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Braskem Exec, Republican Lawmakers Urge Against Pennsylvania Oil/Gas Severance Tax

Braskem America's top executive joined state Republican lawmakers near Philadelphia on Thursday to rally against Gov. Tom Wolf's proposed severance tax on oil and natural gas production, saying it could jeopardize the company's plans to expand its assets in the state if passed.

The remarks were delivered during an energy "roundtable" at Sunoco Logistics Partners LP's Marcus Hook Industrial Complex that featured more than 20 members of the general assembly, the Pennsylvania Chamber of Business and Industry and other groups that oppose Wolf's proposal.

"Braskem is committed to growing its business in North America, and the benefits of shale gas to southeastern Pennsylvania are innumerable. This region has the opportunity to become a major player," said CEO Fernando Musa. "We are evaluating both expanding our asset base and potentially building our next polypropylene plant in Marcus Hook. The benefits from shale gas and the potential resources that may become available in this area make this a real possibility.”

Braskem has offices across Pennsylvania, and it already operates a polypropylene production plant in Marcus Hook, PA. Plastics represent a growing market for the oil and gas industry, and Braskem is one of the largest polypropylene and resin producers in the U.S. (see Shale Daily, May 18).

Along with its Brazilian parent, Odebrecht SA, Braskem disclosed in April that it had put plans for a different project, an ethane cracker in West Virginia, on hold pending further analysis amid the commodities downturn (see Shale Daily, April 23).

Sunoco is also repurposing its industrial complex -- a former oil refinery -- for natural gas liquids storage, processing and distribution to local domestic and international markets. As the project attracts more interest, Sunoco said earlier this month that it is considering constructing a third pipeline to feed the facility (see Shale Daily, June 4).

Musa was on hand for the roundtable, which was organized by state Speaker of the House of Representatives Mike Turzai. Wolf has proposed taxing oil and natural gas production in the state at a rate of  5%, plus a 4.7 cent/Mcf volumetric fee (see Shale Daily, Feb. 11). Lawmakers are considering the governor's proposal as part of the state budget, which by law must be passed by July 1.

Turzai has been hosting roundtable discussions across the state featuring Republican lawmakers and regional energy leaders to highlight policies aimed at growing the oil and gas industry in Pennsylvania rather than taxing it (see Shale Daily, May 29).

On Thursday, Turzai said Republican leaders and industry supporters have "been far too apologetic in telling the real story" about a possible severance tax, adding that the "governor's proposal is really a de facto moratorium that will kill jobs."

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