Oct. 3--Allegheny County could get the $3 million that Executive Dan Onorato is projecting for the 2011 budget by leasing county land for natural gas drilling, three gas experts said this week.

The natural gas market is rebounding from a crash last year, making gas drillers more likely to invest in land during coming months, experts said. Onorato and several County Council members want to lease the gas rights to county-owned property, including thousands of acres at the airports and county parks, to help end chronic budget deficits.

"You bet it's possible," said Thomas Murphy, a Pennsylvania State University professor. "Can we predict it? That's kind of tough. But is it likely they could have some kind of leading income? Yes."

Gas drillers recently paid more than $5,000 per acre up front, to lease land in the northern part of the state. That's quadruple the going rate for gas lands just a few months ago, Murphy said. If the county can offer thousands of adjoining acres, drillers are more likely to pay top dollar, possibly millions in up-front leasing fees, said Matt Pitzarella, local spokesman for Range Resources Corp.'s Marcellus Shale Division.

The county has struggled with multimillion-dollar deficits for several years, and in 2010 needs $30 million from the state to balance the budget, according to the plan Onorato presented Sept. 22. He proposed closing the budget gap long-term by cutting spending and increasing revenue.

His strategy for new revenue includes $3 million in estimated income from leasing land to gas drillers who want to tap the Marcellus Shale, a natural gas-rich layer under most of Pennsylvania. That figure is a conservative estimate, he said at the time.

It could be years before drilling occurs, something Onorato acknowledges. All he expects by 2011 are the lease payments for land access.

The county got no bidders last year to lease about 9,000 acres at Pittsburgh International Airport, but could try again. The attempt came amid the worst of the financial crisis, just as natural gas prices plummeted. The timing was wrong for the bid, and county officials probably asked for too much, correctable in a better-researched second effort, Pitzarella said.

Gas drilling companies like to have thousands of acres in one plot because it enables them to tap a large reservoir from one smaller, consolidated drilling area, Pitzarella said. As long as the plots of land are large, land in Southwestern Pennsylvania should bring in as much money as land elsewhere in the state, said Louis D'Amico, executive director of the Independent Oil and Gas Association of Pennsylvania.

Wall Street investors recently returned to backing natural gas exploration after last year's credit freeze kept them away a few months, said Murphy, a team member with Penn State's Marcellus Shale Education and Training Center who has advised landowners how to negotiate. The state issued 1,127 permits through Sept. 9, more than double those issued all of last year.

There were 329 wells drilled through Sept. 9, compared to 195 for all of last year.

The spike in permits should not be confused with a true market upswing, said Lester Lave, co-director at the Carnegie Mellon Electricity Industry Center. Applications are cheap preparation for companies speculating in a long-term investment.

Whether the volatile natural gas market cycles upward enough for the county to make $3 million by 2011 still is in doubt, he said.

"That $3 million sounds a little bit optimistic to me," Lave said. "The market is clearly down."

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