Goddard State Park's Gas Wells May be First of Hundreds

Where mineral rights are privately owned, Pennsylvania officials can't prevent drilling

Pittsburgh Post-Gazette
3 May 2009
By Don Hopey

Bob Donaldson/Post-Gazette
William Wasser, Maurice K. Goddard State Park manager, at the Hill No. 1 well head, which is just off the bike trail along the shores of Lake Wilhelm. By summer, the well will be nearly invisible in the middle of a cornfield.

Around Lake Wilhelm in Maurice K. Goddard State Park there are nesting osprey and great blue heron, a 12-mile bicycle path and five new deep natural gas wells.

The wells, drilled by Pittsburgh-based Vista Resources through the Marcellus Shale and into the 5,500-foot-deep Medina Sandstone formation last winter, discreetly ring the popular fishing lake that is the centerpiece of the park in Mercer County, 70 miles north of Pittsburgh.

They're the first of up to 20 gas wells Vista may eventually drill in the narrow, 2,856-acre park which attracts more than 200,000 visitors a year. More than 95 percent of the underlying mineral rights in the park are privately owned, and the state has no power to stop the owners from drilling to extract the gas.

As the rush to tap the Marcellus Shale and other gassy geologic formations continues throughout much of the state, the Goddard wells are the first of perhaps hundreds that could be drilled in the state's most popular parks, including Ohiopyle, Ryerson, Kettle Creek, Clear Creek, Keystone, Oil Creek, Laurel Ridge and Elk.

The state Department of Conservation and Natural Resources, which manages state parks and forests, has done little to assess and address how the deep gas well drilling bonanza that has been rolling through the state for the last 18 months will affect park operations and public use.

"Not a lot of people have looked at this issue, but some in our geology division knew we were vulnerable," said James Grace, DCNR deputy secretary for parks and forestry. "It's a concern."

As the gas wells proliferate in Goddard and other state parks where some or all of the mineral rights remain in private hands, they may damage areas where the public expects to bicycle, hike, picnic, swim, fish and hunt without encountering noisy drilling rigs, well heads, holding tanks, potholed access roads and pipelines.

At this time in state parks no gas wells are tapping the Marcellus Shale, which underlies about two-thirds of the state and has the potential to be one of the biggest natural gas "plays" or deposits, in the nation. But development pressure is mounting.

The 450 million-year-old Devonian formation contains approximately 350 trillion cubic feet of natural gas -- enough to supply U.S. demand for 10 to 15 years. Developing it could bring billions of dollars into the state and create thousands of jobs, gas industry and some state officials say.

According to Mr. Grace, the DCNR doesn't know how many of the state's 117 parks are "vulnerable" to drilling or how much park acreage is located over privately owned mineral rights.

He said many parks in the central and northcentral part of the state were carved out of pre-existing state forests. The state owns about 85 percent of the underlying mineral rights there, he said.

But in the western half of the state, where mineral rights were purchased or "severed" from the surface rights more than 100 years ago, the state bought only the surface property rights when it established many parks. In those parks the likelihood that mineral rights are privately owned is much higher.

And because courts have ruled that private owners of what is termed the "mineral estate" have superior rights to "surface estate" owners, the owners of underground mineral rights must be given reasonable access to develop those holdings, even when they lie under parks or other publicly owned land.

"In parks where we own the underlying mineral rights we don't permit drilling, but on land where we don't, we're in the same jam as other landowners with severed surface and mineral rights," Mr. Grace said.

William Wasser, park manager at Goddard, said DCNR has some control over the drilling there through a 2007 "coordination agreement" with Vista.

The agreement required the company to show clear title to the oil and gas rights, a production plan, an erosion and sedimentation plan and a map of the well sites and pipelines before DCNR agreed to the well site proposals. The company also posted a $50,000 security bond for the first five wells and agreed to post an additional $10,000 security bond for each additional well.

"Vista has worked very well with us," said Mr. Wasser, who said he understands the need for domestic energy sources.

"Certainly there is an impact, but the company has worked cooperatively to minimize that as much as possible. If drilling is done right, we can minimize the environmental impact and the aesthetics impacts."

