Pa. invites bids for leases on possible gas field

PHILADELPHIA, July 14 (Reuters) - Pennsylvania officials on Monday invited bids to lease land atop a geological formation that may hold enough natural gas to meet total U.S. demand for two years.

The state's Department of Conservation and Natural Resources said it will hold a lease sale from pre-qualified bidders for 18 tracts of state forest totaling some 74,000 acres in two north-central Pennsylvania counties. The bidding will be open until Sept. 2.

The tracts sit over the Marcellus Shale formation, a natural feature about a mile deep that has been known about for years but which has only recently been suspected of containing massive quantities of natural gas.

The formation, which stretches some 600 miles between western New York State and West Virginia, could contain as much as 50 trillion cubic feet of recoverable natural gas, or enough to supply the entire U.S. for two years, at a wellhead value of $1 trillion, according to website geology.com.

The recoverable quantity may represent about a tenth of the total gas in the formation, some scientists believe.

The estimates came from Pennsylvania State University geoscience professor Terry Englander and New York State University geology professor Gary Lash, the website said.

"Given the enormity of the nation's energy demand, making less than an addition 4 percent of our state forest available for drilling is a reasonable decision that protects our forest ecosystem and helps meet energy demands," DCNR Secretary Michael DiBerardinis said in a statement.

"This lease sale responds to increased interest in the Marcellus Shale formation, a deep resource thought to contain large quantities of natural gas," the department's statement said. It noted that new technology and increased natural gas prices have made it possible to recover hard-to-reach fuel.

If the suspected quantities of natural gas are confirmed, the field could have major economic benefits, supplying the major population centers of the northeastern United States without requiring long-distance transportation. In addition, the shallower deposits at the western end of the formation could supply areas of the central U.S., geologists believe.

The leases will focus on medium and deep drilling to limit the impact on the surface and on other uses of the forest, officials said.

A promising flow of natural gas from the field was found in 2003 by one exploration company which later used the horizontal drilling and hydraulic fracturing techniques that had been applied in the Barnett Formation, another major gas field, near Fort Worth, Texas.

Production by that company, Range Resouces - Appalachia LLC, began in 2005, and about 375 gas wells into the Marcellus were permitted up to the end of 2007, geology.com said. (Editing by Christian Wiessner)