Gas Drillers Have Work To Do To Address Environmental Concerns

- Gas Drillers Have Work To Do To Address Environmental Concerns

Thursday, August 11, 2011
Dow Jones Newswires
WASHINGTON
by Ryan Tracy

Regulators should require the oil and gas industry to disclose the contents of the fluid used in a drilling technique that has helped unlock vast reserves of U.S. energy resources, a panel convened by the U.S. Energy Department recommended Thursday.

The Natural Gas Subcommittee, in a report issued Thursday morning, also said the industry has to expend effort to fully address environmental concerns related to the drilling technique, known as hydraulic fracturing, and other aspects of the drilling process, including wastewater management and well design.

Energy Secretary Steven Chu convened the subcommittee to identify ways to improve the safety of gas drilling. Neither the panel nor the Energy Department have regulatory authority over the industry, but the recommendations come as operators face increasing scrutiny from the media and environmental groups along with the prospect of tighter regulation from states and other federal agencies, including the Environmental Protection Agency.

The panel noted that a recent boom in gas drilling that has quickly transformed the U.S. into a production giant has brought economic benefits and "enhanced national security," but added that "the growth has also brought questions about whether both current and future production can be done in an environmentally sound fashion that meets the needs of public trust."

The EPA is conducting its own study on the impact of hydraulic fracturing on drinking water, while planning to regulate air emissions from gas operations and the use of diesel fuel in the fracturing process. New York is moving toward allowing more drilling to tap what are thought to be considerable reserves within its borders, but regulators are still evaluating the environmental consequences.

The Energy Department panel recommended more research into possible methane leakage from gas wells--a problem that, according to Pennsylvania regulators, has tainted water supplies in dozens of homes. It said operators should develop best practices for well design and regulators should inspect wells at crucial points during the drilling process.

In addition, the panel said regulators should "immediately develop rules to require disclosure of all chemicals used in hydraulic fracturing fluids," addressing a longstanding complaint from environmentalists who say that without that information, they cannot hold companies accountable for potential contamination. The panel said there should be an exception for information that was "genuinely proprietary."

Federal agencies should make a joint effort to evaluate the emissions of heat-trapping greenhouse gases from natural gas drilling as part of a look at the "life-cycle use of natural gas as compared to other fuels," the panel said.

Proponents of natural gas have long argued that gas is cleaner-burning than oil or coal, but recent research has suggested that extracting the gas may release more greenhouse gases than previously thought, raising questions about whether it is an effective way to mitigate climate change.

Environmental groups have questioned the panel's objectivity, saying that some of its seven members have been paid to do research for the oil and gas industry. The industry, meanwhile, has griped that it has no direct representatives in the panel. The members include academics, consultants, and the president of an environmental advocacy group.

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

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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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Misbehaving Drillers May Undergo New Scrutiny

- Misbehaving Drillers May Undergo New Scrutiny

Friday, July 15, 2011
Houston Chronicle
by Jennifer A. Dlouhy

The nation's top offshore drilling regulator said Wednesday he is examining whether the government can do more to keep oil and gas companies with checkered histories from exploring offshore.

Michael Bromwich, the director of the Bureau of Ocean Energy Management, Regulation and Enforcement, said he is studying how to treat "operators who may have behaved badly in the past and whether they should be allowed to continue operating in the future."

The government already can bar offshore oil and gas operators in some cases, and the government can suspend operations or impose civil penalties in response to some violations. But historically, it has not wielded the authority aggressively, raising questions about whether it does enough to keep some of the worst performing companies away from the outer continental shelf.

Other countries, including the United Kingdom, take a hard-line approach that may be a model for the U.S., Bromwich told reporters on a conference call Wednesday.

"They have a much tougher re-qualification system than we do," Bromwich said. "Part of what I have been trying to do recently is gather additional knowledge about what other countries who deal with similar kinds of issues have done in similar circumstances."

Some in Congress have pitched such proposals, including measures aimed to block BP from offshore drilling because of last year's deadly blowout at its Macondo well.

