DRAFT Non-Surface Disturbance Leasing and Review Criteria DCNR State Park and Forest Lands

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1 DRAFT Non-Surface Disturbance Leasing and Review Criteria DCNR State Park and Forest Lands July 2014 The Department of Conservation and Natural Resources (DCNR) manages approximately 2.5 million acres of State Park and Forest lands across Pennsylvania, balancing the protection of their ecological and natural resource values with their use for public enjoyment of outdoor recreation, timber and energy development. Since 1947, one of those uses has been oil and gas development on both State Park and State Forest lands, which includes oil and natural gas wells both shallow and deep wells. Oil and gas development plays a historic and present role on State Park and Forest lands. For example, Oil Creek State Park is the site of the world s first oil well while the Tioga State Forest has approximately 40,700 acres leased for gas development. Currently, the Commonwealth owns both the surface and subsurface rights (i.e. fee simple) on approximately 20% of State Park land and 82% of State Forest land. The remaining lands are where the subsurface rights are privately owned (i.e. severed rights). While DNCR land mangers balance the park and forest resource uses and values when making management decisions, these lands present a challenge as management of the lands may, at any point in time, be affected by the rights of the subsurface owner to reasonably develop their subsurface resource. Executive Order (attached) prohibits additional leasing of State Park and Forest lands for natural gas development which results in additional surface disturbance. DCNR intends to review lease nomination requests by using criteria that will implement the Executive Order. The objective of this document is to establish and communicate non-surface disturbance lease options, and a set of key principles and review criteria that provide consistent and reasonable direction for implementing a non-surface development lease program on State Park and State Forest lands in accordance with both DCNR s mission to conserve and sustain Pennsylvania s natural resources for present and future generations enjoyment and the best interest of the Commonwealth. I. Non-Surface Disturbance Leasing A Non-Surface Disturbance (NSD) lease applies to oil and gas leasing opportunities where the well laterals come from beneath the surface from adjacent private land, from an adjacent existing DCNR lease, or from an area where DCNR owns the surface rights but another entity owns the subsurface rights (i.e. severed rights). If the NSD lease area is adjacent to an existing DCNR lease tract or severed rights area, the construction of additional well pads or associated infrastructure on the existing DCNR lease tract or severed rights area must first service the existing DCNR lease tract or severed rights area. New infrastructure cannot be placed on State Park and Forest lands to exclusively access the new NSD lease area. Surface disturbances will be associated with well pads or other infrastructure that service both the existing DCNR leased or severed rights areas and the NSD leased tract. Applying the review criteria described below, DCNR will determine whether a proposed well pad or other associated infrastructure on an existing lease tract or severed-interest area constitutes additional surface disturbance. As a general rule, a lease nomination which includes a proposed well pad on State forest land being placed solely to access the new NSD lease area will be considered additional surface disturbance which would violate Executive Order Page 1 of 5

