“Green Dogs” take up with the “Hunt Dogs”

Lawmakers line up against governor’s forest leasing plan
Monday, February 22, 2010
By Don Hopey, Pittsburgh Post-Gazette

A caucus of 37 “green dog” and “hunting dog” legislators is barking mad about a Rendell administration budget proposal that would seek to raise $180 million by leasing more state forest land for Marcellus shale gas well drilling…. In a Feb. 3 letter to the governor, the legislators called for a moratorium on state forest land leasing until the “long-term environmental, fiscal, economic and social impacts” are studied and reviewed and requested a meeting with the governor on the issue….

To read the full article. click here:

http://www.post-gazette.com/pg/10053/1037700-454.stm

DEP – Notice of new rulemaking for gas well construction

The following is an extract of a DEP release from January. You may already have seen this, but might not have considered officially commenting to DEP on their rulemaking. I urge you and any organization you represent to do so. Gas industry representatives may attempt to weaken or delete some – or all – of these regulations. Public input will help to support DEP’s efforts to put these regulations in place.


In order to protect Pennsylvania’s residents and environment from the impact of increased natural gas exploration across the state, Governor Edward G. Rendell announced today that the commonwealth is strengthening its enforcement capabilities…. … DEP’s work to amend Pennsylvania’s oil and gas regulations will strengthen well construction standards and define a drilling company’s responsibility for responding to gas migration issues, such as when gas escapes a well or rock formation and seeps into homes or water wells. Specifically, he said the new regulations will:

• Require the casings of Marcellus Shale and other high-pressure wells to be tested and constructed with specific, oilfield-grade cement;
• Clarify the drilling industry’s responsibility to restore or replace water supplies affected by drilling;
• Establish procedures for operators to identify and correct gas migration problems without waiting for direction from DEP;
• Require drilling operators to notify DEP and local emergency responders immediately of gas migration problems;
• Require well operators to inspect every existing well quarterly to ensure each well is structurally sound, and report the results of those inspections to DEP annually; and
• Require well operators to notify DEP immediately if problems such as over-pressurized wells and defective casings are found during inspections.

“These new draft regulations, which were developed through open meetings with experts in the industry, are designed to give Pennsylvanians peace of mind by bringing our state’s requirements up to par with other major gas producing states or, as in the case of the well casing requirements, to a level that is even more rigorous,” said Governor Rendell.

The new regulations will be offered for public comment on Jan. 29 before going through DEP’s formal rulemaking process.

In commenting to DEP about these new regulations, consider whether it is appropriate for  the industry to police itself when there have been so many documented instances of failure to do so in Pennsylvania and other gas-producing states.
Specifically, the regulations noted above that say the following are situations where a regulatory agency may be a more appropriate entity to oversee this aspect of drilling in order to protect the public and the environment.
– “Require well operators to inspect every existing well quarterly to ensure each well is structurally sound, and report the results of those inspections to DEP annually.”
– “Require well operators to notify DEP immediately if problems such as over-pressurized wells and defective casings are found during inspections.”
Consider the following with regard to the regulation that says: “Clarify the drilling industry’s responsibility to restore or replace water supplies affected by drilling.”
If a home’s water supply is damaged in quality and/or quantity by gas drilling – whether the supply comes from a private or public source – it should be replaced in toto. It’s unacceptable to replace only drinking water but not water that is needed for other household purposes, such as washing, or for irrigation. A property’s value can be significantly diminished by lack or water or water that is polluted. It appears that the regulation on this matter would insure appropriate replacement. Public input would underscore the importance of this regulation.
Consider whether the mechanism to determine whether a water supply has been adversely affected by drilling is fair to the property owner.
In order to comment on these regulations, here’s what DEP says.
Interested persons are invited to submit comments, suggestions or
objections regarding the proposed amendments to the Bureau of Oil and Gas, P. O. Box
8765, Harrisburg, PA 17105-8765 (express mail: Rachel Carson State Office Building,
5th Floor, 400 Market Street, Harrisburg, PA 17101-2301).
Comments submitted by facsimile will not be accepted.
Comments, suggestions or objections must be received by the Department by March 2, 2010.
Electronic Comments: Comments may be submitted electronically to the Department at
ra-epoilandgas@state.pa.us and must also be received by the Department by March 2,
2010.
A subject heading of the proposal and a return name and address must be included
in each transmission. If the sender does not receive an acknowledgement of electronic
comments within 2 working days, the comments should be retransmitted to ensure
receipt.
To read the original announcement, click here:

http://www.portal.state.pa.us/portal/server.pt/community/newsroom/14287?id=3115&typeid=1

