As part of the deal to break the budget impasse, huge multi-national energy corporations want immediate and substantial access to drill in our public forests and parks, instead of paying a severance tax on natural gas drilling. A severance tax would bring in revenue every year, and by 2014 could be generating half a billion dollars for Pennsylvania's treasury, for environmental programs, and to compensate communities dealing with the damage from drilling.
Allowing driller widespread access to our state forests now, instead of assess a fair severance tax would be a rip-off for taxpayers. Now is not the time to allow wholesale leasing of our state forests when drillers could pick up leases at bargain basement prices.
The budget deal will allow the energy corporations access to hundreds of thousands of acres of our forests. The budget deal anticipates leasing state land for drilling will bring in $100 million a year in lease payments and royalties. No one but the budget negotiators has seen the estimates. To make the numbers work, wither the state will be forced to open up huge amounts of land for drilling or the lease auction must bring in unrealistically high prices.
Here's the real story. Last year, the Department of Conservation and Natural Resources (DCNR) conducted an auction for leases for 74,000 acres of public land at a time when natural gas prices were at an all-time high. The winning bids averaged $2,300 per acre. Today, gas prices have fallen off a cliff and now are at a seven year low. Gas drillers are now paying an average of $250 to $500 an acre for leases on the open market.
Giant energy corporations are taking advantage of the new lower prices. Seneca Energy won the right to drill on 8,400 acres of state land in last year's auction and bid an average of $3,700 and acre for the lease - a total of more than $31,000,000. When gas prices started to fall, Seneca walked away from the bid, and DCNR offered the acreage to other bidders. ExxonMobil subsequently took over the lease for $9 million, just over $1,000 per acre.
President and CEO, Citizens for Pennsylvania's Future (PennFuture)