2 II. Definition of Surface Disturbance for Purposes of NSD Leasing Surface Disturbance is defined as: The long-term conversion of the park or forest to a non-park or forest use. Examples include creating or increasing the footprint of infrastructure such as roads, pipelines and well pads. This definition shall be used for purposes of evaluating whether an NSD leasing proposal would result in additional surface disturbance. Temporary Disturbance is defined as: Impacts to the park or forest itself, the surface, or vegetation that are short-term in nature and will allow the resource to be restored to its normal state naturally. Examples include seismic activity and air and noise impacts associated with an increase in truck traffic. III. Non-Surface Disturbance Leasing Options DCNR has the statutory authority to lease State Park and Forest lands via competitive bid or sole source contract. It is anticipated that most nominations will satisfy the necessary criteria for sole source leasing as long as the operator demonstrates ownership of the preponderance of immediately adjacent acreage. DCNR anticipates that nominations for NSD leases will be comprised of three categories: 1) nominations of state park and forest lands that will be under-drilled from adjacent private lands; 2) nominations from lessees who have an existing adjacent DCNR lease; and 3) nominations from owners of severed rights lands that are adjacent to fee simple state park and forest lands. A- Private Lands This category of NSD leasing consists of a well that is located on private land that will be drilled beneath the surface to access the NSD lease area. There will be no surface disturbance to the newly-leased NSD area that is located on State Park and Forest lands; however, potential temporary disturbances may occur. B- Existing DCNR Lease Tracts This category of NSD leasing consists of lands that are adjacent to an existing DCNR lease that may or may not have existing well pads and other infrastructure in place on the tract. The newly-leased NSD area will be accessed beneath the surface from well pads on the existing DCNR lease tract. There will be no surface disturbance to the newly-leased NSD area. Construction of additional well pads or associated infrastructure on the existing DCNR lease area must first service the existing DCNR lease tract. New infrastructure cannot be placed on State Park and Forest lands to exclusively access the new NSD lease area. All proposed infrastructure on the existing lease will be subject to the terms of the existing DCNR lease and the rights afforded to that lease-holder. Potential temporary disturbances may occur to State Park and Forest lands. C- Severed Rights Lands This category of NSD leasing consists of lands that are adjacent to State Park or Forest lands with severed subsurface rights which may or may not have existing well pads and associated infrastructure in place. The newly-leased NSD area will be accessed beneath the surface from well pads that are located on severed rights areas. There will be no surface disturbance to the newly-leased NSD area. Construction of additional well pads or associated infrastructure on the existing severed rights area must first service that area. New infrastructure cannot be placed on State Park and Forest lands to exclusively access the new NSD lease area. All proposed infrastructure on the existing severed rights area are subject to existing rights afforded to the subsurface owner or through any DCNR surface-use agreements. Potential temporary disturbances may occur to State Park and Forest lands. Page 2 of 5

3 IV: Key Principles When administering NSD leases or when making resource management decisions, DCNR uses sound conservation practices for the long-term good of the natural resources of the Commonwealth. When administering the NSD lease program, several key principles will guide management decisions: DCNR is responsible for managing and protecting natural resource and recreation values and uses on State Park and Forest lands where multiple activities occurring in close proximity may present conflicts. DCNR strives to balance those potential conflicts to ensure the long-term viability of those resources for the Commonwealth. Therefore, gas activities are to be conducted in a manner that minimizes adverse impacts to water, soil, flora, fauna and land-scape scale natural resources and is compatible with other uses of State Park and/or State Forest lands, such as timber management, watershed protection and providing recreational activities. DCNR s general approach to managing natural gas can be described with four principles--avoid, minimize, mitigate, and monitor. A few examples are as follows: o Avoid impacting critical natural and ecological resources through early and comprehensive planning, and the utilization of existing disturbances. o Minimize potential impacts by applying appropriate buffers, timing restrictions or construction techniques. o Mitigate any adverse impacts by restoring sites to park or forest conditions, enhancing wildlife habitat, recreation facilities, or removing invasive species infestations. o Monitor to track activities, detect changes, report findings and modify practices where applicable practicing adaptive management. Landscape-level planning is an integral component of State Park and Forest management, and is a mutuallybeneficial tool that promotes efficiency and cost effectiveness while minimizing adverse impacts to state park and forest resources, uses and values. Therefore, DCNR s review of proposed comprehensive development plans plays a crucial role in implementing the NSD leasing program. DCNR and operators should work cooperatively to establish constructive relationships to enable consistent, reasonable and environmentally-sound development of oil and gas resources. DCNR staff will utilize adaptive resource management to manage and monitor existing oil and gas activities and/or NSD lease oil and gas activities. This approach includes the documentation of impacts both beneficial and adverse. The knowledge and experience gained from these efforts will promote continued understanding and improvement of the guidelines, best management practices and DCNR s ability to manage oil and gas activity. Efforts to minimize park and forest conversion and adverse impacts should involve the utilization of existing disturbances, such as road networks, rights-of-way, pipelines, impoundments, compressor stations, well pads and associated oil and gas infrastructure, when feasible. V: Review Criteria: Due to the complexity of each potential NSD lease area and the ecological, recreational and landscape-level resources in those areas, DCNR will assess and analyze NSD lease nomination requests on a case-by-case basis. DCNR has developed the following criteria to guide the review of NSD lease nomination requests: Page 3 of 5

