The Pennsylvania Department of Environmental Protection’sOffice of Oil and Gas Management faces a $2.9 million deficit in fiscal year (FY) 2016-2017, which begins in July, according to the state budget office. It also faces a $9.8 million deficit in FY 2017-2018. The oil and gas office, which is staffed by 227 people and regulates the state’s oil and natural gas industry, is funded entirely by permit fees, which have plummeted with the decline in activity in the state related to low commodity prices. Last month, DEP Secretary John Quigley said the DEP remains severely underfunded and understaffed (see Shale Daily,March 1). The deficit means that the office can’t fill vacant positions. There were 17 rigs running in the state at the end of last week, compared to 50 at the same time last year, according to Baker Hughes Inc. Quigley told lawmakers in March during state budget hearings that the situation could lead to another increase in oil and gas permit fees, which were last increased in 2014 (see Shale Daily,June 13, 2014). The agency is not alone: the state faces a $2 billion budget deficit, and lawmakers only recently passed the rest of the FY 2015-2016 budget after a nine month impasse (see Shale Daily,March 23).
Articles from Deficit
The West Virginia Senate is moving swiftly toward passing a bill that would terminate volumetric fees that natural gas producers pay in addition to the state’s severance tax.
January natural gas is expected to open 3 cents lower Wednesday morning at $3.14 as traders factor in another outsized reduction in the storage deficit and weather forecasts show no market-altering cold. Overnight oil markets slumped.
October natural gas is seen opening a penny lower Friday morning at $3.81 as traders cite the ongoing dynamic of storage deficit contraction and little in the way of supportive weather on the horizon. Overnight oil markets rose.
September natural gas is expected to open 4 cents lower Friday morning at $3.80 as traders mull continued storage deficit reduction and ongoing weakness in the financial sector. Overnight oil markets fell.
July natural gas is set to open 2 cents higher Wednesday morning as traders balance the end of 100-plus Bcf builds in Thursday’s government storage report with weather forecasts showing a cool trend in the nation’s mid-section. Overnight oil markets were mixed.
July natural gas is set to open unchanged Friday morning at $4.58 as traders attempt to balance a near-term soft weather outlook with a storage deficit still considered unable to allay concerns over winter supply. Overnight oil markets were mixed.
May natural gas is expected to open 4 cents higher Thursday morning at $4.77 before the release of government storage statistics that for the last two weeks have come in shy of market estimates. Overnight oil markets rose.
A U.S. natural gas storage surplus of 463 Bcf on Feb. 15 had tumbled to a 32 Bcf deficit by May 24, a 495 Bcf decline that “ranks among the strongest we have seen, and oddly, the timing was in the late winter and early spring,” analysts at Stephen Smith Energy Associates said in their most recent Monthly Energy Outlook.
Low prices have made dry gas from shales a producers’ problem and an end-user’s dream. But interests at both ends of the market do agree that the right gas price — the equilibrium price — would make shale gas a boon for the country.