To read the details of the rulemaking, deadline for public comments and where to send them, click here:

Gas tax makes sense

http://www.philly.com/inquirer/opinion/20100118_Editorial__Gas_tax_makes_sense.html

Nice editorial from the Philadelphia Inquirer about taxing the energy companies for drilling int he Marcellus Shale in PA.

What the Philly Inquirer Has to Say…

Got these from a  fellow group member this morning.

http://www.philly.com/philly/business/81082272.html

http://www.philly.com/inquirer/currents/81082787.html

The attached articles concerning the Marcellus Shale  appeared in today’s Philadelphia Inquirer under bylines of two reputable reporters. The fracking article by Andrew Maykuth summarizes some of the problems and concerns. Kevin Ferris’s column  presents information about how other states have handled oil and gas income and moves on to describe proposals from various PA politicians. You have to love his suggested 11th Commandment.
Peace,
Barb

Next Years Severance Tax (better late than never?)

House to focus on drilling issues next year

by robert swift (harrisburg bureau chief)
Published: December 1, 2009

HARRISBURG – House Democratic leaders are making taxation and regulation of natural gas drilling in the Marcellus Shale formation top priorities next year.

The effort will get started with statewide hearings by the House Environmental Resources and Energy Committee and House Democratic Policy Committee, said Majority Leader Todd Eachus, D-116, Hazleton.

A renewed push to enact a state severance tax on gas production as well as legislation to address drilling-related issues ranging from protection of water supplies to royalties for landowners is part of the legislative focus.

“We are going to take up the issue of the Marcellus Shale extraction tax,” added Eachus in a recent interview. “We really think the development of the Marcellus Shale should have a social benefit.”

Interest in the impact of drilling activities in the Marcellus formation underlying Northeastern and Central Pennsylvania built steadily this year stemming both from fiscal concerns over the large state revenue deficit and environmental concerns highlighted by the recent federal lawsuit by 15 families in Susquehanna County alleging that Cabot Oil and Gas Corp. damaged their health and property.

Earlier this year, Gov. Ed Rendell proposed a five percent severance tax modeled on the West Virginia levy while the Department of Environmental Protection hired additional gas well inspectors with revenue from a fee hike on oil and gas exploration permits.

Rendell eventually said it would be premature to implement a severance tax for fiscal 2009-10, but House Democrats rallied behind the idea and included it in their version of the budget bill. The final $27.8 billion budget is without a severance tax. This is mainly due to because of opposition from Republican lawmakers who said a tax would discourage drilling companies from creating new jobs.

Rendell thinks the timing is right to include a severance tax as part of the 2010-11 budget, said John Hanger, acting Secretary of the Department of Environmental Protection.

“The governor is open to what the details of the severance tax would be,” he added.

One unresolved issue is the distribution of severance tax revenues.

“My (bill) would devote gas revenues to both the municipality and the county where natural gas is extracted, the Liquid Fuels Fund (for local road work), as well as to LIHEAP (low-income heating), environmental stewardship and state government,” said Rep. Camille George, D-74, Houtzdale, the environmental panel chairman.

Other drilling issues await Harrisburg’s attention.

George wants action to protect the existing 12.5 percent royalty to property owners for gas production on their land. He is awaiting a decision from the state Supreme Court on whether the royalty is to be calculated after deducting post-production expenses such as processing, marketing and transportion from the producer’s proceeds.

How Marcellus Shale gas came to be tax-exempt in Pa.