4 The following items are required from the operator for nomination consideration by DCNR: A narrative describing the company and its experience with unconventional oil and gas development, and a statement that the company agrees to enter into a NSD lease, pay a bonus of $3,000/acre, and a royalty of 18%. Title information confirming ownership should also be included. A proposed, comprehensive development plan must be submitted and include the following: o General map of the nominated lands and acreage calculation o Map of the gas-related infrastructure such as roads, pipelines and well pads and their location on adjoining leased or severed lands o Well spider diagram showing the proposed drainage pattern o Documentation and/or information that demonstrates that no surface disturbance will occur on the newly-leased NSD area o General map showing pertinent ownership and lease-hold position (to satisfy sole-source requirement) o Intended timing of development activity (i.e., imminent, near future, far future) Prior to execution of any NSD lease, the areas considered for NSD leasing (and an existing DCNR tract that is part of the development plan) will undergo DCNR Environmental Reviews to gather information about ecological, recreational and landscape-level resources. Environmental Reviews by DCNR may include an assessment of: o Surface disturbance o Infrastructure placement o Resource fragmentation o Plants, animals and wetlands o Recreation uses and potential impacts o Water resources use and management o Road and Pipeline infrastructure o Compression and Noise o Invasive plant species, plantings and re-vegetation o Site Restoration As per standard procedure, the following will be applied to NSD leases: DCNR will not allow the speculative acquisition of seismic surveys on newly-leased NSD areas prior to the execution of the NSD lease. To appropriately address ecological, recreational and landscape-level resources, additional measures such as field surveys, timing restrictions or avoidance and/or mitigation measures may be necessary on an existing DCNR lease tract. The following applies to leasing options on Private Lands and Severed Rights Areas specifically: Private Land nomination requests will be evaluated using the following considerations: o The use of State Park roads for gas development will not be allowed. o The proposed location of well pads on private lands in the development plan will be assessed. Page 4 of 5

5 o Specifically, DCNR will examine the proposed location with respect to proximity to State Forest and Park lands and the potential impact on recreational users; setback distances which minimize such impacts will be preferred. The addition of well pads or associated infrastructure on a severed rights area must first service that area the new infrastructure cannot be placed to exclusively access the newly-leased NSD area. Requests for adjustments or additions to current or approved infrastructure on existing severed rights areas to access the newly-leased NSD area will be assessed on a case-by-case basis. Because natural resources management is an adaptive process, DCNR intends to follow the measures outlined in the Bureau of Forestry s Guidelines for Administering Oil and Gas Activity on State Forest Lands to guide review and approval of any well pads or associated infrastructure. The guidelines outline an ecosystem management approach to managing oil and gas, which DCNR intends to also follow on State Park lands, including any additional considerations specific to parks. Summary The review criteria listed above must be submitted to DCNR for thorough review of NSD lease areas. These criteria will guide DCNR staff and gas operators on the appropriate opportunities for development and the information necessary for DCNR to comprehensively analyze Non-Surface Disturbance lease nomination requests in order to determine whether the proposed lease is in the best interest of the Commonwealth and enables DCNR to further its mission of conserving and sustaining Pennsylvania s natural resources. Page 5 of 5

