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Pennsylvania Governor’s Energy Plan Highlights Marcellus Benefits

Pennsylvania Gov. Tom Corbett on Tuesday rolled out a new energy plan aimed at business and industry leaders across the country that highlights the state’s competitive advantages and touts its oil and gas production as a beacon for national energy independence.

Although the plan fell short of putting forth any major policy proposals, at more than 70 pages it promoted some of the impressive strides the state has taken in the years since oil and gas development in the Marcellus Shale has taken off. 

“This plan was not intended to be strong on policy proposals; during the campaign the governor talked about putting together an energy plan and strategy to help the state increase its competitive advantages,” said Corbett’s Energy Executive Patrick Henderson. “Our audience here is really capital investors and decision makers who may not know a lot about what Pennsylvania has to offer or those who might have had a negative connotation before.”

Nuclear, coal, natural gas and renewables production were all given play in the report, but it placed a strong emphasis on the benefits Pennsylvania has seen from oil and gas in recent years -- summing up the Republican governor’s energy policy with an "all of the above and below" slogan -- in a nod to the state's shale rock formations that are being developed at a rapid pace.

"Pennsylvania is poised once again to be the energy capital of the nation," Corbett was quoted as saying in the report. "Our abundant natural resources, sound public policies, favorable business climate, skilled workforce and commitment to competitive markets are second to none."

The report laid out the state's energy portfolio and offered a look at how energy is consumed. It also detailed a few of the efforts that are underway to capitalize on the natural resources.

Corbett's plan was met with a muted response. It also comes at time when Corbett faces a tough reelection bid, with several polls showing low approval ratings and pundits identifying him as one of the most vulnerable incumbents in the country. In May, eight Democratic candidates are to face off in a primary to challenge him.

“We certainly commend the governor for putting something out, but it’s long overdue given the abundance of the state’s natural resources,” said Richard Fox, the Democratic executive director for the state Senate’s Environmental Resources and Energy Committee. “We generally agree with using all of our energy resources to the state’s advantage, but some people feel Gov. Corbett has not taken a strong enough approach.”

One of the Democratic frontrunners, U.S. Rep. Allyson Schwartz, has been critical of Corbett's energy policies, suggesting that the state's Act 13 tax has done little to generate enough revenue. Schwartz has pushed a plan calling for a 5% tax rate on oil and gas production (see Shale Daily, Sept. 6, 2013).

According to the U.S. Energy Information Administration (EIA), between 2011-2012, Pennsylvania's marketed natural gas production grew by 72%, moving it from the seventh-largest to the third-largest producing state in the country. Earlier this month, the EIA said production in the Marcellus would increase from 13.84 Bcf/d in January to 14.23 Bcf/d in February (see Shale Daily, Jan. 14).

In its report, the Corbett administration said the boom has led to a windfall for the state, with 240,000 Pennsylvanians employed in core and ancillary oil and gas jobs. By 2020, the report said, $14 billion would be contributed by the industry to the state's economy, and federal and state taxes collected would reach $5.6 billion.

"I've heard the administration float that 240,000 number before. It sounds too high to me," said Matthew Rousu, an economics professor at Susquehanna University, which reviews economic impact studies. "What some of these studies and numbers don't factor in is that the biggest stimulus from fracking  [hydraulic fracturing] is the lower energy prices, which generate an additional $100 billion a year in this country. That has had an enormous benefit here and it's meant that more people are employed in Pennsylvania."

In highlighting the opportunities that oil and gas has presented the state, the energy plan said by 2015 coal-fired power plant retirements would reduce generation capacity by 4,820 MW. Proposed gas-fired power plants have the potential to nearly double that capacity to 7,049 MW. The report also noteed that wet gas is providing the basis for a slow industrial revolution in the state's petrochemical industry.

The report also noted increasing conversions to gas for power, and the greater protections from price volatility and supply disruptions with more gas production, are reducing costs for consumers, businesses and manufacturers.

The plan also reported that Pennsylvania is keeping a close eye on a slowly emerging liquid natural gas export market across the country, saying the state's ports "are well situated to explore and capitalize on these opportunities."

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