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Senate should consider alternative to House’s uncompetitive approach

Canonsburg, Pa. – This evening, the Pennsylvania House of Representatives passed a massive, uncompetitive new tax on the responsible development of clean-burning natural gas from the Marcellus Shale formation, which has helped create nearly 88,000 jobs in Pennsylvania alone as the state’s unemployment rate continues to remain near double-digits. This massive new tax – 39 cents per mcf of natural gas – represents the nation’s highest among shale gas producing states. In fact, this onerous tax on shale gas production is twice as high as West Virginia’s, currently the nation’s highest.

Equally problematic, this enormous tax does not allow for natural gas producers to recover and reinvest the millions of dollars required to produce shale gas from the Marcellus, as virtually every other major shale gas producing state does. Many members of the House of Representatives voted against this massive tax, recognizing the negative impact it would have on job creation and investment in Pennsylvania.

Kathryn Klaber, president and executive director the Marcellus Shale Coalition (MSC), issued this statement following the vote:

“Votes for this misguided, unprecedented tax that narrowly passed this evening, are votes against the job creation and the responsible development of clean-burning domestic natural gas, which is helping to lower energy prices for Pennsylvania consumers and driving down our nation’s dependence on foreign sources of energy.

“We are confident, based on Senator Scarnati’s public comments this evening, that the Senate will remain steadfast in their commitment to realize a competitive climate for growth for this industry, and prosperity for Pennsylvanians.

“To make certain that Pennsylvania’s economy and workforce remain ahead of the curve in the increasingly competitive global economy requires commonsense solutions that encourage capital investment in the Commonwealth. A competitively structured tax in Pennsylvania, that allows for critical capital investment, coupled with smart regulatory and legislative modernizations, is key to ensuring that this historic opportunity is realized in ways that benefit each and every Pennsylvanian.”

NOTE: In a statement, Rep. Dwight Evans (D-Philadelphia), chairman of the House Appropriations Committee, underscored the fact that “We need a tax that is competitive with other shale states.” Rep. Evans adds: “I also recognize the industry will want to weigh in and argue for a tax with a rate and characteristics that allow for capital recovery, a tax it can support as it does in every other state where drilling occurs. These issues are all negotiable.”

As State House Readies Massive New Tax on Shale Gas Job Creators, Leaders Must Consider Host of Unintended Consequences

Canonsburg, Pa. – The responsible development of the Marcellus Shale’s clean-burning, homegrown natural gas reserves represents a historic opportunity to revitalize Pennsylvania’s economy by growing its workforce, all while strengthening our nation’s energy security and improving its environment.

In fact, the Reading Eagle took a deep look at these economic, environmental and national security benefits in a weekend story under the headline “Pennsylvania gas reserve could transform U.S. energy market.” But commonsense laws, policies and regulations that encourage this tightly-regulated, environmentally proven production are key to maximizing these benefits for each and every Pennsylvanian and ensuring this transformational opportunity is fully realized. And as Marcellus Shale production expands across the Commonwealth, so too do these much-needed, job-creating benefits.

But as the General Assembly’s legislative calendar quickly draws to a close before this fall’s elections, the Associated Press reports that “Pennsylvania’s House majority leader said Friday that he plans to hold a vote next week on legislation to impose a tax on Marcellus Shale natural gas extraction,“ noting that “Todd Eachus, D-Luzerne, said he will press for a minimum tax of 39 cents per thousand cubic feet.”

Unfortunately, this proposed new, massive tax – twice as large (and punitive) as West Virginia’s, which is currently the nation’s highest – would drive critical capital investment to other energy-producing states (and countries), dramatically undercutting efforts that are helping to lower energy costs for Pennsylvania consumers and creating jobs at a time when they’re most needed. Here’s a look at the taxes on the books in other shale gas-producing states, which are competing fiercely for the jobs and the critical capital investment needed to produce from the Marcellus:

It’s also important to note that the competing shale gas-producing states, including Texas, Arkansas and Louisiana, all include a capital recovery period in their tax structures, reflecting their commitment to attract investment and job creation – not discourage it – like the model under consideration in the House of Representatives.