Bromwich said he is conducting a broad review of agency policies as part of a reorganization of the former Minerals Management Service that is on track to meet an Oct. 1 deadline.

The ocean energy bureau is also readying two new rules that aim to boost the safety of offshore drilling, including a measure that would set new mandates for the blowout preventers used as a last line of defense against unexpected surges of oil and gas at wells.

Designs, safety

The agency will kick off a long process of creating the new regulations by publishing an advanced notice of proposed rule-making that sets a slower timetable for completing the mandates. Bromwich said the lengthier review will allow more people to weigh in on the measure's content.

It could include mandates governing the design of offshore wells and new standards for cement barriers. The rule also is likely to continue making adjustments to a drilling safety rule that was imposed last October. Companies have complained that it sets confusing and conflicting standards.

"It may well be that there are specific items that we've already issued rules on that we may want to change, modify, enlarge," Bromwich said.

He said that while the process will focus on drilling safety, nothing prohibits the agency from looking into other safety issues.

Bromwich said the agency will be closely looking at the recommendations of a new 15-member Offshore Drilling Advisory Committee, which was meeting in New Orleans on Wednesday.

Interior Secretary Ken Salazar tasked that panel with developing recommendations for bolstering safety rules and drilling standards to better prevent spills and contain them when they happen.

The group also is studying how to improve the broad safety and management systems oil and gas companies use to identify and respond to risks.

'Very broad view'

Tom Hunter, the former director of Sandia National Laboratories who is heading the advisory group, said it is examining a range of subsea equipment and how workers interface with it, including instrumentation, fluid injection systems and well control equipment.

"We are going to take a very broad view and see if we can ferret out some very clear recommendations," Hunter said.

Copyright (c) 2011, Houston Chronicle

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Debate on Gas Drillers' Impact Fee Put Off

- Debate on Gas Drillers' Impact Fee Put Off

Wednesday, June 29, 2011
The Morning Call, Allentown, Pennsylvania
by John L. Micek, The Morning Call, Allentown, Pa.

Hours after a threatened veto, Republicans who control the state House pulled the plug Tuesday on a planned debate over a local impact fee for natural gas drillers, saying they'll take up the issue this fall.

The 180-degree turn came as lawmakers worked to put the final pieces of a $27.15 billion budget into place so they could send it to Gov. Tom Corbett before the new fiscal year starts on Friday.

At a news conference, the GOP governor said he wants lawmakers to wait to debate any impact fee bill until after a Marcellus Shale commission submits its report next month on the effects of drilling.

"I have sent this message back: If something gets to my desk, it will be vetoed," Corbett said.

The budget cleared a major hurdle as the Senate voted 30-20 along straight party lines to approve it, positioning it for a vote by the House as soon as Wednesday.

Also on Tuesday, House and Senate Democrats withdrew their opposition to funding bills for Penn State, Temple and Lincoln universities and the University of Pittsburgh, and the veterinary school at the University of Pennsylvania, mustering the two-thirds majority needed for approval.

Democrats in the two chambers withheld their votes for the schools Monday, complaining they hadn't had time to review the details of the sprawling main budget bill. Once that happened overnight and into Tuesday, the Democrats said they were prepared to withdraw their opposition. In short order, the House and Senate separately voted to approve the appropriations.

A key budget bill governing how the state regulates public education and a bill known as the fiscal code, which implements the spending in the main budget, were also moved into place. The House advanced the fiscal code bill, positioning it for a vote Wednesday. The school code bill cleared the Senate on a 33-17 vote and went to the House for approval.

During lengthy debate in the Senate, Democrats repeated arguments that the budget, which trims overall state spending by about 3 percent largely through more than $1.1 billion in cuts to public schools and 18 universities, would result in reduced services for the needy and the aged, tuition hikes for college students and local property tax increases for homeowners.

They also reiterated longstanding complaints that Republicans and the administration had refused to tap a year-end stimulus of as much as $700 million to restore some of the deepest cuts. The spending plan includes more than $100 million in surplus funds.

"This budget recognizes that there are tough, tough choices, I understand that," said Sen. Lisa Boscola, D-Northampton. "But it also includes some bad choices on how to reinvest $27.15 billion for as many Pennsylvania families as we can."

