Rendell announces drilling deal that protects land

HARRISBURG - Gov. Rendell said Tuesday that a deal to lease 33,000 acres of state forest land for new natural-gas drilling will partially address the state's revenue needs and help protect pristine land that might have been threatened by additional drilling.

Rendell, at a news conference, said Houston-based Anadarko Petroleum Corp. would pay the state $120 million to drill on 11 tracts in north-central Pennsylvania, adjacent to the company's existing wells.

Most important, he said, the land has already been disturbed by earlier shallow-well gas drilling - so the new deep-well activity will not affect undisturbed forest.

"This is a responsible approach that meets our revenue targets and limits the impact of additional natural-gas exploration in our state forests," Rendell said.

He said the $120 million lease deal, along with $60 million carried over from last year's leases, kills two birds with one stone: It meets the $180 million target that he and the legislature had agreed upon for revenues from such leases, and it ends, at least for now, the prospect of more drilling to meet that goal.

Environmentalists praised the lease agreement between the state and Anadarko for minimizing disruption to the forests, while maximizing drilling revenue.

"It's a relief not to open up more virgin land for drilling," said Jan Jarrett, president of PennFuture, a statewide environmental advocacy group. "It's inappropriate to manage forests to raise revenue."

But State Senate Majority Leader Dominic Pileggi (R., Delaware) accused the governor of "closing the door" on further tapping of an important revenue source at a time when the state's overall revenues are still in what Pileggi called a "precipitous decline" because of the recession.

Pileggi, whose party controls the Senate, said that with six weeks to go until the end of the 2009-2010 fiscal year and a budget shortfall projected at more than $1 billion, he did not want to rule out additional state land leases for gas drilling in the vast and potentially lucrative Marcellus Shale reserve.

"There are tens of thousands of acres of state land that are suitable for leases," said Pileggi. "The administration wants to say that it is finished with the leasing process in an arbitrary way."

Rendell said he would support a moratorium bill, which has passed the House and awaits action in the Senate, that would halt additional leasing of state forest land for gas drilling for three years, and require an environmental study of the effects of drilling on the water supply.

The governor also reiterated his support for a Marcellus Shale gas-extraction tax that would be paid by companies leasing private land.

"We are the only major shale state without a shale tax," said the governor. "I'm hopeful that will end." He proposed such a tax in his February budget address after withdrawing a similar proposal the year before.

Pileggi said he did not want to open discussion on such a tax without also opening the door to further discuss leasing more state land to gas drillers.