Pennsylvania

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2014 Governor’s Race: Face off over the sweet spot on taxing Marcellus Shale

Governor Pennsylvania Debate

Tom Gralish / The Philadelphia Inquirer

Governor Tom Corbett (L) with Democratic challenger Tom Wolf (R) at a debate in Philadelphia in October.

Here’s something Governor Tom Corbett and his democratic challenger Tom Wolf agree on: Each calls Pennsylvania’s Marcellus Shale natural gas a “game-changer” for the state’s economy. But they disagree on how to get the most out of the gas boom for all Pennsylvania residents. Comparisons to Texas keep coming up in the race. And natural gas production has recently put Pennsylvania second only to Texas. So how exactly does Texas tax the gas drillers, and how is it different in Pennsylvania. StateImpact Pennsylvania drills down into the sometimes taxing and dull fiscal policy to get at the answer.

 

How does Pennsylvania tax natural gas?

In 2012 the state implemented the “impact fee.” This is a flat fee charged to each well. The levy can change from year to year based on natural gas prices and the Consumer Price Index, but in 2013, gas companies paid $50,000 for each new well they drilled. Smaller, vertical wells were $10,000. The impact fee has so far generated $636 million in three years.

Sixty percent of the impact fee revenue stays at the local level, going to counties and municipalities hosting wells. The rest goes to various state agencies involved in regulating drilling and to the Marcellus Legacy Fund – which gets spread out around the state for environmental and infrastructure projects.

Like other businesses in Pennsylvania, the gas industry gets charged corporate taxes as well. At 9.99 percent, Pennsylvania’s corporate tax is considered high. It’s unclear how much the drillers actually pay, because many are not registered in the state and do business elsewhere. Governor Corbett says he has not done an analysis on what the drillers pay in corporate taxers. But he says when combined with the businesses that support and serve the industry, the total revenue is $2.5 billion for the past six years. Continue Reading

Corbett signs bills addressing gas transparency issues

Governor Tom Corbett has signed two bills aimed at providing more transparency for people who have leased their property to gas companies.

Marie Cusick/ StateImpact Pennsylvania

Governor Tom Corbett has signed two bills aimed at providing more transparency for people who have leased their property to gas companies.

Governor Corbett has signed two bills providing more transparency for people who have leased their property for natural gas drilling.

A landowner advocacy group calls the measures “helpful” but says more action is needed.

One measure would require drillers to submit monthly gas production reports; they are currently required to report every six months. The second bill requires companies to file a document with the county recorder of deeds surrendering a lease once it has expired.

Monthly production reports will bring Pennsylvania in line with other major gas-producing states. Some landowners have complained they are not able to compare the monthly gas production figures on their royalty statements with the bi-annual data collected by the state.

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Corbett approves bills on stream buffers and carbon plan

Governor Corbett signed a pair of bills Wednesday dealing with two hot-button environmental issues. The first would eliminate stream buffer requirements for the state’s cleanest waterways. The second measure gives legislators a role in crafting a federally-mandated carbon reduction plan–a top priority for the state’s coal industry.

The stream bill removes the 150 feet buffer requirement between new developments and Pennsylvania’s cleanest streams. It was supported by the Pennsylvania Builder’s Association. The law only applies projects that need stormwater discharge permits and are adjacent to the state’s “high quality” or “exceptional value” streams – a small percentage of waterways. Supporters have said the buffers amounted to eminent domain that restricted landowners. Environmental groups criticized the measure as a step backwards.

A separate bill approved by Corbett requires legislative approval of a federally-mandated carbon pollution plan. Under proposed rules recently put forth by the federal Environmental Protection Agency, Pennsylvania will have to cut its carbon emissions by 32 percent over the next 15 years. The new climate policy will mean major changes for the state’s energy industries.

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Anti-fracking activist and gas company head back to court

Scroggins and her attorneys talk to reporters outside a court hearing in March 2014.

Katie Colaneri/StateImpact Pennsylvania

Scroggins and her attorneys talk to reporters outside a court hearing in March.

63-year-old anti-fracking activist Vera Scroggins will be back in court next week facing fines and possible jail time in an ongoing fight with one of Pennsylvania’s biggest gas drillers, Cabot Oil & Gas.