6 EXECUTIVE ORDER Commonwealth of Pennsylvania Governor's Office Subject: Leasing of State Forest and State Park Land for Oil and Gas Development Number: Date: 05/23/2014 By Direction of: Tom Corbett, Governor the Department of Conservation and Natural Resources (DCNR) is the state agency charged with ensuring the stewardship and protection of state forest and state park lands for the benefit of all citizens; and Pennsylvania is home to a world-class state forest and state park system, comprising over 2.2 million acres of state forest land and 200,000 acres of state park land contained within 120 state park and conservation areas; and Pennsylvania s award-winning state parks provide opportunities to enjoy healthful outdoor recreation and serve as classrooms for environmental education in a setting where natural, scenic, aesthetic and historical values are preserved for current and future generations while hosting 38 million visitors annually, contributing $1.2 billion annually to the commonwealth s economy and providing more than 13,000 jobs; and Pennsylvania s state forest system is managed for a variety of uses and values, including ecological integrity; wild character; drinking water supply protection; recreation; plant and animal habitat; high-quality timber; and the environmentally sound utilization of mineral resources; and the international Forest Stewardship Council (FSC) has developed a set of principles and criteria that apply to FSC-certified forests around the world, and FSC forest-management certification confirms that a specific area of forest is being managed in accordance with the FSC principles and criteria; and Pennsylvania s state forest system has been independently certified to be in adherence with the gold standard for environmentally and socially responsible forestry established by the FSC, and Pennsylvania s state forest system has been FSC-certified longer than any other state forest system in the United States; and in December 2012, after five years of natural gas development in the Marcellus shale formation, the Rainforest Alliance s annual audit of Pennsylvania s conformance with the FSC certification found that certification requirements are being met and recommended maintenance of certification; and an independent review of Pennsylvania s state forest system in 2013 by Scientific Certification Systems, a certification body accredited by the FSC, recommended that Pennsylvania s state forest system be awarded FSC certification as a Well Managed Forest ; and Page 1 of 3

7 the Conservation and Natural Resources Act (Act of June 28, 1995, P.L. 89, No. 18) authorizes DCNR to enter into leases for the disposition of oil and natural gas when doing so would be in the best interests of the commonwealth; and DCNR has the responsibility and expertise to approach shale gas development in a way that efficiently utilizes commonwealth energy resources while balancing the many uses, values and overall sustainability of the state parks and state forest system; and the Governor s Marcellus Shale Advisory Commission, in accordance with Executive Order , unanimously adopted a report and accompanying recommendations on the safe and responsible development of unconventional shale gas resources, and the Commission recommended that any future leasing of state forest land should be limited to agreements which result in no or minimal surface impact to commonwealth-owned land; and the Pennsylvania General Assembly enacted the 2012 Oil and Gas Act (Act of Feb. 14, 2012, P.L. 87, No. 13) (Act 13), which significantly enhanced the environmental protection standards for shale gas resource development in the commonwealth, including new protections for rivers, streams, water wells and public water supplies, well site inspection and enforcement, public notice and information sharing, remediation standards, and other enhancements; and Article 1, Section 27 of the Constitution of Pennsylvania, recognizes the right of citizens to clean water and pure air and establishes the commonwealth s duty to conserve and maintain Pennsylvania s public natural resources for the benefit of all the people; and Executive Order , Leasing of State Forest and State Park Land for Oil and Gas Development issued by Governor Edward G. Rendell on October 26, 2010 ordered that no lands owned and managed by DCNR shall be leased for oil and gas development; and oil and natural gas development which results in no additional surface disturbance to state park and forest lands managed by DCNR is consistent with ensuring the stewardship and protection of such lands for the benefit of all the citizens, and with the requirements of Article 1, Section 27 of the Pennsylvania Constitution; NOW, THEREFORE, I, Tom Corbett, Governor of the Commonwealth of Pennsylvania, by virtue of the authority vested in me by the Constitution of the Commonwealth of Pennsylvania and other laws do hereby direct the following: 1. DCNR Oil and Gas Leasing. As of the date of this Executive Order, no state forest or state park land may be leased for oil and natural gas development which would result in additional surface disturbance on state forest or state park lands. 2. Use of Oil and Gas Royalty Revenue to Buy Oil and Gas and Other Mineral Rights and to Provide Improvements in State Parks and State Forests. DCNR shall seek, in accordance with applicable laws, to utilize the royalty revenue generated from oil and natural gas leasing and development to: a. repair and improve upon the infrastructure and amenities of the state forest and state park systems; b. prioritize and acquire high-value inholding lands, indentures and areas of high conservation value or ecological importance; and c. prioritize and acquire privately-owned oil, natural gas, and other mineral rights underlying high-value surface lands owned by DCNR. Page 2 of 3

8 3. Effective Date. This Executive Order shall take effect immediately. 4. Termination Date. This Executive Order shall remain in effect until amended or rescinded by the Governor. 5. Rescission. Effective immediately, Executive Order is hereby rescinded. Page 3 of 3

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