What about the Marcellus?

Posted on: August 31, 2015 | Bob Frye | Comments

What about the Marcellus?
That’s what some hunters are asking in light of the Pennsylvania Game Commission’s announcement that it’s seeking an increase in the cost of hunting and furtaking licenses. It wants to double the cost of resident adult hunting and furtaking license in the next five years, and boost the price of archery, bear, muzzleloader, doe, migratory game bird and second spring gobbler tags by as much or, in cases, even more.
License fees last increased in 1999.
When the Marcellus shale industry took off in the state years ago, though, the commission was among those to benefit. While it does not own the mineral rights under all of its state game lands, it owns some, and entered into lease agreements worth millions of dollars. It continues to collect royalties on the gas being harvested.
Where’s all that money gone, some wonder? And can’t it take the price of a license fee increase?
The answer, according to Rich Palmer, a deputy executive director, is that the commission’s Marcellus money has been sustaining the agency in place of higher license fees for years. But times have changed.
In the past decade, from 2005 to now, the commission earned $139.4 million counting all oil, gas and mineral rights, Palmer said. Marcellus income was an especially big part of that from 2008 through 2010, he said.
Of that money, $23.4 million was spent to add 43,731 acres to the state game land system.
The remaining $116 million was used to prop up the commission budget and forestall the need for a license increase that would otherwise have been needed years ago, Palmer said.
“The rest of that money was deposited annually, as it was brought in, into the game fund and essentially used for general operations, just to maintain our operations,” Palmer said.
The 1999 license fee increase was insufficient to cover agency expenses as early as 2001-02, Palmer said.
Marcellus money – with revenues from other natural resource sales mixed in – changed that. Agency income exceeded expenses again in fiscal years 2004-05, 05-06, 06-07, 07-08, 10-11, and 12-13, Palmer said.
Expenses have gone back to outpacing revenues since, though, and are projected to do so through at least fiscal 2019-20, he added.
That’s not to say the commission isn’t making any money. In fact, counting royalties from all oil, gas and minerals, it expects to make $22.5 million in 2015, with 90 percent of that coming from Marcellus, Palmer said. That’s not far off the record $24 million it made in 2013, he added.
But new Marcellus leases will be few and far between, Palmer said.
“The important point to make is that the vast majority of the major, large significant leases for oil, gas and mineral development in regards to the shale have already been leased. There are a few in the pipeline over the next year or two, and there may be some interest from some companies, depending on what happens with the market. But by and large, the major part of new development on game lands is pretty much over,” Palmer said.
Royalties collected on existing wells is down and figures to stay down, he added.
Marcellus gas was selling for $12 a cubic foot in 2006, Palmer said. Now it’s going for $2.60. Projections from the gas industry suggest prices will remain flat for years to come, he added, which is why the amount of gas being harvested is “minimal.”
Timber sales – something else sportsmen sometimes point to as a possible solution – can’t be relied upon either, Palmer said.
The agency doesn’t harvest timber with the idea of making money foremost in mind: habitat decisions determine when and where the commission cuts, he said. But timbering can make money.
It’s just not consistent, Palmer said.
The commission has sold $98 million worth of timber and recorded $52 million in net profits in the past decade, according to figures he provided. But in 2005, for example, the commission sold $16 million of timber and netted $12 million. In 2014, it cut almost exactly as many acres – about 5,000 statewide – but sold it for just $7 million, and recorded a profit of only $577,000 after expenses, because of depressed prices, he said.
Are those explanations enough to satisfy hunters, and just as importantly lawmakers, who will decide whether or not to increase license fees?
The commission will be trying to convince them all in the months ahead. It’s hoping to have a fee increase in place for the 2016-17 license year.
Stay tuned.

Bob Frye is the everybodyadventures.com editor. Reach him at 412-838-5148 or bfrye@535mediallc.com. See other stories, blogs, videos and more at everybodyadventures.com.

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Bob Frye is a storyteller with a passion for all things outdoors. He hunts, he fishes, he hikes, he camps, he paddles, backpacks and snowshoes depending on the season. If he’s not an expert at anything, it’s because he’s passionate to try a little bit of everything.