Energy. Environment. Economy.

PA lawmaker floats new severance tax proposal as industry pushes back

Cabot Oil & Gas operations in Susquehanna County include some of the most productive wells in the state.

Lindsay Lazarski/WHYY

Cabot Oil & Gas operations in Susquehanna County include some of the most productive wells in the state.

State senator Jim Brewster plans to introduce a bill that would enact a 5 percent tax on Marcellus Shale gas production, and dedicate all of that revenue toward education. The western Pennsylvania lawmaker, from McKeesport, says the tax would generate between $700 million to $1 billion for public schools.

“My ‘Extraction for Education’ proposal is simple, reasonable and credible because it uses the proceeds of an extraction tax to support education,” Brewster said in a release posted today on his website. His plan would maintain the current impact fee, which helps fund local municipalities that bare the brunt of natural gas drilling. Brewster says gas producers would be able to claim a credit for the impact fee, while all of the proposed tax would get funneled to education.

But natural gas industry representatives in Pennsylvania say they are already paying their fair share of taxes. On a call with reporters today, Dave Spigelmyer with the Marcellus Shale Coalition said attempts by the incoming Wolf administration to raise $1 billion in revenue through a severance tax would “damage this play forever in the commonwealth.” Spigelmyer says the state should first get spending under control through pension reform, and have the shale gas boom generate tax revenue indirectly.

“There are opportunities for job growth, opportunities for a manufacturing renaissance,” said Spigelmyer.  ”All will create tax revenue for the commonwealth and I think that’s where the focus should be for the state.”

Spigelmyer says the industry won’t pack up and move, but it will invest less capital if a 5 percent severance tax eats into their bottom line. He says the lack of pipeline capacity has meant that Pennsylvania’s natural gas has fetched a lower price than other shale gas across the country because it’s more expensive to transport the gas to regions of high demand.

But an analysis by Platts last spring showed drillers would profit even with a 5 percent tax at current sale prices. The analysis showed producers continuing to make well above ten percent internal rate of returns, an industry benchmark. And although the number of new wells drilled has decreased, production has continued to increase. Just this week, driller Range Resources reported striking more gold in the Utica shale with a well that produced 59 million cubic feet of natural gas in just 24 hours.


  • DeanMarshall

    The Frackers will not move away from their ca$h Cow….at least not until they have sucked the most prolific plays dry and left a horrendous mess of abandoned well casings, rusting pipes, tanks, and compressor/processing equipment behind! (Not to mention the mountains of toxic waste, contaminated aquifers and Cancer time bombs for us to clean up! There should be a huge tax and a security bond of a Billion bux per well!

  • JimBarth

    The Spigelmyers of this industry strongly support sales taxes as a solution for everything, yet, they think a tax on gas and oil extracted from our Commonwealth is unfair? As a property owner and resident in PA, I have paid extensive school taxes and I have never had a child in school in PA. Non resident property owners in PA pay PA school taxes and they can’t vote. Spigelmyer and his colleagues whine constantly about paying taxes? Go back to Oklahoma you ex-Vice President of Chesapeake.

  • Fracked

    Isn’t PA sick of the threats from the gas industry? I would like to see something positive come out of this fracking mess. The gas industry can afford the 5%. They expected a tax when the set their sights on PA’s resources. Our water, our air, our gas and their profit. Keep the impact fee-and please let the communities that are being impacted USE THAT MONEY FOR IMPACTS and levy the 5%, no levy a 7% tax on the very very rich gas industry. If PA citizens and their homes and their environment are to be the sacrifice, let us please fund the education of our children. PA is a fossil fuel extraction zone. Our kids are going to need all the help they can get to deal with the mess or to leave the mess behind.

  • Steve Todd

    Oklahoma’s Dave Spigelmyer has no say in our pension system. We in PA will charge him our fair share. He can pay it or go home. We’ll handle our unrelated issues as we see fit, regardless.

  • AlSever

    Education? More money for Jerry Sandusky University! Bad enough we waste all of our Lottery money on senile Senior citizens! No new taxes until churches start paying taxes!

  • Robert

    He may be from Oklahoma, Steve, but the guy is right this time around: Pension reform is a no-brainer in PA. We need to get spending under control, not just let it continue to increase uncontrollably while finding new funding sources. The gas industry is important to our economy, it’s as simple as that, and we need to ensure that gas extraction creates more jobs and gives us lower energy costs. Taxes are certainly not the way to do that.

  • Tarisa

    Oh no the gas people will go away…they already are starting to since my husband works in the gas industry…since this governer came in to office his hours and his coworkers have been cut down…rigs are stacking (which means shutting down)…what you people don’t understand is PA already has the 2nd highest corporate tax in the US…so are taxes are already ridiculous compared to other states that have fracking and you want to tax them more?…guess what they will and are taking there business elsewhere…so you still won’t get that tax money because the business won’t be here…the gas industry was saving Pennsylvanias economy…I can say that is definitely true in my county Greene…a rural area with not much prospects…all the drilling has brought people eating in our restaurants, buying from our stores, and staying in our hotels…and many jobs for our unemployed…you people against the industry in general are idiots…do you all drive a Prius no I doubt that…you’re more than happy to hear your home and put gas in your car…not to mention all the products that come from drilling that you use in everyday life…until you give all that up you’re a hypocrite and guess what you’re supportmg fracking

About StateImpact

StateImpact seeks to inform and engage local communities with broadcast and online news focused on how state government decisions affect your lives.
Learn More »