Will natural gas boom ease PGC cash crisis?

Harrisburg ’Äî The discovery of huge natural gas reserves under
much of Pennsylvania, and the resulting spike in gas-lease prices,
could solve the Pennsylvania Game Commission’Äôs financial
crisis.

With 1.4 million acres of state game lands sprinkled across the
commonwealth, the agency seems poised to cash in on the natural
gas-leasing boom. In the last year, the average rate per acre for
leases has gone from $300 per acre to approximately $2,500 per
acre.

Pennsylvania is experiencing a ’Äúgold rush’Äù unlike anything
seen in the state perhaps since Edwin Drake struck black gold (oil)
near Titusville in 1859. But instead of oil, it’Äôs natural gas in
the Marcellus shale layer deep below the commonwealth.

But although much of the State Game Lands System acreage has
been ’Äúnominated’Äù for oil and gas exploration, a Game Commission
spokesman recently pointed out that the agency might not be in line
for the windfall many expect.

’ÄúFirst of all, we don’Äôt own all the oil and gas rights, and
if we don’Äôt own the rights, we don’Äôt get the royalties,’Äù said
commission press secretary Jerry Feaser. ’ÄúSo some of this is
being overblown because of misinformation that has been
spreading.’Äù

It may sound like the Game Commission has hit the jackpot with
the discovery of huge amounts of natural gas under game lands,
Feaser cautioned. But it’Äôs not that simple.

’ÄúThere is a great deal of excitement about this in industry,
the Legislature and other places ’Äì we, however, are taking a
cautious approach because we don’Äôt own all gas and mineral rights
on all game lands. So we first have to determine what the agency
does own ’Äì and where.’Äù

Most of the state game lands were pieced together from a variety
of smaller parcels over the years that were either donated to or
purchased by the commission. Each smaller tract came with it’Äôs
own set of mineral rights, or lack of them.

Many previous land owners reserved the mineral rights for
themselves when they deeded parcels to the commission, Feaser
noted.

’ÄúSo it’Äôs not so simple to say, ’Äòthe Game Commission’Äôs
financial problems are solved by the gas discovery in the Marcellus
shale layer,’Äô’Äù he said. ’ÄúWe are dealing with a confusing
patchwork quilt of mineral rights ’Äì some we own, most we don’Äôt
’Äì so a lot has to be figured out. We have the people in our gas
and mineral section of the bureau of wildlife management working on
it.’Äù

Extracting gas from the Marcellus shale layer is more
environmentally challenging than traditional gas drilling,
according to Game Commission scientists, because it involves using
copious amounts of water that is forced through the shale under
high pressure to fracture rock and push gas out.

Disposing of and treating that water may make drilling for gas
on game lands problematic, Feaser explained. ’ÄúWe are running it
through the prism of compatibility of deep gas exploration on state
game lands with wildlife management and recreational use,’Äù he
said. ’ÄúWe just don’Äôt know at this point what the potential
is.’Äù

The pace of gas exploration in the state accelerated this year
after Penn State research suggested that the Marcellus shale, a
geologic formation that stretches across a large part of northern
and western Pennsylvania and into neighboring states, may contain
more than 500 trillion cubic feet of natural gas.

According to Penn State scientists, at least 10 percent of that
natural gas ’Äì up to $1 trillion worth ’Äì could be recovered with
new drilling technology. And that has gas companies, landowners and
rural communities scrambling to tap into this energy bonanza’Äôs
potential profits.

The Marcellus Shale, also referred to as the Marcellus
Formation, is a Devonian-age black, low density, carbonaceous
(organic rich) shale that occurs beneath much of Ohio, West
Virginia, Pennsylvania and New York.

Small areas of Maryland, Kentucky, Tennessee, and Virginia are
also underlain by the Marcellus Shale.

According to Penn State scientists, throughout most of the
layer, the Marcellus is nearly a mile or more below the surface.
These great depths make the Marcellus Formation a very expensive
target.

Successful wells must yield large volumes of gas to pay for the
drilling costs that easily exceed a million dollars for a
traditional vertical well and much more for a horizontal well with
hydraulic fracturing.

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