Republicans have said they're not comfortable with all the reductions in the spending plan. But they stressed that the plan "reflects the circumstances of the times," while ducking any major tax increases.

"The document reflects the need for the commonwealth to be fiscally responsible at a time of difficult financial challenges," said Majority Whip Pat Browne, R-Lehigh.

Negotiations continued on two of Corbett's key legislative priorities: authorization of public school vouchers and legislation closing most of the loopholes in a law requiring voter referendums for any school tax hike that outpaces inflation. The governor wants both measures passed before lawmakers start their summer break.

"The House and the Senate have worked with us to reach a final budget," Corbett said. "Because we planned carefully, estimated conservatively, we have a framework to put our budget together."

Corbett has pressed hard to close the loopholes in the "back-end referendum" law, raising the issue in nearly every negotiating session with legislative leaders. Implementing language sponsored by Rep. Seth Grove, R-York, has been attached to a Senate bill currently scheduled for a House vote Wednesday. The governor appeared ready to play hardball with lawmakers, saying "until there is a budget, until I sign one, there is no budget."

Talks on the school-choice bill are continuing, with House leaders saying it's up to the Senate to make the first move. "The Senate has always been in the lead," said House Majority Leader Mike Turzai, R-Allegheny.

Senate President Joe Scarnati, R-Jefferson, said the chamber is "continuing to work with the House to see if there's support" for a school-choice bill and to "see what we can get done before we leave."

House Republicans denied that Corbett's veto threat had anything to do with their decision to put off a vote on an impact fee until the fall. They were complying with his long-stated position that lawmakers delay voting until the Marcellus Shale commission presents its report.

"We'll try to design a legislative package that addresses the full impact of drilling," House GOP spokesman Steve Miskin said.

Scarnati, who spearheaded the push for a drilling fee, said Corbett's veto threat had "changed the dynamic. ... Obviously, it's not going to get done by June 30 if the governor has put his marker down," he said.


Copyright (c) 2011, The Morning Call, Allentown, Pa.

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Little Lizard Could Cause Big Disruptions for Texas Drillers

- Little Lizard Could Cause Big Disruptions for Texas Drillers

Monday, June 20, 2011
Fort Worth Star-Telegram, Texas
by Anna M. Tinsley

Deep in the West Texas sand dunes is something that some say could threaten the state's oil and gas production: A tiny lizard.

But it's not just any lizard: It's a dunes sagebrush lizard, also known as the sand dune lizard.

This little brown reptile is a concern for state officials, who hope that federal officials don't designate it an endangered species. That, they say, could disrupt oil and gas exploration in the heart of Texas' oil country, leading to higher gas prices and shrinking dollars for schools.

"It's reptile dysfunction," said Texas Land Commissioner Jerry Patterson, who oversees the permanent school and university funds, which get money from royalties and leases on some of the potentially affected land. "It has the potential to bring oil exploration and production to a halt."

The U.S. Fish and Wildlife Service, which has had the issue before it for about a decade, is considering protections because oil and gas exploration and ranching are shrinking the lizard's habitat. A decision could come by year's end.

The lizard

The blunt-nosed lizard at the heart of the issue has bright yellow eyes but is barely as long as a person's hand. The lizard is important prey for a number of other species, including some birds and mammals.

It can be found in the West Texas counties of Andrews, Crane, Gaines, Ward and Winkler -- part of the Permian Basin, known to petroleum officials as the most "prolific oil-producing region in onshore America" -- as well as in southeast New Mexico.

There it lives, in the shade of shinnery oak trees, which look like bushes and are found mainly in the sand dunes. The lizard lives only in dunes that have medium-size sand grains.

Environmentalists say the spiny lizard is in danger of extinction because its habitat has been disturbed or removed by oil and gas development. Shinnery oaks, for instance, have been destroyed by drillers, who clear space and move equipment. They have also been killed by ranchers, who say the plant can be poisonous to cattle.

