Leases of state forest land for gas drilling prove lucrative
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HARRISBURG -- After months of depressing economic news and declining revenues that hurt the state's budget, Gov. Ed Rendell is finally crowing about a positive note, as revenue from new leases of state forest land for natural gas drilling has exceeded expectations.
He said yesterday that five energy companies have bid $128 million for the rights to drill for natural gas on 32,000 acres of state forest land, which is more than the $60 million included in the current budget for fiscal 2009-10.
That leaves the state with $68 million to carry over into fiscal 2010-11, which begins July 1, and partially offsets a drag in other state revenues, such as the income tax and sales tax, which in the first half of this fiscal year have fallen about $250 million below expectations.
He said his plan has been "to minimize the number of (state-owned) acres put out to bid" for drilling, in order to minimize any environmental danger to state forests.
"This was the right approach," he said, because the 32,000 acres put out for lease "generated more than twice the amount we projected for this fiscal year," which ends June 30.
"Now we can walk into next (fiscal) year with $68 million in unanticipated ... gas revenues," he said. "This will certainly make a difference in what will likely be another very challenging budget year."
Mr. Rendell said the state leased 74,000 acres of state land in 2008 for gas drilling, receiving $160 million. This latest lease deal, done this week, brings to 410,000 acres the total amount of state land under lease to private companies. He wasn't sure if more forest land would be leased, saying he wants "to limit the footprint of drilling as much as possible and limit the intrusion into state forests."
As a way to generate additional funds for the state treasury, Mr. Rendell yesterday renewed a call for the state Legislature to enact a "severance tax," also called an "extraction tax," on natural gas pumped at the wellhead from areas of Marcellus shale around the state. Some experts have called Pennsylvania the Saudi Arabia of natural gas because of the plentiful deposits of gas within vast areas of shale that lie deep underground.
First Published January 15, 2010 12:00 am
