The state Fish & Boat Commission this week approved an agreement with Big Star Energy to drill for natural gas at Rose Valley Lake.
The five year agreement includes an up-front bonus payment of $2.14 million and an 18.25 percent royalty rate, according to a Fish Commission news release.
The funds are to be put in a special fish fund to be used for repairing state-owned "high-hazard, unsafe dams managed by the Commission."
John Arway, the state agency's executive director, stated in the release that costs for needed dam repairs are in the "tens of millions of dollars."
"The Natural Gas and Water Access Program is one way of raising the funds to revitalize and repair these facilities so communities can continue to enjoy them," he said.
Big Star Energy officials could not be reached for comment Friday.
The company is listed as an oil and gas exploration and development company from Vancouver, British Columbia.
Dan Alters, a member of Friends of Rose Valley Lake, said his group had no position on drilling.
The group opposed plans by McElhattan developer Bobby Maguire to build on a 13-acre parcel near the Fish Commission-owned lake.
The Fish Commission Board opened the way for the development earlier this year after approving Maguire's request to use a 33-foot right-of-way through state land to access his property.
"The long-term impacts of housing are more significant," Alters said. "We haven't taken a position on the drilling. There's a number of wells around the lake already."
Alters said while gas wells are "ugly and nasty," it is unknown what effect they'll have into the future.
Fish Commission officials could not be reached for further comment Friday.