Cabot wants Scroggins to be held in contempt of court for allegedly violating an order to stay at least 100 feet away from its work sites. A hearing is scheduled for next Wednesday in Susquehanna County.

Scroggins maintains her innocence.

“I just hope to be cleared of the charges and be a free person like anyone else in my county,” she says. “I want to be able to move through all the public roads here without having to worry about counting my steps.”

Scroggins has been a thorn in the company’s side for years. She frequently gives unofficial tours of drilling sites and carries a video camera. Cabot says she has repeatedly trespassed on its property, and her activities pose a safety risk to workers and visitors.

In a motion filed last week, Cabot attorney Amy Barrette claims Scroggins came within 10 feet of an access road to a well site.

“Ms. Scroggins’ conduct constitutes a blatant disregard for this Court’s Order,” wrote Barrette. “Such a flagrant violation of the clear terms of this Court’s Order must not go unchecked.”

The company is also seeking to have Scroggins cover its attorneys fees. A Cabot spokesman did not respond to requests to comment.

The feud made international news earlier this year, after Cabot got a judge to agree to bar her from all the land it owns or has leased. The restrictions went beyond blocking her from operational work sites. The prohibited area included large swaths of land the company has leased but not developed– encompassing public spaces like restaurants, grocery stores, and a hospital. It amounted to nearly 40 percent of Susquehanna County. Cabot later said it didn’t intend for the order to be so broad.

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DEP fines pipeline company more than $300,000

Gathering lines in Lycoming County.

Marie Cusick/ StateImpact Pennsylvania

Natural gas gathering lines in Lycoming County.

The state Department of Environmental Protection has levied a $306,570 fine against a Texas pipeline company for multiple violations involving construction of two gas pipelines in 2012 and 2013.

According to the DEP, the flawed work was performed by PVR Marcellus Gas Gathering LLC of Williamsport. That company was later acquired by Regency Marcellus Gas Gathering of San Antonio, Texas.

“Many of these violations occurred over a significant period of time,” DEP Director of District Oil and Gas Operations John Ryder said in a statement. “We expect that Regency has made operational changes to avoid problems of this nature during future pipeline construction projects.”

DEP oversight of pipelines is limited to matters related to water quality (for example, a stream crossing) and issues with erosion and sedimentation.

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Legislature OKs bill requiring more frequent gas production reports

A natural gas well in Lycoming County. Under current law, companies report gas production figures twice a year. This bill would require monthly reporting.

Joe Ulrich/ WITF

A natural gas well in Lycoming County. Under current law, companies report gas production figures twice a year. This bill would require monthly reporting.

A bill approved by the state House and Senate would change the way drillers report gas production figures. The measure now awaits Governor Corbett’s signature.

Under current state law, gas companies have to file reports twice a year with the state Department of Environmental Protection (DEP). House Bill 2278 would require monthly production reports– a common practice among other major gas-producing states.

Transparency around gas production figures has become a sore point for some landowners who have questioned the accuracy of their monthly royalty payments. Since royalty checks are typically distributed on a monthly basis, it has been difficult for landowners to verify the information they receive from gas companies with the bi-annual gas data posted on DEP’s website.

The U.S. Energy Information Administration (the statistics arm of the federal Department of Energy) has also said monthly reporting in Pennsylvania would make its job easier.

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First responders in Philadelphia prepare for oil train accidents

Philadelphia's first responders react to a simulated oil train derailment during an exercise at the Philadelphia Fire Academy.

Emma Lee/NewsWorks

Philadelphia's first responders react to a simulated oil train derailment during an exercise at the Philadelphia Fire Academy.

Officials from at least seven government agencies, the railroad CSX and the refinery in South Philadelphia responded to a faux fiery train accident on a rail bridge in the city’s downtown Friday morning.

While there was no real emergency, the scenario was based on a minor derailment that happened in January that left six tanker cars intact, but leaning across the Schuylkill Arsenal Bridge.

The Philadelphia Fire Academy buzzed with activity as officials wearing badges from a variety of local, state and federal agencies made radio calls and worked in units to evacuate residents within a half mile of the hypothetical accident scene.

A picture of a crude oil tanker engulfed in flames was displayed on a screen at the front of the room. A coordinator with a microphone called out new details and told officials to stand by for more information.