The lizard has been a candidate for endangered status since 2001, when the Center for Biological Diversity asked the federal government to list it. But this proposal was moved forward at least in part because of a federal lawsuit by the environmental advocacy group WildEarth Guardians.

"I think the current federal proposal is based on a number of years of examining the status of the lizard," said Ken Kramer, director of the Lone Star Chapter of the Sierra Club. "It's not a last-minute sort of proposal."

State opposition

Patterson, who has compared the sand dune lizard to Godzilla for its ability to potentially freeze gas and oil work, said this fight is about more than just a reptile.

It's about what he said is a new strategy to gain endangered status for many animals and essentially block industries from doing their work.

"You overwhelm Fish and Wildlife with requests ... and rather than do science on several hundred species, they just settle the lawsuit," he said.Patterson, who has held a sand dune lizard and said it actually is "a cute little bugger," is calling on federal officials to reject the proposed designation.

"The science is not complete, it's out of date, and there's no decent information that has been sufficient to warrant the designation," he said. "If the designation comes, and it isn't based on sound science, we will file a lawsuit."

Texas Agriculture Commissioner Todd Staples, University of Texas System officials and Texas Association of Business President Bill Hammond also oppose the designation.

UT System officials manage more than 2.1 million acres for the benefit of the system, including acreage that could be a habitat for the lizard. They sent a letter to federal officials saying that listing the lizard as endangered is "at best premature" because that decision would be based on "faulty science, inadequate data and seriously erroneous assumptions."

Patterson said that a herpetologist from Texas A&M University has been hired and that studies of the lizard have been commissioned.

The Texas Endangered Species Task Force, primarily made up of property and business owners who could be affected, is developing conservation plans, said R.J. DeSilva, a spokesman for the Texas comptroller's office.

"The goal is to have a plan by November," he said. "There's a need to balance the development of the industry, and economic development in the industry, and take actions to mitigate and preserve the habitat."

Political move?

This year, the Obama administration said a decade's worth of petitions to add wildlife to the endangered species act would be addressed over the next six years.

About 1,400 plant and animal species are designated endangered. Officials work to protect their habitats and review what can be done. Several Texas Republicans in Congress, including Reps. Michael Conaway of Midland, Randy Neugebauer of Lubbock and Francisco Canseco of San Antonio, have asked colleagues to keep the lizard from being designated as endangered. Sen. John Cornyn filed an amendment to prevent federal officials from offering protections to the lizard.

"If the Obama administration has its way, this scaly political pawn will land on the Endangered Species List, without sufficient supporting research to back up the move, and effectively bring new and existing oil and gas production in parts of Texas and New Mexico to a screeching halt," he said in a statement.

Federal officials say they used the best science available and are working with companies to minimize problems or interruptions. Some petroleum companies have signed on to voluntary conservation agreements, agreeing to pay for habitat restoration and use techniques to lessen the impact on the lizards.

Kramer, of the Sierra Club, said he believes that state and industry officials are exaggerating the crisis.

"Practically every time there is a proposal, we get these people saying ... 'The sky is falling. This is going to be the end of civilization as we know it,'" Kramer said. "There is almost always an overreaction based upon their lack of understanding in which the species can be protected."

Copyright (c) 2011, Fort Worth Star-Telegram, Texas

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Utica, Upper Devonian Reserves in Pa. May Match Marcellus' Bounty

Utica, Upper Devonian Reserves in Pa. May Match Marcellus' Bounty

Monday, April 11, 2011
The Philadelphia Inquirer
by Andrew Maykuth

Natural gas drillers are accelerating exploration of several Appalachian rock formations that sandwich the Marcellus Shale beneath Pennsylvania, and some experts say the new discoveries may be as prolific as the Marcellus itself.

"What we've got is Marcellus times two," said Terry Engelder, the Pennsylvania State University geosciences professor whose Marcellus Shale estimates in 2008 first drew public attention to the region's shale gas potential.

Since The Inquirer reported in May that drillers had found recoverable gas in the Utica and Upper Devonian Shales, several operators have become more openly optimistic about a potential natural gas triple play in the region. The new discoveries add momentum to an industry that is rapidly reshaping the economy and the environment of large swaths of rural Pennsylvania.

