EDITORIAL: No, Drillers Already Paying Their Way

- EDITORIAL: No, Drillers Already Paying Their Way

Tuesday, August 02, 2011
The Philadelphia Inquirer
by Matthew J. Brouillette

Despite a deep recession, Marcellus Shale gas drilling in Pennsylvania has created tens of thousands of jobs, rescued many landowners from foreclosure and bankruptcy, and generated fortunes for farmers, laborers, and businesses. Nevertheless, some have stoked fears of environmental disaster and spread the myth that drillers aren't paying their share of taxes. Such attacks have led many to the mistaken conclusion that the industry should pay a special tax or what's euphemistically called an "impact fee."

While a tax on natural gas would not drive the industry out of the state, it would be passed on to residents -- folks like Jim VanBlarcom, a Bradford County dairy farmer who testified that leasing a small portion of his land for drilling enabled him to double his herd. He's not alone: Pennsylvania's gas industry is estimated to have produced more than $7 billion in lease and royalty payments since 2006. Moreover, it's given rural areas thousands of new jobs paying an average annual salary of nearly $70,000.

The influx of new employees means local governments have seen more revenue from the emergency and municipal services tax, which is withheld from workers' paychecks. Other revenue streams have grown, too. Bradford County has received about $1 million from the drilling industry in recording and copying fees alone. And drillers have paid $1.1 billion in state taxes since 2006, according to the Department of Revenue.

But even if local residents and governments are benefiting, some feel the industry should pay more to do business in the Keystone State. This notion is bolstered by a misperception, often promoted by environmental interests, that gas companies avoid taxes through some loophole.

But drillers pay the same taxes as every other business in the state, and those taxes rank among the highest of their kind. Pennsylvania has the 10th-highest state and local tax burden in the nation, and the second-highest corporate income-tax rate in the world.

That drillers pay the same taxes as other businesses isn't good enough for some, though. They argue that gas extraction imposes environmental and other costs that justify an extraordinary tax. Most of us care about the environment and believe businesses should pay for the government they use, but those calling for an additional tax or fee on drillers fail to understand the industry's true impacts or contributions.

In recommending an impact fee, Gov. Corbett's Marcellus Shale Advisory Commission provided anecdotal examples of potential drilling impacts. But these must be compared with what gas companies contribute.

In addition to state and local taxes, gas drillers voluntarily spent more than $200 million on road repairs and improvements in 2010 alone. Ultimately, Pennsylvania law ensures that drilling companies, not taxpayers, are responsible for whatever environmental and infrastructure damage they cause. And the fees drillers pay to the state Department of Environmental Protection cover the cost of inspections.

Some of the pro-tax pressure is coming from special interests that want more funding for pet programs such as "Growing Greener." Set to lose its funding this year, the program subsidizes a wide range of projects, from alternative energy to downtown redevelopment. In fact, some of the groups pushing for the tax have received such subsidies. No matter how lawmakers or lobbyists sell it, though, Growing Greener has nothing to do with drilling impacts.

Despite the manufactured fears of disaster and cheers for a unique tax on drilling, Pennsylvania can balance economic growth with environmental protection without imposing a new tax. The true impacts of drilling can be addressed by charging drillers fees for services provided, requiring them to be insured for environmental costs, and other measures.

Any impact fee must identify specific costs tied to drilling and demonstrate that they are not already being covered. Otherwise, another tax or fee on the industry is really just a punitive tax on Pennsylvania's people and prosperity. Matthew J. Brouillette is president and CEO of the Commonwealth Foundation.

Copyright (c) 2011, The Philadelphia Inquirer

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Costa Rica's Chinchilla Says No to Oil Drilling; Maybe to Natural Gas

- Costa Rica's Chinchilla Says No to Oil Drilling; Maybe to Natural Gas

Friday, June 17, 2011
Knight Ridder/Tribune Business News
by Adam Williams, The Tico Times, San Jose, Costa Ric

Costa Ricans don't want oil drilling in their country. But extraction of natural gas is on the table, said President Laura Chinchilla.

One month after Chinchilla said "the unstoppable rise of fuel prices could result in the worst energy crisis in human history," talk of oil drilling in Costa Rica made headlines last week when U.S.-based Mallon Oil, a subsidiary of South Dakota-based Black Hills Corporation, announced it plans to pursue through international trade agreements the rights to explore and drill for oil and natural gas in the Central American country (TT, June 10).

While Chinchilla responded by saying that oil drilling is off the table, she said her administration would consider granting the company a contract to explore and drill for natural gas in the Northern Zone's Alajuela province, where the company owns a concession to a large oil and gas block. That decision is expected in two or three months, she said.

