The administration of Pennsylvania Gov.-elect Tom Corbett, who is scheduled to be inaugurated in Harrisburg Jan. 18, should be a breath of fresh air for the natural gas industry, which saw outgoing Gov. Ed Rendell's administration put state forest land off limits to drillers and push for a significant severance tax of 5% on drilling, according to Marcellus Shale Coalition President Kathryn Klaber.
"I think they're pragmatic folks. I also think that they recognize what an integral role the natural gas industry plays in Pennsylvania's economic, environmental and energy future," Klaber told NGI's Shale Daily. "They get the broad reach of impact that this industry is already having and obviously could grow to have even more in the next four years, and they want to do the best for 12.7 million Pennsylvanians."
Corbett, who is a Republican, should be able to get through many of his programs, since both chambers of the Pennsylvania's General Assembly will have Republican majorities.
During his campaign Corbett pledged not to raise any taxes, which would include a severance tax on natural gas drilling advocated by Rendell for the last two years. The measure, which had drawn strong Democratic support, died in the General Assembly before the election. Despite commitments during last year's budget negotiations to pass a severance tax on gas drillers, Pennsylvania lawmakers balked on the issue during a lame duck session (see Shale Daily, Nov. 18, 2010).
But with the state facing a projected $4 billion revenue shortfall, Corbett and the General Assembly can expect pressure to levy a tax on the drilling industry. Already newspapers in the state, including the Philadelphia Daily News, Johnstown's Tribune-Democrat and State College, PA's Centre Daily Times have published editorials calling on Corbett to implement the severance tax to help fill the revenue gap. A recent survey of Pennsylvania residents found that 67% of respondents would support a severance tax on natural gas drilling companies in the state, while just 29% said they oppose such a tax (see Shale Daily, Dec. 28, 2010).
Still, a natural gas tax in Pennsylvania isn't likely, though he will "look at what the legislature proposes," Corbett recently told the Pittsburgh Tribune-Review. Corbett said he will support "fair and consistent" regulation and will avoid doing anything to stunt the natural gas industry, according to the Tribune-Review.
In the days following his election, Corbett said he planned to gradually reopen the state's forest lands to drilling, reiterating his opposition to an executive order by Rendell, which put 800,000 acres in state forests off limits to drillers (see Shale Daily, Nov. 15, 2010; Oct. 27, 2010).
Corbett, who currently serves as the state's attorney general, appointed Tom Paese, a lobbyist for The Williams Companies, as co-director of his transition team. A 30-member energy & environment committee appointed by Corbett as part of his transition team included representatives from Exelon Generation, Iberdrola Renewables, the Pennsylvania Coal Association, the state's Public Utility Commission and environmental groups.
"Given the [incoming] governor's history and his role in Pennsylvania, he understands the importance of clear and enforceable laws, and could take a stand that will inspire confidence in the people of Pennsylvania that he is putting in place and enforcing good regulations," Klaber said. "I think he also could give the industry the predictability that we need -- that the rules are not going to be changed willy nilly partway through...I think that there will be a willingness to work through the issues with all of the stakeholders at the table.
"That's exactly what we've asked for all along -- to have this be a broad-based discussion about all the regulatory, legislative, public policy issues that come to bear when you're talking about a transformational energy and economic period for this commonwealth and the surrounding states as well."