"A year ago, I didn't have a feeling the tests were going to be as large as I've seen," Engelder said. "The implications of this are just amazing."

Range Resources Corp., the Texas company that drilled the first Marcellus well in 2004, is bullish about multiplying output from its acreage, mostly in southwestern Pennsylvania.

"The Utica and Upper Devonian could combine to equal the Marcellus," Range spokesman Matt Pitzarella said, though he cautioned that the estimates were preliminary.

At least four gas drillers, including Range, told investors this year they were exploring the formations, which lie above and below the Marcellus in a geological layer cake.

The expanding outlook of shale gas reserves goes far beyond Pennsylvania.

Worldwide estimates of gas reserves are growing because of revolutionary advances that couple horizontal-drilling techniques with hydraulic fracturing to unlock gas in long reaches of tight rocks.

The U.S. Energy Information Administration on Tuesday said technically recoverable shale gas worldwide could add 40 percent to global gas supply. China, South Africa, Argentina, and Australia have big reserves. So do Mexico and Canada.

According to the administration, American natural gas reserves are now at the highest level in 40 years. By 2035, shale gas will account for 46 percent of U.S. natural gas production.

Though gas burns cleaner than coal or oil, the escalation of an industrial extraction process that produces large volumes of toxic wastewater has raised fears about the trade-offs of shale gas. President Obama has championed natural gas development, but only if it can be done without endangering water supplies.

"It's a little disheartening the industry is wringing its hands in excitement when they clearly haven't figured out how to drill in the current shale without creating problems," said David Masur, executive director of PennEnvironment, a lobbying organization.

Pennsylvania regulators on Wednesday pressed Western Pennsylvania water suppliers to expand the scope of tests to screen for radioactive pollutants and other contaminants from the natural gas drilling industry.

So far, 2,748 Marcellus wells have been drilled in Pennsylvania -- 399 in the first three months of 2011. Experts say 50,000 wells could be drilled in the coming decades, not counting wells in other formations.

"We're still in the early stages of this," Masur said.

Awareness of the presence of gas in other Appalachian formations -- even deep ones -- is hardly new. Some operators, such as Anadarko Petroleum Corp., were attracted to Pennsylvania to explore other deep formations and then switched to the Marcellus. Range's first Marcellus well had targeted a deeper formation called the Lockport Dolomite.

The potential of the Marcellus has eclipsed all other formations. In the last 150 years, operators have produced 47 trillion cubic feet of gas from Appalachian wells, Pitzarella said. By comparison, the Marcellus Shale is believed to contain 500 trillion cubic feet, though the amount eventually recovered will be less.

In recent months, operators have begun to focus capital on some of the other formations.

Atlas Energy Inc. executives, before their company was sold to Chevron Corp., told analysts they were exploring the Utica formation and the Upper Devonian Shale.

"Both of these shale packages are prevalent throughout Western Pennsylvania and New York, where we have over 630,000 net acres," Atlas president Richard D. Weber said in August.

Consol Energy Inc., a Pennsylvania coal producer that last year moved aggressively into natural gas, said it had a promising Utica well last year in eastern Ohio.

Brandon Elliott, Consol's vice president for investor relations, told investors on Feb. 28 that a vertical well produced 1.5 million cubic feet of gas from a 200-foot-thick Utica layer 8,450 feet below the surface.

That production, which required no hydraulic fracturing, "actually would be greater than any of our other vertical wells that we drilled in the Marcellus," Elliot said.

Consol has budgeted $35 million to drill six more Utica wells later this year, he said.

Ultra Petroleum Corp. of Houston says the Utica Shale appears to be uneconomical beneath its acreage in northern Pennsylvania. But it plans to drill into a shallower Upper Devonian formation, the Geneseo Shale, this month.

"We're optimistic about this target, and we feel it has the potential to add significant value across a large part of our Pennsylvania acreage position," Douglas Selvius, Ultra's director of exploration, told investors.