This is a real gem of an article published by the Philadelphia Inquirer. This is the sort of writing that needs to show up more often and in more papers in smaller regions of Pennsylvania. If you’ve been wondering how the heck the natural gas industry has gotten away without being taxed and why Governor Rendell changed his mind about that tax when it came time to pass a budget, look no further. This article explains most of it in easy to understand details and my oh my how political it is!

Desperate for revenue, Gov. Rendell chose not to tax the “gold rush.”

By Mario F. Cattabiani and Amy Worden

Inquirer Staff Writers

HARRISBURG – All through Pennsylvania’s 101-day budget impasse, Gov. Rendell spoke of pain.

A recession-weary state had to tighten its belt. Revenues had to rise – income tax, sales tax, new taxes on whole industries. “We can’t get this budget resolved,” Rendell said, “without everyone feeling some pain.”

But when the budget was finally signed Oct. 9, one industry came away pain-free.

The natural-gas industry’s leaders and lobbyists beat back Rendell’s proposal to tax gas as it is pulled to the surface from the rich black-rock reservoir known as the Marcellus Shale.

So, as drilling rigs are sprouting in the state’s northern tier and southwestern corner, the gas those rigs are extracting still isn’t taxed. That makes Pennsylvania unique among the 15 states that produce the most natural gas.

What’s more, the industry persuaded Harrisburg to lease more public land to gas drillers – even as the state’s budget for environmental protection was being sharply cut.

What happened to Rendell’s gas-tax proposal?

He says the industry made good arguments for staving it off. He did not want to slow the “gold rush,” as he called it, of jobs and commerce the drillers would bring.

One legislator came away with a more cynical view.

“The same old influential interest groups getting their way,” said State Rep. Greg Vitali (D., Delaware). “It was just another day in Harrisburg.”

What follows is a closer look at some key moments in the short life of Rendell’s proposal to help balance the budget by taxing natural gas.

Tapping “the gold rush.” As Rendell prepared his Feb. 4 budget address, a boom was under way. Natural-gas industry representatives were fanning out across the state, securing leases and drilling wells at twice last year’s pace.

Rendell, a policy wonk, did his homework. He spoke with Gov. Joe Manchin III of West Virginia, a state that also sits atop the Marcellus Shale and has taxed natural gas for years.

In his budget address, Rendell proposed to tax gas extracted in Pennsylvania.

Rendell said Manchin, a fellow Democrat, had assured him that West Virginia’s tax did not “inhibit gas extraction and that it is continuing at a record pace, and it’s reaping critically needed revenues so the state can provide services to its citizens.”

Rendell’s plan matched West Virginia’s – a 5 percent tax on the value of natural gas at the wellhead, plus 4.7 cents per 1,000 cubic feet of natural gas extracted.

By Rendell’s estimates, such a tax could raise $107 million for Pennsylvania in its first year, helping fill a billion-dollar budget gap.

In a recent interview, Manchin described what he said to Rendell months ago.

“The Marcellus Shale is a tremendous producer. A severance tax will not deter” the drillers, Manchin said. “Believe me, if we didn’t have the gas, they wouldn’t be here.”

Manchin said he had faced industry complaints in 2005 when he proposed to expand the tax, with some companies threatening to leave.

He offered to have the state buy up their leases “so you don’t lose one penny.” No one took him up on his offer.

Skin in the game. By spring, Rendell’s tax proposal was the talk of the industry. In a June 1 panel discussion held by a New York investment firm, four executives spoke of what might happen next in Pennsylvania.

They talked of the Marcellus “play” – industry parlance for a focused drilling campaign. Rich Weber, president and chief operating officer of Atlas Energy Resources of Pittsburgh, pooh-poohed Rendell’s tax proposal.

“I think the shot over the bow from the governor was just that. He wanted to spark discussion,” Weber said, according to a published transcript. “I think the legislature is going to kill it for this year. It may be inevitable down the road but who knows.”

Jim Fraser, senior vice president of Talisman Energy Inc. in Calgary, Alberta, did some math. “We have encouraged the state to lease some more of that land,” he said, adding that his “back of an envelope” figures showed the state could raise more money by leasing land to drillers than by taxing the gas.