In yesterday’s Harrisburg Patriot-News, Kathryn Klaber — president and executive director of the Marcellus Shale Coalition (MSC) — underscores how critical it is that our leaders in Harrisburg “get this right” in a column entitled “Misguided Marcellus Shale tax would cost PA”:

It’s no secret that our elected officials in Harrisburg are considering a new tax on shale gas production. Unfortunately, some don’t seem to understand that global competition for capital will react to the magnitude of the tax, evidenced by their consideration of a tax that would be the nation’s highest and least competitive. Our focus must be on getting this opportunity right. To make certain that Pennsylvania’s economy and workforce remain ahead of the curve in the increasingly competitive global economy requires common-sense solutions that encourage capital investment in the commonwealth.

We have an opportunity to make Pennsylvania a national leader in natural gas production – a “first” that will afford thousands of Pennsylvanians a good-paying job, spur billions in economic development and provide America with the energy security it so desperately needs.

Our lawmakers should reject any massive, new tax proposal that puts Pennsylvania last.

Copyright: Marcelluscoalition.org

In the Sept. 22 editorial “Shale Worries: Loss of Property Rights Could Be the Next Threat,” the Post-Gazette mischaracterizes the concept of fair pooling, a policy that states have used wisely for generations to reduce above-ground surface activities, while maximizing responsible shale gas production and its host of benefits.

Pooling — which is on the books in every major energy-producing state for horizontal drilling, except Pennsylvania — ensures that mineral owners are compensated for the production of their natural gas.

Your readers, and your editorial writers, should understand that new technologies allow natural gas reserves to be reached thousands of feet below ground, and thousands of feet horizontally from a drilling pad. Unfortunately, under current law, a single landowner could deny the rights of a vast majority of landowners from producing their natural gas reserves. How fair is that?

In June 2009, the Post-Gazette editorialized in favor of a severance tax on shale gas production because “most states, including West Virginia, already” have such a tax, adding that “it is only fair that Pennsylvania share in the wealth.” By that logic, doesn’t Pennsylvania need a common-sense pooling statute, too, since other states (including West Virginia) have one?

The paper is right to characterize Pennsylvania’s natural gas industry as a source of “promising new jobs and income”; in fact, the responsible development of the state’s shale gas resources has created more than 44,000 jobs so far in the commonwealth, with many more in the coming months and years. A competitive tax structure, along with common-sense laws such as fair pooling, will only help build on this tremendous and historic opportunity.

DAVID CALLAHAN

Vice President

Marcellus Shale Coalition

– Link to original Letter to the Editor in Pittsburgh Post-Gazette:  http://www.post-gazette.com/pg/10270/1090577-110.stm

Copyright: Marcelluscoalition.org

Findings highlight how Pa. continues to lead the way in safe, responsible use of hydraulic fracturing

Canonsburg, Pa. – Pennsylvania officials’ oversight and regulation of hydraulic fracturing, a critical technology for producing abundant reserves of natural gas from the Marcellus Shale, is among the strongest in the nation. That’s the message delivered by a national board of state regulatory officials, industry experts and environmental stakeholders in the form of a new report from the non-profit group STRONGER, the State Review of Oil and Natural Gas Environmental Regulations.

“Hydraulic fracturing has long been an important technology in producing energy here in Pennsylvania,” said Kathryn Klaber, president and executive director of the Marcellus Shale Coalition. “But at no point in its history has it been more important than right now. Thanks to the well-stimulation process, natural gas that would otherwise be too deep and too difficult to access suddenly isn’t – which means more energy, more jobs, and more revenue for state and local governments. But we know the process has to remain safe to remain effective. And so that’s why we continue to work with state regulators to ensure that our environment and groundwater are protected. The work done by DEP is incredibly important and done tremendously well, and this study confirms that.”

“The review team found that the Pennsylvania Department of Environmental Protection has a well-managed program,” said Lori Wrotenbery, the chair of the STRONGER review panel and a senior official with the Oklahoma Corporation Commission. “In fact, we believe several aspects of the Department of Environmental Protection and its operations merit special recognition.” A copy of STRONGER’s press release can be accessed here.

The Pennsylvania hydraulic fracturing regulatory program was singled out for its operations in the following areas: comprehensive water planning; baseline water sampling and water studies; prevention, preparedness and contingency planning; waste identification, tracking and reporting; and increasing staffing levels, according to the STRONGER statement.

NOTE: According to STRONGER, “hydraulic fracturing has been used in Pennsylvania since the 1950s. Since the 1980s, nearly all wells drilled in Pennsylvania have been fractured. Although thousands of wells have been fractured in Pennsylvania, DEP has not identified any instances where groundwater has been contaminated by hydraulic fracturing.” Click HERE to view this study on-line.