"Natural gas is less of a pollutant [than oil] and could prove to be an important alternative fuel," Chinchilla said, while noting that Costa Rica has relied in the past on industries that produce pollution, including mining, to bring economic growth. "We are evaluating the criteria of timeliness and convenience, and the review is being directed toward satisfying public interest and to respecting the principles of environmental protection," she said.

In 2000, Mallon Oil won a 20-year concession for exploration and production of oil and natural gas in northern Costa Rica, but some 200 court appeals filed mostly by environmental groups have until now blocked the project from advancing. Last April, the Constitutional Chamber of the Supreme Court rejected the last of those appeals.

The company has invoked the Central America Free Trade Agreement (CAFTA) to pressure Costa Rica's government into signing a drilling and exploration contract. In the past seven months, company representatives sent letters to Costa Rican officials warning that the country could face "legal, economic and international consequences" if the 11-year-old exploration contract is not honored. The first letter was sent November 2010 to Foreign Trade Minister Anabel Gonzalez, and a second one was sent March 31 to Costa Rica's ambassador in Washington, D.C., Muni Figueres.

Despite Chinchilla's toe-the-line response, when news spread that Costa Rica would consider natural gas or oil exploration, environmental groups quickly organized an anti-oil rally that lasted several hours Saturday at San Jose's Plaza de la Cultura outside the historic National Theater.

Protesters carried signs that said "No to oil exploration" and "Don't destroy our beautiful Costa Rica." Demonstrators dressed in black and covered their faces in funeral veils. Others blocked a major downtown thoroughfare while covering themselves in black paint.

"We can't allow our government to continue to sell our country to [satisfy] the greed of multinational companies," Fabian Pacheco, of the group Oil Watch International, shouted through a megaphone. "We are selling off our most precious resources for the sake of profit. It is our responsibility to stop this corruption and block the government from selling Costa Rica."

A spokesman for Black Hills Corporation did not respond by press time to questions sent by email by The Tico Times.

"[Mallon Oil] has made several requests to government officials and the Environment Ministry [MINAET] to discuss different options in the process," Environment Minister Teofilo de la Torre told The Tico Times this week. "The company has also sent several requests to Costa Rica's ambassador in the U.S. to encourage the Executive Branch to make a decision about the contract."

Mallon Oil spent the last decade trying to obtain the required permits to start oil and gas exploration here. In public bidding in 2000, the company won rights to the northern oil and gas block under then-President Miguel angel Rodriguez (1998-2002).

In 2002, President Abel Pacheco imposed a moratorium on oil exploration, citing the potential environmental consequences it could have on a country that depends on tourism to generate jobs and revenue (TT, June 7, 2002). Three years later, the government revoked a concession it had granted in 1998 to U.S.-based Harken Holdings to exploit oil blocks on the Caribbean coast in Limon province. The company sued the Costa Rican government in Costa Rican courts.

History Repeating Itself?

At last Saturday's rally, Costa Rican lawmakers Jose Maria Villalta, of the Broad Front Party, and Juan Carlos Mendoza, of the Citizen Action Party (PAC), stood alongside Luis Diego Marin, regional coordinator of the environmental group Preserve Planet, and echoed a decade-old mantra: studies on the environmental impact of oil and gas drilling are lacking.

"If you were to go to the Environment Ministry's National Technical Secretariat [SETENA] and request a copy of the environmental impact study for this proposed project, you'd find that there isn't one," Marin said. "It's just another example of our government's hypocrisy. They claim to support the development of renewable energy and then they announce weeks later that they'd support oil and gas exploration."

De la Torre, Chinchilla's environment minister, said that "no environmental impact study has yet been approved" by MINAET or SETENA, and that an "ample study" must be conducted and approved before any exploration process can begin. The study would be used to assure that no wildlife, forests, wetlands, local communities or indigenous groups would be impacted by the project in the San Carlos region.

"I have been hearing for years that the development of projects won't damage anyone's land and will bring prosperity. But as a Maleku, every time there is development in our region, we lose more of our forest and homeland," said Phil alvarez, a member of the northwestern Maleku indigenous tribe that took part in the protest. "The government has already taken over 90 percent of my tribe's land. Let's stop them from taking anymore," he said.

After a series of speeches, protesters marched down Avenida Segunda, a main transit route through the city, blocked traffic and scattered coal across the pavement. Chants of "No to oil" echoed off nearby buildings.