John H. Pinkerton, chief executive of Range Resources, says he believes a lot of other companies will follow his lead into the Utica and Upper Devonian Shales.

Range is attracted to the additional shales because all three layers lie under much of its prime 700,000 Marcellus acres -- making those mineral leases equal in value to 1.5 million acres in other shale regions.

Pinkerton said production costs for the new wells would be lower than those of the original wells because many will use the same infrastructure -- the same well pads, roads, and pipelines now being installed for the Marcellus wells.

"The incremental cost to develop the Upper Devonian and Utica will be reduced by approximately one-third versus the development of these zones on a stand-alone basis," Pinkerton told analysts in March. "We believe this will allow us to continue to drive down the cost of the entire play."

The new shales also seem more promising in Western Pennsylvania areas where the Marcellus produces "wet gas" that contains liquid fuels in addition to natural gas. Those areas are considered attractive in the current market because liquids, which are valued according to oil prices, which are soaring, fetch a premium.

Some analysts say the Utica and Upper Devonian Shales have limited promise.

Subash Chandra, a Jeffries & Co. managing director, said the Utica formation "is not going to work" in much of Pennsylvania because it may not contain attractive quantities of natural gas in its deepest parts.

"The real Utica play is in Ohio, where it's shallower," he said.

As Marcellus drillers have discovered, not all shale acreage is created equal.

Encana Corp., a Canadian driller, last year pulled up stakes in Luzerne County, near Wilkes-Barre, after its wells produced disappointing results, marking what may be the productive boundary of the Marcellus.

According to industry experts, some deep Marcellus pockets on its eastern edges are "baked" -- they received too much heat over the ages and no longer contain commercial quantities of natural gas.

Marcellus Impact Fee Proposal In The Works

Marcellus Impact Fee Proposal In The Works

Monday, March 28, 2011

Knight Ridder/Tribune Business News

by  Brad Bumsted, The Pittsburgh Tribune-Review

 

Republican senators will introduce legislation to impose a fee on Marcellus shale drillers in a few weeks, in an effort to offset costs municipalities experience dealing with the growing natural gas industry, said a top Senate staffer.

Senate President Pro Tempore Joe Scarnati of Jefferson County, the party's highest-ranking senator in the GOP-controlled General Assembly, could be lead sponsor of the bill, said his chief counsel Andrew Crompton.

Counties where drilling occurs would benefit the most monetarily, but lawmakers likely will try to compensate contiguous municipalities, Crompton said. Those municipal boundaries could cross county lines, he said, so "contiguous counties could well get money."

Lt. Gov. Jim Cawley said yesterday a shale advisory panel he chairs will report to Gov. Tom Corbett in 120 days and include a recommendation on assessing a local impact fee to help municipalities defray costs such as road repairs and first responder units.

Corbett has said he would consider a fee to help local government finances. But the money should not go to the state, he said.

The Senate might produce a different interpretation. Scarnati "believes local needs are paramount, but knows that there needs to be a statewide portion, likely for 'Growing Greener' projects and/or hazardous site cleanup," Crompton said.

Cawley said the administration would not impose a severance tax on gas extraction, and the Marcellus Shale Advisory Commission wants evidence of damage that's occurring from drilling operations.

"We want to understand what the actual impact is," he said.

It's not clear whether the full Senate would vote on a bill before the commission concludes its work. Crompton said senators do not want to usurp the commission, but Scarnati senses urgency among local government officials and doesn't want to wait until fall to address it.

The commission will consider a range of issues, such as environmental impacts and the extent to which natural gas eventually could be used to fuel state vehicles, prisons and schools, Cawley said.

Corbett's critics have said the commission's makeup is industry-heavy. It includes drilling company executives, business representatives, six members of Corbett's cabinet, a member of the Public Utility Commission, environmentalists, local government officials and the governor's energy executive, Patrick Henderson.

"This is a very interesting group of cheerleaders," Virginia Cody of Wyoming County told the panel during its first meeting.

Joanne Fiorito, who lives near drilling sites in that county, said she moved there "to be at peace with nature."

"You have ripped my American dream apart, and I am appalled and outraged," she said.