Seneca Resources Will Not Sign $31 Million Marcellus Drilling Lease For State Forest Land

The Associated Press this week reported Seneca Resources, one of the successful bidders for part of the 74,000 acres of State Forest land leased last year to companies interested in drilling Marcellus Shale for natural gas, refused to sign its $31 million lease with the Department of Conservation and Natural Resources.

 

In a letter to DCNR, Seneca said they would walk away from the 4,400 acres in Tioga and Lycoming counties they bid on because pipeline construction costs are higher than originally expected.

 

ExxonMobil submitted the second place bid and will be given the opportunity to express interest.

 

Gov. Rendell proposed transferring $174 million in advanced payments from Marcellus Shale leases from DCNR to the General Fund to help balance the budget, which is meeting with significant opposition from environmental groups. (2/9/09 PA Environment Digest)

 

In March, the Senate passed legislation that would authorize the transfer, after earmarking some of the funding for activities related to gas well permitting and inspection, including conservation districts. The vote was-- 33 to 17. (3/30/09 PA Environment Digest)

 

House Republicans recently proposed a plan to lease more State Forest land for Marcellus Shale drilling, using the proceeds to help balance the budget and provide funding for conservation districts. The proposal set a floor of $2,000 per acre for bidding, which in the current economic climate is considered high. (3/30/09 PA Environment Digest)

 

In February, DCNR Secretary Michael DiBerardinis told the House Appropriations Committee not to expect another Marcellus Shale windfall due to the dramatic collapse of natural gas prices since the agency leased 74,000 acres of State Forest Land last year. (3/2/09 PA Environment Digest)