State leases land under Susquehanna River for gas development

BY BRIAN BISHOP (STAFF WRITER)
Published: May 14, 2010

Article Tools
Font size: [A] [A] [A]
Sign Up newsletter

The Pennsylvania Department of Conservation and Natural Resources (DCNR) has recently finalized a lease agreement for mineral rights for state-controlled property under the Susquehanna River in Bradford County.

DCNR has leased around 1,500 acres of land under the river for $6.15 million to Chesapeake Energy, according to DCNR spokesperson Christina Novak. The portion of the river affected by the lease starts seven miles below Towanda and continues to the Wyoming County line. The state controls mineral rights under navigable rivers in Pennsylvania between the low water marks on those rivers, Novak said.

The money from the gas lease will go to the Oil and Gas Lease fund, Novak said, which was established in 1955; money in that fund is designated for conservation, recreation and flood control, though there have been transfers form the Oil and Gas Lease Fund to the state's general fund legislated in the past. Those transfers require an act of the state Legislature as part of the budget process, she said. DCNR will use much of the money from the Susquehanna River lease to help keep state parks open, Novak said.

The lease is similar to other leases DCNR has entered into concerning state forest land, Novak said, with provisions for no surface development on the leased area. Chesapeake owns mineral rights on both sides of the river in the area affected by the lease.

DCNR has leased mineral rights on 725,000 acres of state forest land, out of 2.2 million acres in Pennsylvania. Novak said that while no other under-river agreements have been finalized by DCNR, other portions of streams in the state may be leased for gas development in the future.

DCNR will receive a first-year lease payment of $4,000 an acre for the acreage under the Susquehanna, Novak said, and will receive 20 percent royalties on any gas produced from the area.

In a prepared response, Brian Grove, the director of corporate development at Chesapeake's Towanda office, said: "One of the superior advantages of horizontal drilling technology is to be able to reach out great distances to develop natural gas resources without disturbing what lies above them. We have a demonstrated track record of successfully producing natural gas from beneath lakes, rivers, streams, homes, skyscrapers and even below the runway and terminal of an international airport. Steel and cement casing systems and more than a mile of rock that is harder than cement ensure than natural gas and fluid used during the well completion and production processes remain controlled within the well. Such drilling poses no unusual challenges."

Brian Bishop can be reached at (570) 888-9652; or e-mail: bbishop@thedailyreview.com.

Ads by Yahoo!






Type in the characters you see in the picture below. If you have trouble reading the characters in the picture, click it to see a new one.



5 posted comments

Are they totally insane?

Remember the mine under the Susquehanna that caved in?

This is even beyond fiction.

Report
Who'd a thunk?,  05/14/10 5:03
Steven, the article says that Chesapeake owns mineral rights on both sides of the river. It does not say that CHK owns ALL mineral rights on both sides of the river. There are other companies with leases on both sides of the river, such as Talisman (Fortuna), Range Resources, and others. Clearly CHK has the most leases. However, state government agencies are not usually allowed to "eyeball" whether there are any logical other bidders. They must usually bid, and if you only get one, then that is ok.
Report
Leased with Friendsville Group (Talisman/Fortuna),  05/14/10 4:41
questions, If CHK owns the mineral rights on both sides of the river for the portion of the river specified, as the article states, why would any other company have an interest in it? If they couldn't get the gas themselves, would they want the lease just to keep CHK from gettign the gas? That's kind of a dog-in-a-manger attitude that would be very expensive for any competitor to undertake. Or am I missing something?
Report
Steven,  05/14/10 12:06
This is a dagger in the heart of all those who have fought to protect the Susquehanna River. I hope Chesapeake is prepared to deal with the reaction to the first major "ooops!" The DCNR should hang its head in shame.
Report
Don Williams,  05/14/10 7:37
When DCNR, a state agency, leases public lands it is normally required to use a bidding process. Similarly, townships and public institutions such as school districts do the same. Why is it legal for the DCNR to just go ahead and lease the land beneath the river to CHK without using a bidding process? I am sure that CHK has the lions share of the leases in the area, but this is not a good enough reason. I thought the bidding process on a lease arrangement with this high of a value was an absolute requiremenet. I have not read anywhere that this was put out to bid. Anybody know what loophole was applied here?

Also would like to see a map of the affected stretch of river. Different newspapers have reported this different ways. This article says the lease starts 7 miles below Towanda. Another article in a different paper says that the length of river leased is seven miles long. Another paper says the lease runs from Towanda to the Wyoming County line. I would like to see this cleared up. I might have to "ask CHK" and see if I can get an answer. I am wondering if this supports under the river drilling in the Leisure Drive area of Wysox, in the River Road area of Standing Stone, or in the French Azilum area of Asylum Township.

Report
Some questions,  05/14/10 4:40