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Leasing state land for shale wells called a business decision
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The new $5.1 million dam and spillway at Dutch Fork Lake was recently completed by the state Fish and Boat Commission. The lake should be refilled and restocked with fish by spring. -
Dutch Fork Lake in Washington County was drained in 2004 after the remnants of Hurricane Ivan destroyed the concrete spillway. Many of the trees and vegetation that have since grown up in the dry lake bed will be left in place as fish habitat.
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When it comes to the mantra "drill baby drill" in the Marcellus Shale gas play, the head of one Pennsylvania agency said he found himself thinking of a different catch phrase: not so fast.
John Arway, executive director of the state Fish and Boat Commission, said he was torn between the commission's mission as stewards of the environment versus what could be significant -- and sorely needed -- new revenue sources generated by allowing Marcellus Shale natural gas drilling beneath some of the 56 dams managed by the commission statewide and by selling some of the water in the impoundments for hydraulic fracturing of gas wells, also called fracking.
"We struggled with that decision," Mr. Arway told a group of several dozen people who turned out in Claysville on Wednesday for an update on the progress of repairs at Dutch Fork Lake in nearby Donegal Township.
In the end, Mr. Arway said, the commission chose to lease some of its properties, including the 91-acre Dutch Fork, the Rose Valley Lake in Lycoming County and Donegal Lake in Westmoreland County.
For now, those recreational lakes -- used for fishing and boating, not for drinking water -- are the only bodies of water being leased by the commission, though more waterways and lakes could be leased if natural gas companies express an interest in them.
"With natural gas, we discovered we had a new asset," Mr. Arway said. "We had to look at it from a business perspective."
Because the private property around Dutch Fork had already been leased to drilling company Range Resources, Mr. Arway felt that natural gas deposits beneath the 53-year-old man-made lake and its surrounding property would naturally migrate once the neighboring wells were tapped -- leaving the commission without the natural resource or the income from it.
"I felt it would be irresponsible not to let that gas be extracted, so at least we could get compensated," said Mr. Arway, who said he never would have imagined two years ago that he would be siding with the natural gas industry regarding drilling.
Although anglers and boaters in Pennsylvania spend $3.2 billion annually in fishing and boating purchases, the commission sees little of that revenue. It has three primary sources of income: fishing licenses, boat registration fees and federal excise taxes.
License sales have declined from a high in 1990 of more than 1.15 million issued to a low last year of fewer than 800,000 licenses.
Mr. Arway said the commission "can't even come close" to being able to fund the estimated $46.5 million needed to repair the 19 "high-hazard" dams that have been deemed unsafe statewide. Dams are categorized as high-hazard if they threaten the safety of residents living downstream and could have a significant economic impact on the region.
Dutch Fork, an earthen impoundment emptied in 2004 after the remnants from Hurricane Ivan destroyed the concrete spillway, was one of those lakes that eventually found funding through the state's H2O grant program, established by the General Assembly in 2008. If the dam at Dutch Fork had failed before the lake was drained, it could have inundated 325 homes.
Commission representatives announced at Wednesday's meeting that $5.1 million in repairs to the dam have been completed and the lake should be refilled and restocked with fish by early 2013.
When deciding whether to lease the commission's properties, Mr. Arway said he also considered that stringent lease terms with drillers would have more meaningful safeguards than state or local ordinances regarding shale drilling. Local oversight remains as vague as ever with the state Supreme Court expected to decide on an appeal of the statewide zoning provisions in Act 13 later this year.
The commission in April entered into a five-year lease with Range for non-surface drilling, meaning that there will be no well rigs on the commission's 566 acres around Dutch Fork.
Nearby private property owners will host the well rigs, which will drill horizontally beneath the lake and its surrounding acreage.
The 16-page lease also spells out environmental protections, including water monitoring conducted by the Washington County Watershed Alliance, an independent agency.
The watershed alliance is to install water sampling devices and provide the commission with annual reports, which will be available to the public online, detailing its findings.
Revenue from the $2.24 million signing bonus the commission received from Range, along with 18 percent in royalty payments, is earmarked for a special fund that will be used to repair other high-hazard dams.
Another $1 million that is to be diverted to the commission annually through new statewide impact fees established under Act 13 will be used to review permits involving streams, wetlands and wildlife.
Mr. Arway said no drilling company had yet approached the commission to discuss the possible sale of water in Dutch Fork Lake to be used for fracking, though the commission does have such an agreement at Donegal Lake.
Despite assurances, some residents, including John DeBord of South Strabane, said they remain concerned about drilling near the rural, serene setting.
Mr. DeBord asked Mr. Arway if he could guarantee that fracking water and other industrial fluids wouldn't leech into Dutch Fork. While Mr. Arway could offer "no guarantees," he said he felt he negotiated the best protections possible.
"Not so long ago, I felt exactly the way you did," Mr. Arway said. "We believe we can manage the risk better if we're part of the solution. We want to minimize the impacts."
"I'm just concerned about the irreversible possibility of pollution," Mr. DeBord said. "I'm concerned about the environmental impact of the toxic chemicals injected while fracking. I'm concerned about it leeching into the lake."
Donna Riggle of the Buffalo Creek Watershed Association said she cried when she heard about the lease between Range and the commission.
"I am concerned about the impacts of the entire natural gas extraction process," she said.
The association, a local nonprofit group, heavily lobbied legislators and raised funds and awareness during the past eight years to reopen the lake. Ms. Riggle said the group is grateful that the county watershed alliance will be overseeing possible environmental impacts.
"Having more eyes out there -- I think that's good," she said. "It's something that's needed."
The commission has no control over where in the area the wells are drilled, and Range spokesman Matt Pitzarella said there is no timeline yet for when or exactly where drilling would take place. Mr. Pitzarella said he didn't expect any unusual impacts and pointed out that many wells already have been drilled in the area.
"The anticipated impacts of this location is no different than any other, so there may be some short-term vehicle, lights or noise, but that's hard to say since there's no time set for drilling," Mr. Pitzarella said.
Myron Arnowitt, the Pennsylvania state director for Clean Water Action, said his primary concerns are accidental chemical spills that could pollute the watersheds located near the lakes that will be drilled, along with declining water quality from deforestation that might be necessary for drilling and air pollution issues.
"I think there certainly could be some impacts," he said. "Especially depending where the drills are located and how many wells we're talking about."
While the revenue generated by drilling is a bonus, Mr. Arnowitt questioned whether bonding from the drilling companies would be sufficient in the event of a catastrophe or unexpected problem.
"I do understand that the Fish and Boat Commission has a revenue problem," he said. "It's a shame that the state isn't supporting the commission so they don't need to resort to this type of thing to raise funds."
State Sen. Tim Solobay, D-Canonsburg, attended the Dutch Fork meeting Wednesday and said afterward he wasn't particularly concerned about impacts from drilling near the lake.
"Let it start and let's see what happens," he said. "It's not cast in stone."
Washington County Commissioner Larry Maggi said he, too, was adopting a wait-and-see attitude, though he also thought it unlikely that drilling would contaminate the lake or mar the scenery around it.
"You're going to keep your secluded, serene, fishing-hole atmosphere," he said. "I think there are enough safeguards in place to ensure they can co-exist."
First Published August 11, 2012 12:00 am