At Goddard, named for the father of Pennsylvania's state park system, the agreement had worked well enough so far, Mr. Grace said. But only five wells have been drilled.

"We had some issues, but we've worked with the drilling company to keep wells out of our most intensely used parts of the park," Mr. Grace said. "But how many wells are enough or too much for Goddard or other parks? Well, we haven't gotten to that issue yet."

Clark Nicklas, Vista's chief executive officer, said the company has drilled more than 900 wells in Mercer and Crawford counties since 1981 -- most of them on private property where they're still pumping. He said his firm is happy to work with the state.

"Since we've worked in the area for such a long time, we have many landowner friends and I don't see any problem drilling in the park," said Mr. Nicklas, whose company has no plans to drill in other state parks but might develop additional wells next year in Goddard.

"I think we should be able to balance things," he said. "DCNR's basic interest is recreation and where the mineral rights are privately owned we should be able to develop them in a prudent manner so it works for all parties."

But such cooperation doesn't always exist. When it doesn't, the state's legal landscape is limited, as underscored last week when the Pennsylvania Supreme Court ruled in favor of Belden & Blake Corp., a Houston, Texas-based energy company with offices in Pleasantville, Crawford County, that wants to drill gas three 6,000-foot-deep wells in Oil Creek State Park.

According to the court, while DCNR has an obligation to preserve publicly owned parkland and may seek to impose additional conditions on owners and drillers, "it has no authority to impose them unilaterally without compensation."

The DCNR decided to go the compensation route and buy mineral rights in Potter County, a hotbed of Marcellus Shale well drilling in northcentral Pennsylvania. It didn't want well development in 48-acre Cherry Springs State Park and the surrounding 262,000-acre Susquehannock State Forest, an area known as a stargazer's paradise because of its dark skies. In June 2007 it bought 1,980 acres of mineral rights under the park and forest for $396,000.

"We just wanted to eliminate the opportunity for drilling there because we were aware it was a critical area," Mr. Grace said. "But doing it for all the parks in Western Pennsylvania is financially impossible. In that sense we're in the same boat as the Allegheny National Forest."

More than 2,000 new shallow oil and gas wells have been drilled in the Allegheny National Forest, the state's only national forest, in the last two years and more than 12,000 wells are actively pumping there. Oil and gas development on those 513,000 federally owned acres has occurred because the underlying mineral rights are privately owned.

"It's troubling and news to me that mineral rights are privately owned under state parks. I had no idea the state was so exposed," said Jeff Schmidt, the Sierra Club's lobbyist in Harrisburg. "And it should be a great concern that the state doesn't have a policy to limit the number of wells or an aggressive policy for acquiring mineral rights to protect parkland for recreational users."

With gas prices low and development of new wells in a temporary lull, Mr. Schmidt said the state should launch a program to buy privately owned mineral rights under the state's parks.

Jan Jarrett, vice president of Citizens for Pennsylvania's Future, a statewide environmental group, agreed. But she said the state's ability to do that is undermined by Gov. Ed Rendell's proposal to plug a gaping hole in the state's general fund budget with $174 million that the DCNR recently received for leasing drilling rights in state forests.

"This is a perfect illustration of why money received for drilling on state land should remain in the Oil and Gas Fund," Ms. Jarrett said. "Funding the purchase of mineral rights with that money would be a great use."

The state could also raise money to buy mineral rights under state parks by imposing a severance tax on the gas extracted, she said, as is done in 39 other states where there are active oil and gas drilling plays.

Although the oil and gas industry has said the tax would stop or delay development of the Marcellus Shale gas play, environmental and outdoor groups said revenues from a severance tax could bring in $100 million to help repair road, bridge, water and environmental damage that could result from natural gas development activities.

"Drilling in the parks will compromise the public's use of the land, which has been set aside for public recreation," Ms. Jarrett said. "The taxpayers should be compensated for the drilling done there and whatever damage it causes."

Don Hopey can be reached at dhopey@post-gazette.com or 412-263-1983.