128 million—$60 million of that went toward this year’s General Fund budget and the additional $68 million will be applied to a target of $180 million to help balance state budget for the fiscal year that begins July 1, 2010.
“With this agreement negotiated and the money in the bank, we can safely be on board with the moratorium which passed the House and is now in the Senate. If the Senate passes the legislation and it comes to my desk, I will sign it,” Governor Rendell said.
This lease ensures the citizens of Pennsylvania will benefit in a positive way from the development of the Marcellus Shale on public lands. Governor Rendell believes it is vital for the General Assembly to pass a severance tax to further protect the interests of the citizens of Pennsylvania.
For more information on gas drilling on state forest land, visit the DCNR website at www.dcnr.state.pa.us and choose Gas Drilling under “Quick Links,” or call 717-772-9101.
*Gov. Rendell Press Release (May 11) – Governor Rendell Announces Land Lease Agreement that Meets Budget Targets, Greatly Minimizes Additional Disturbance to State Forests