Chad Stephens, senior vice president of Range Resources Corp. of Texas, weighed the pros and cons.

“Maybe at some point in the far-out future if they introduce a severance tax, once the play gets some legs, that’s a different story,” he said. “But if they do implement the tax, at least the government will have some skin in the game.” State officials might become “more cooperative and try to help the play along.”

Murry S. Gerber, chairman and chief executive officer of EQT Corp., spoke next.

“Chad said it right. Skin in the game,” Gerber said. “The local governments need to get some of this money back. I mean, we are on their roads.”

But the state had to be flexible, he said. “If it’s all take and no give . . . we should just say no as long as we can.”

The meeting. Four days later, Gerber sat with his aides and state officials in his company’s sixth-floor conference room in Pittsburgh. His guests included Rendell.

Gerber knew the governor well. He’d donated $30,000 to Rendell’s 2006 reelection fund, records show. Last October, Rendell went to Pittsburgh with a check of his own – $2.8 million in state grants and tax credits to help Gerber’s company expand operations and add 354 jobs.

Gerber requested the June 5 meeting. He hoped to convince Rendell that the state should consider all the various natural-gas issues – wastewater treatment, leasing royalties – and not just a tax, said Kevin West, managing director of external affairs and one of four EQT executives at the meeting.

Gerber did most of the talking. Rendell asked questions. “You could see the governor turning a little bit” to Gerber’s pitch, West said last week.

Rendell did not say he would abandon the tax. At the meeting’s end, he said he would create a task force of stakeholders – legislators, environmental officials, industry executives – to examine Marcellus Shale issues.

“We were very pleased with that,” said West. “We felt he adopted our position.”

The study. As the summer rolled on and the budget impasse deepened, the industry made its case in Harrisburg, spending more than $1 million to lobby legislators in the first half of the year alone, state reports showed.

Foes of the gas tax began citing a Pennsylvania State University study, “An Emerging Giant: Prospects and Economic Impacts of Developing the Marcellus Shale Natural Gas Play.”

The study said the tax would backfire.

Marcellus Shale drilling in Pennsylvania was in “the takeoff phase,” the study said. It concluded that a severance tax would decrease revenue by reducing drilling and slowing job growth.

Without the tax, the study said, the Marcellus reserve could become a bonanza for the state “if pro-growth policies are pursued that unleash the entrepreneurial spirit.”

The study’s primary author, Robert Watson, said Friday that the shale contains enough gas to make Pennsylvania “an OPEC nation.”

Watson, an emeritus professor of petroleum and natural-gas engineering, also acknowledged that the industry had funded the study.

The Marcellus Shale Committee, a group of more than 50 natural-gas and drilling companies, commissioned the study and paid Penn State about $100,000 for it, he said.

But one version of the study that circulated in Harrisburg did not mention the funding source. Subsequent copies did. Watson said the omission had been simply a mistake made in his rush to publish.

Pennsylvania’s environmental community lashed out at the study as a tool of a deep-pocketed industry. Even the state’s top conservation official questioned its findings.

At a Marcellus Shale seminar in August, the acting secretary of conservation and natural resources, John Quigley, rose to introduce Watson. Quigley also told the audience – a citizens’ advisory panel on environmental policy – that Watson’s study was unsubstantiated by facts.

That prompted Watson to stand up and yell, twice, “That’s bull-.”

Quigley remembers the meeting. “I pointed out that the study was paid for by the industry, and that any suggestion that a severance tax would strangle the infant industry in its crib strains credulity,” he said Friday.

Watson stands by his findings. “The procedure we used was scientific,” he said. “We would have come up with the same answers regardless of who paid for it.”

The surprise. Until August, there was no change in Rendell’s public stance. He wanted the tax.

But in a briefing for reporters Aug. 31, the governor said, “It won’t be in the mix this year.”

Rendell said industry executives had convinced him that imposing a tax now would stunt drilling. Also, he said a drop in the price of natural gas made the tax impractical. And Senate Republicans were so opposed to the tax that it would not pass.

It would have to wait until next year, Rendell said.

“We felt we should let the industry get off to a good start,” he said, “and that surpasses our need for money.”