It was one of several training exercises that have taken place in Pennsylvania and across the country as an increase in accidents involving these oil trains has prompted emergency officials to make sure first responders are prepared. According to a spokesman for CSX, a similar training is planned for next week in Bucks County.

“It’s critically important that we do it here in a simulated scenario rather than try to figure all of this out in an actual emergency,” said Joe Sullivan, Chief Inspector of Homeland Security and Counterterrorism with the Philadelphia Police Department.

As many as 75 trains hauling crude oil from the Bakken Shale in North Dakota roll through Pennsylvania each week on their way to refineries on the East Coast.

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Attorneys advise landowners to get involved in pipeline plan

Pipeline construction in Butler County.

AP Photo/Keith Srakocic

Pipeline construction in Butler County.

More than 200 people turned out for a meeting in Lancaster Thursday night to discuss a proposed interstate natural gas pipeline. The forum was aimed at educating landowners about how to handle a pipeline on their property.

The project has sparked significant controversy. Attorneys were on hand to discuss ways landowners can negotiate with a pipeline company and deal with regulatory agencies.

Oklahoma-based Williams Partners is seeking to build 177 miles of new pipeline through 10 Pennsylvania counties in an effort to bring Marcellus Shale gas southward to markets along the East Coast. Williams needs the approval of the Federal Energy Regulatory Commission (FERC) to go forward with the project.

Washington D.C.-based attorney Carolyn Elefant represents landowners in pipeline cases and says it’s important for people to educate themselves and get involved early in the process. She spoke with StateImpact Pennsylvania.

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Fracking in Texas helps the state’s public school fund top Harvard’s endowment

Lenny Rodriguez works on a Choice Exploration Inc. natural gas rig near Devers, Texas. Drilling on state lands has helped create the largest public school endowment in the country.

Mike Fuentes / AP

Lenny Rodriguez works on a Choice Exploration Inc. natural gas rig near Devers, Texas. Drilling on state lands has helped create the largest public school endowment in the country.

A fund that collects rents and royalties from oil and natural gas development to Texas public schools recently became the largest education endowment in the country.

The publicly run endowment, called the Permanent School Fund, is worth $37.7 billion dollars. That’s $1.3 billion more than Harvard University’s $36.4 billion endowment. Jim Suydam, a spokesperson for the Texas General Land Office, says a big part of the story is the shale gas boom.

“We’re making a ton of money off natural gas,” said Suydam. “We made over a billion last year. The shale plays are huge down here. You can see them from space.”

Suydam says that from 1874 to 2003, $7.9 billion was deposited into the fund.  Since 2003, just before the shale gas boom began, oil and natural gas has helped increase the endowment by $8.1 billion. These deposits have generated enough return on investments to bring the grand total close to $40 billion. The Permanent School Fund doesn’t cover all expenses for Texas school children, but Suydam says it contributes an average of $400 per student per year. It also backs bonds by local school districts, allowing them to get a triple-A rating. Continue Reading

Environmentalists seek to halt construction at Cove Point LNG export plant

Dominion's offshore loading platform at Cove Point. Lusby, Maryland. Dominion wants to start exporting LNG from this platform.

Lindsay Lazarski / WHYY/Newsworks

Dominion's offshore loading platform at Cove Point. Lusby, Maryland. Dominion wants to start exporting LNG from this platform.

Environmental groups have filed a motion with the Federal Energy Regulatory Commission (FERC) to stop the current construction of Dominion’s liquefied natural gas export facility in Cove Point, MD. The groups also want FERC to reverse their recent decision approving the plant. 

Last month FERC approved Dominion Energy’s plan to transform the Cove Point plant from an import terminal to an export facility, which will ship out more than 5 million metric tons of liquefied natural gas each year. Cove Point is the fourth export terminal approved by the Federal Energy Regulatory Commission, or FERC. It will be the first connected to the Marcellus Shale by pipeline.

Opponents of the plan say the plant will stimulate natural gas drilling in Pennsylvania’s Marcellus Shale, thereby increasing pollution in shale gas communities. Jocelyn D’Ambrosio is an attorney with Earthjustice.

“In neglecting to prepare a thorough review of the environmental impacts of Dominion’s controversial project, FERC is prioritizing the desires of a powerful company over the health and safety of the people of Calvert County, Marylanders, and communities throughout the Marcellus shale region,” wrote D’Ambrosio in a release.  Continue Reading

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