"People always claim oil and natural gas will result in development or progress, but development always comes with destruction of something else," said Inge Kitzing, a rally attendee. "Protests have been used to stop several projects in the past, including the Crucitas gold mine [in the Northern Zone], and we are not going to allow this project to destroy our environment either."

But while the demonstrations unfolded in downtown, some onlookers shook their heads.

"Wasn't it announced that the concession was to explore for natural gas, not oil," asked Paola Villalobos, a middle-aged woman watching as she waited to cross the street. "Why is everyone dressed in black? Those are completely different resources."

Others said they disagreed with the Costa Rican blockade on oil exploration.

"We are such a country of contradictions," said Flora Campos, who stopped at the intersection to watch the protest. "We always say that we want to develop and prosper, but when an opportunity comes along to do so, there are always groups that block you from doing so. One way to become a much wealthier country is to allow for oil."

While Chinchilla ruled out oil exploration, a study to influence the decision whether or not to grant Mallon Oil a gas-drilling contract is expected by the end of the year.

"The Executive Branch has decided that exploration would be used for natural gas, and not for oil," De la Torre said. "Natural gas is more in line with the intentions of the country to develop energies in a more 'green' way."

Copyright (c) 2011, The Tico Times, San Jose, Costa Rica

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BP: No Decision Taken to Sell Any of Its TNK-BP Shareholding

- BP: No Decision Taken to Sell Any of Its TNK-BP Shareholding

Tuesday, June 07, 2011
Dow Jones Newswires
by Alexis Flynn

BP said Tuesday it has no plans at present to divest any of its shareholding in TNK-BP Ltd.

BP's comments follow a report late Monday that the U.K. major was beginning preparations to sell part of its stake in the conflict-plaugued Russian venture to Rosneft in a bid to salvage a landmark cooperation deal with the Russian state oil company.

"BP has taken no decision to sell any of its shareholding in TNK-BP and there is no current intention to do so," a BP spokesman told Dow Jones Newswires.

Top BP executives notified the Russian billionaire shareholders in TNK-BP Monday that the U.K. company would soon send them a letter formally announcing the U.K. company's intention to sell down its 50% TNK-BP stake, the first step in such a sale, The Wall Street Journal reported Monday, citing people familiar with the situation.

Copyright (c) 2011 Dow Jones & Company, Inc.

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Williams Says It Has No Utica Drilling Plans

Williams Says It Has No Utica Drilling Plans

Tuesday, May 03, 2011
Knight Ridder/Tribune Business News
by Elizabeth Skrapits, The Citizens' Voice, Wilkes-Barre, Pa.

Beneath the deep-lying Marcellus Shale lies the even deeper Utica Shale, a rock formation that geologists say also has the potential to be rich in natural gas.

However, nobody is tapping into it in Northeastern Pennsylvania just yet, and the Utica remains largely unexplored in the rest of the state.

The state Department of Environmental Protection issued Williams Production Appalachia LLC a permit on Feb. 4 to drill deeper for its exploratory well on Route 487 in Sugarloaf Township, Columbia County, past the Benton Foundry.

The permit sparked rumors Williams planned to drill into the Utica Shale, but company spokeswoman Helen Humphreys says they're not true.

"I know that we are not going into the Utica Shale at all," she said.

The plan is to drill down past the Marcellus Shale to tap into the Onondaga limestone formation beneath, then go back up into the Marcellus, Humphreys said. The well has been drilled and the next step will be to hydraulically fracture it, but she said she didn't have a date for when it will be done.

A map issued by DEP on April 5 shows that, like the Marcellus, the Utica Shale runs completely through Northeastern Pennsylvania including Luzerne, Lackawanna, Wyoming and Columbia counties.

Although DEP keeps track of Marcellus Shale drilling permits, the Utica is still pretty much off the radar for the state agency.

"We don't have anything really identifying the formation in our system right now," said Dave English of the DEP Bureau of Oil & Gas Management. "Basically all we're tracking at this point in time is the Marcellus."

There have been permits issued for the Utica Shale -- although not many, and none in Northeastern Pennsylvania -- and there are several other shale formations being tested, English said.

Range Resources, the first company to drill a Marcellus Shale well in Pennsylvania, in 2004, is a pioneer in the state's portion of the Utica Shale as well.

Last year, the company drilled a productive well in Beaver County. Range Resources President and Chief Operating Officer Jeffrey Ventura reported in an April 27 conference call the company is planning a second horizontal well in the Utica Shale later this year.

Copyright (c) 2011, The Citizens' Voice, Wilkes-Barre, Pa. Distributed by McClatchy-Tribune Information Services.

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