His change of position was news to many – including Steve Crawford, Rendell’s chief of staff. “The governor’s press conferences are always newsworthy,” Crawford said last week, “and sometimes they are even newsworthy to those of us closest to him.”

His switch also surprised his party’s lea   ders in the legislature, who made a last-ditch effort to revive the tax before the budget was signed.

Rendell declined requests for an interview for this article, but he authorized aides to describe several meetings he had with industry officials.

Gary Tuma, Rendell’s press secretary, said the governor had changed his mind on the tax in July, but had not told aides at that time.

As for the Marcellus Shale task force that Rendell told Gerber he’d create: The governor abandoned the idea because he’d decided to nix the tax for this year, Tuma said.

The tax fight is over for now. But the industry is still stockpiling resources for future contact with Pennsylvania officeholders.

Range Resources, the Texas driller, recently hired away a top Rendell aide to be its vice president for government relations and regulatory affairs. K. Scott Roy had been Rendell’s executive deputy chief of staff and his liaison to the natural-gas industry and environmental groups.

Range Resources also hosted a luncheon this month near Pittsburgh for legislators from both parties. After sandwiches, the dozen legislators toured a drilling site.

Among those at the lunch was State Rep. Timothy J. Solobay (D., Washington), an unabashed natural-gas cheerleader. He’s seen drillers transform his district. Steamfitters and welders are getting work. Job-training and truck-driving classes are full.

Natural gas “is the new steel,” said Solobay. “They all told me is that severance [tax] is coming,” he said of industry executives. “They are only asking for a couple of years to get the infrastructure in place.”

State Sen. Jake Corman (R., Centre) has seen drill rigs rising in his district, too. Eventually, Corman said, a tax could help towns defray the related costs. “I think a day will come when there’s a severance tax,” he said. “I just didn’t think that day was today.”

Others are less sanguine. “This was the best time to do it,” State Rep. David K. Levdansky (D., Allegheny) said of the tax. Next year, he said, “the industry will just dig in their heels even harder in hopes that a Republican governor more sympathetic to their cause wins election.”

In June, Range Resources launched a political action committee in Pennsylvania. Nine executives put in a total of $49,500. The PAC’s first donation, for $5,000, went to a Republican campaign fund begun by state Attorney General Tom Corbett.

He’s running for governor next year.

Do you know what the Oil & Gas Fund is?

The Oil and Gas Lease Fund Act was created in 1955. As I understand it, the money that goes into this fund comes from the leasing of state land to gas companies (except game lands) for gas drilling. The money in this fund is only to be used for conservation programs that might include things like building or fixing state parks, dams and flood control, purchasing land, and maybe fixing up any messes the gas industry makes, etc. Follow this link for a better explanation.

http://www.landandwater.org/oilgasfund.html

The state of Pennsylvania needs money. At one point Governor Rendell voiced his approval of a severance tax, which would put money from the leasing of state land back into a variety of funds, including DCNR, DEP and other conservation organizations like the fish and game commission. Over the past month or so he seems to have changed his mind. He no longer supports a severance tax. He has stated that he feels it would hurt or disable the gas industry at such an early point in their endeavor. (PLEASE!) So he has laid out some other options for making money instead. One of them is to take funding from the Oil and Gas Lease Fund and put some of that money into the the general fund. There are two ways to do that and they are both explained in the above link.

There is also some discussion of the same thing in the below article from Pennlive.com. I have to say, despite some of the referencing to what the republicans want versus what the democrats want, I find that this really isn’t (or shouldn’t be) about political parties. This issue is about people who pay taxes in the state of PA (that’s all of us). It’s about Pennsylvanians caring for and appreciating their forests and streams. It’s about wanting to have a safe and healthy place to hunt and fish, paddle, hike, bike and camp. It’s about being responsible to ourselves as tax payers and public land users. I feel that the politicians who represent us, especially here in Tioga County, forget that they have their offices because we chose them to do a job for us. Let’s keep reminding them to do it right.

http://www.pennlive.com/editorials/index.ssf/2009/10/the_biggest_loser_in_pennsylva.html