Department of Environmental Conservation

Lease of State Land for Gas and Oil Exploration and Production

The Department of Environmental Conservation leases State lands for oil and gas exploration and production. We examined the Departmentís leasing process and found that it generally complied with guidelines that are intended to promote open competition. As a result, there is some assurance State revenue from the leases is being maximized. However, we also identified certain actions that could be taken by the Department to provide additional assurance lease revenue is being maximized. For example, we recommended the Department obtain independent corroboration of the information used in calculating the leaseholdersí royalty payments to the State. The Department relies on the leaseholders to self-report this information accurately and completely, but we believe some independent corroboration is needed. The Department is also responsible for monitoring gas and oil well operations on both public and private lands. We examined the Departmentís monitoring practices and identified the need for improvements in certain administrative and recordkeeping practices.

For a complete copy of Report 2005-S-54 click here.
For a copy of the 90-day response click here.
For a copy of the associated follow-up report click here.