Pennsylvania

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Pa. owed ‘hundreds of thousands of dollars’ in royalties from forest drilling

A drill rig in the Tiadaghton State Forest.

Marie Cusick/ StateImpact Pennsylvania

A drill rig in the Tiadaghton State Forest.

The Commonwealth of Pennsylvania is owed “hundreds of thousands of dollars” in royalties from natural gas drilling on public forest land, according to an official with the state Department of Conservation and Natural Resources.

DCNR has leased 386,000 acres of publicly-owned forest land for drilling, and like private landowners, the government agency had problems getting paid properly.

Internal emails obtained by StateImpact Pennsylvania through the open records law show DCNR staff questioning companies over issues including: misreporting the price of gas and the volume produced, failing to provide complete or accurate information on statements, and inappropriately withholding gas transportation costs.

Many companies also failed to adhere to lease language which requires them to pay 35 cents per thousand cubic feet, or a 20 percent royalty– whichever is higher.

Because the price of gas has been so low recently, the 35 cent provision kicked in, rather than the 20 percent royalty.

DCNR says it recovered nearly $1.5 million over the past year, after ramping up its auditing efforts and hiring a new accountant. The department had repeatedly declined to answer questions about how much money it believes it’s still owed, citing legal concerns.

When pressed at a public meeting Wednesday, State Forester Dan Devlin says the amount owed is less than $1 million dollars and the figure fluctuates as gas is produced and new payments come in.

“It’s not like there’s one number,” he tells StateImpact. “It’s always changing.”

That money represents a small fraction of the hundreds of millions of dollars the department has brought in through leasing land for drilling and royalties from producing wells.

For example, this year DCNR projects it will take in about $80 million in royalties.

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