Energy companies active in Pennsylvania’s shale-gas boom would be taxed on each well drilled and subject to tighter environmental regulations designed to protect groundwater, according to plans published by Governor Tom Corbett on Monday.
The new measures are among those recommended by the Marcellus Shale Advisory Commission, a panel set up by the Republican governor to propose ways of benefiting from the state’s natural-gas bonanza while protecting water and air from chemicals and gases used in the extraction process.
Corbett, who has refused to accept a proposed production, or “severance” tax on the industry, said gas companies would instead be subject to an “impact fee”, costing them up to $40,000 per well in its first year, and smaller annual amounts in the subsequent 10 years, up to a potential total of $160,000 per well.
A Slice Of The Fracking Pie
The fee would generate about $120 million in the first year and almost $200 million in the first six years, Corbett said in a statement. Three-quarters of the revenue would be split between counties and towns in the areas affected by drilling, and can be used for projects such as road repair or storm drain construction.
Pennsylvania, at the heart of the Marcellus Shale industry, has been the only gas-producing state not to impose a tax on drillers.
“As the number of wells grows, so will the revenue,” Corbett said.
Almost all of the money it brings in will go to benefit the places experiencing the impact.
The fee, along with about a third of the commission’s recommendations, is subject to approval by the Republican-controlled state legislature. Senate President Pro Tempore Joe Scarnati said the level of the fee and how its revenue is used will be debated by lawmakers this month.
Democratic Representative Greg Vitali said he would vote against Corbett’s proposal because it set the fee too low and its revenues would be unfairly distributed.
The Marcellus Shale Coalition, an industry group, said the plan would help Pennsylvania benefit from the shale-gas industry.
“Governor Corbett’s plan,” the group said in a statement, “should build upon this momentum for years to come.”
Nurturing An Industry
The measures represent the state government’s efforts to manage an industry that is in the early stages of exploiting one of America’s biggest reserves of natural gas. The new policy boosts environmental safeguards in response to criticism that the industry is contaminating drinking water with toxic chemicals used in hydraulic fracturing, or “fracking.”
But Corbett also wants to nurture an industry that is expected to create thousands of jobs and generate millions of dollars in tax revenue while helping a national effort to reduce dependence on imported oil and cut greenhouse gas emissions by promoting the use of cleaner-burning natural gas.
Environmental proposals include doubling penalties for civil violations from $25,000 to $50,000; expanding an operator’s “presumed liability” for impairing water quality from 1,000 to 2,500 feet from a gas well, and increasing the distance that a gas well must be set back from a private water well to 500 feet from the current 200 feet, and to 1,000 feet to public water systems.
Gas wells would have to be set back 300 feet from rivers, ponds and other waterways, up from the current distance of 100 feet.
Iris Marie Bloom, founder of the anti-drilling group Protecting Our Waters, called the environmental measures “utterly inadequate.”
“Increasing setbacks from human beings’ private water wells from 200 to only 500 feet is pathetic, since methane has been shown to migrate thousands of feet in a few seconds due to gas drilling,” Bloom wrote in an email.
In New York, opposition to fracking development has also created a vocal anti-fracking community. Read: Grass Roots Campaign Focuses On New York Fracking.
Photo Caption: Independence Hall on Independence Day July 4, 2003 in Philadelphia.