Pennsylvania Gov. Tom Corbett heeded the advice of his Marcellus Shale Advisory Commission (MSAC) last week by proposing an impact fee, enhanced safety provisions and incentives to increase natural gas consumption, but lawmakers and third party observers expressed skepticism with the plan.
“We are going to do this safely and we’re going to do it right, because energy equals jobs,” Corbett said.
The centerpiece of the package would allow counties to charge a $40,000 fee on each well in its first year, declining to $30,000 in its second year, $20,000 in its third year and $10,000 through its tenth year, raising as much as $120 million this year and nearly $200 million within six years.
Counties and municipalities that host unconventional natural gas drilling would keep 75% of the revenue to repair public infrastructure, enhance emergency preparedness and beef up the budgets of shale-related programs for the environment, health, social services and local government planning.
Of the remaining 25% of revenue, 70% would go to road, bridge and rail repairs, while the remainder would go to enforcement, education, investigation and emergency response on a statewide level. The proposal would also allow counties to offer credits up to 30% for drillers that invest in natural gas infrastructure, including fueling stations and public transit vehicles (see NGI, April 11).
Those basic provisions mirror an impact fee proposed by state Senate President Pro Tempore Joe Scarnati, a Republican from central Pennsylvania. “As we move toward ensuring that communities across the commonwealth are protected from the impacts of drilling, there will be discussion on the percentage that goes to local jurisdictions and what environmental programs will be funded and at what level,” Scarnati said, adding that he wants the state Senate to pass legislation this month (see NGI, June 20).
The proposal doesn’t work for Sen. John Yudichak, though.The Democrat from northeastern Pennsylvania and chairman of the important Senate Environmental Resource and Energy Committee, said, “The governor’s county-assessed fee approach will create a fragmented patchwork of ‘have and have not’ communities across Pennsylvania. It completely overlooks countless communities across Pennsylvania that have road, water system and other infrastructure demands placed upon them.”
Although Corbett insists he won’t sign any tax increase, support is growing for a proposal from state Reps. Thomas Murt and Gene DiGirolamo, Republicans of southeastern Pennsylvania, for a 4.9% per Mcf tax on the gross wellhead value of “deep gas reserves,” i.e. the Marcellus and Utica. The tax would generate $362 million in the coming fiscal year and $562 million annually within five years.
Those figures look better to Citizens for Pennsylvania’s Future CEO Jan Jarrett, who said the Corbett fee is “too small, full of loopholes, unwieldy to administer, and leaves too much money on the table.”
Another debate is how to spend the revenue from any tax or fee. Discussions going forward must focus on “legitimate impacts that are not currently being addressed and compensated by the industry,” according to Lou D’Amico, executive director of the Pennsylvania Independent Oil and Gas Association. D’Amico praised the proposal for exempting conventional oil and gas production.
The Marcellus Shale Coalition (MSC) welcomed the proposal. “The governor’s plan — and its foundation that ‘energy equals jobs’ — reminds us that the most significant and long-term benefits of clean-burning natural gas will be achieved only through competitive policies that allow the industry to flourish in the Commonwealth and relentlessly protect our shared environment,” said MSC President Kathryn Klaber.
The package also includes several safety and enforcement provisions recommended by the MSAC. The legislation would double and in some cases triple the setbacks from water supplies. It would also increase well bonding and the “presumed liability” of industry for water contamination near wells.
That’s a step in the right direction, but it not far enough, according to environmental group PennEnvironment. “The proposal allocates impact fee money to environmental cleanup, which is far more expensive than pollution prevention,” said spokesperson Erika Staaf. “Wouldn’t a true fiscal conservative set stringent safety and environmental standards on the front end to avoid expensive cleanup that will likely be paid by taxpayers on the back-end?”
Â©Copyright 2011Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.
© 2024 Natural Gas Intelligence. All rights reserved.
ISSN © 2577-9877 | ISSN © 1532-1266 |