DCNR examining gas royalty payments ‘very closely’

The state Department of Conservation and Natural Resources expects to bring in $130 million from natural gas drilling royalties this year. Much of the money will be used to fund the agency’s general operating expenses.

At a budget hearing before the House Appropriations Committee Monday, acting DCNR Secretary Cindy Dunn told legislators it’s a “long-term” goal to wean the agency off royalty money.

Environmentalists complain it poses an inherent conflict of interest for DCNR– which is supposed to balance conservation with resource management. Governor Wolf’s spending plan would make the department slightly less reliant on royalties, but they would still make up over a third of its $342.6 million proposed budget.

“It’s not a good set-up to have the agency funded by extracted resources. Markets and prices go up and down. Things change,” said Dunn.  “Will we be off of it in the short term? I don’t think it’s realistic.”

Rep. John Maher (R- Allegheny) also asked about the problems some people have had with gas companies paying royalties properly.

“Has DCNR undertaken an organized effort to audit the statements you receive from drillers?”

State Forester Dan Devlin said DCNR has multiple levels of oversight– including an internal review and a contract with Penn State to check gas volume information. The agency is also hiring an outside firm to audit how gas companies report price data.

“We are looking at it very closely,” said Devlin. “Whenever we find discrepancies we contact the companies. For the most part, they’ve been pretty amenable to fessing up and giving us what the Commonwealth’s due.”

As StateImpact Pennsylvania has previously the reported, DCNR is also in the process of investigating some drillers for shortchanging the state.

Dunn was also questioned about plans to expand drilling in the Loyalsock State Forest– specifically in a 25,000 acre swath of the forest known as the Clarence Moore lands– a treasured area for wildlife and recreation. 

“What is the status of evaluating that, and where are we on timelines?” asked Rep. Garth Everett (R-Lycoming).

Although the state does not own the mineral rights under the Clarence Moore lands, it does have surface rights on about 18,000 acres. Anadarko Petroleum, along with Southwestern Energy, can exercise surface control on about 7,000 acres.  Opponents want DCNR to use its control over the remaining 18,000 acres as leverage to keep development off the most sensitive areas.

Under the Corbett administration, DCNR said its hands were tied and it had to allow the companies to develop their mineral rights.

“That position hasn’t changed,” said Dunn. “We’re just taking fresh eyes on that to see if we completely agree. The discussions are still fairly early on.”

DCNR has said it will allow a 15 day public comment period when it has a final development plan from Anadarko and Southwestern, but so far there is no final plan.

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