Kathryn Z. Klaber
The Patriot-News
Sunday, September 26, 2010

• “Our focus must be on getting this opportunity right. To make certain that Pennsylvania’s economy and workforce remain ahead of the curve in the increasingly competitive global economy requires common-sense solutions that encourage capital investment in the commonwealth.”

Pennsylvania’s prosperity has long been a function of its abundant natural resources — and the American experience has long been improved by their use. The commonwealth’s coal helped us win two world wars. Its oil helped power progress and improve our standard of living. And its timber helped form the backbone of our modern society.

Today, we’re leading the way once again with manufacturing of alternative energy technology. And because of the Marcellus Shale and other shale plays nationwide, we’re positioning ourselves to leverage the power of clean energy into thousands of jobs and billions in revenue for Pennsylvanians.

Of course, geologists have known about the Marcellus Shale for a long time — it’s 390 million years old, after all. But thanks to the combination of age-old techniques and new innovations along the way, natural gas reserves previously considered too deep and difficult to access suddenly are not. And considering energy security concerns and the difficult economic times in which we find ourselves today, these discoveries couldn’t have come at a better time.

As of this writing, Pennsylvania’s unemployment rate is still near double digits, and more than 400,000 residents are still out of a job. A recent Patriot-News article reports that “The economic impact of the drilling industry — particularly in rural areas of the state — is indisputable,” noting that the facts are “demonstrable.”

In an otherwise bleak economy, Marcellus Shale development will create nearly 90,000 jobs in Pennsylvania by the end of this year, according to researchers at Penn State, with nearly 211,000 jobs projected through the next decade.

And these aren’t just drilling rig jobs — railroads, engineers, building contractors, supply stores, diners, hotels, steel manufacturers and several other industries and small and medium-size businesses involved in our growing and robust supply chain are all experiencing a significant expansion of growth directly tied to Marcellus production. We call it the “Marcellus Multiplier.”

Our work also is generating billions of dollars in tax revenues and lease payments to Pennsylvania landowners. During the next year, continued Marcellus development will generate more than $1 billion in state and local tax revenues. In 2008 alone, our industry paid more than $1.8 billion in lease and bonus payments to Pennsylvania landowners. But there’s much more to be done, more jobs to be created and more stable supplies of homegrown, clean-burning energy to deliver to Pennsylvania consumers.

Yet as our production expands in Pennsylvania, the competition for the critical capital needed to produce a Marcellus well — each requires about $4 million — grows stronger and fiercer by the day. Other shale gas-producing states — particularly Texas, Oklahoma, Louisiana and Arkansas — want those investments, and those jobs, just as much as we do.

But we’re not just competing with other states for these opportunities. Poland, China, Canada and other foreign nations are working aggressively to secure the capital needed to expand their energy production, too. There’s a reason officials at the Kremlin read news clips from the Marcellus region every morning — and it’s not because they’re looking for coupons.

It’s no secret that our elected officials in Harrisburg are considering a new tax on shale gas production. Unfortunately, some don’t seem to understand that global competition for capital will react to the magnitude of the tax, evidenced by their consideration of a tax that would be the nation’s highest and least competitive.

In fact, it would be higher than West Virginia’s, which stands as one of the least competitive in the nation. And, as of last month, there were 16 horizontal rigs operating in West Virginia’s Marcellus and more than 60 here in Pennsylvania. That’s not a coincidence.

These far-reaching decisions — which will impact the commonwealth’s economy and ability to compete for decades to come — should not be made in isolation to fill a hole in the state budget; that’s the wrong approach and one that will carry several negative unintended economic consequences.

Our focus must be on getting this opportunity right. To make certain that Pennsylvania’s economy and workforce remain ahead of the curve in the increasingly competitive global economy requires common-sense solutions that encourage capital investment in the commonwealth.

Pennsylvania needs strong regulatory and competitive tax frameworks that encourage capital investment and job creation — not a massive, misguided and unprecedented tax that would drive critical capital and jobs to other energy-producing states and countries. This would dramatically undercut efforts that are helping to lower energy costs for Pennsylvania consumers, increase energy security for Americans and bring cleaner fuels to our environment.

As an industry, we are committed — each and every day — to ensuring that this historic opportunity is realized in ways that benefit each and every Pennsylvanian. Our hope, and expectation, is that our government also will work to ensure that this opportunity is realized for decades to come.

KATHRYN KLABER is the president and executive director of the Canonsburg-basedMarcellus Shale Coalition.

Copyright: Marcelluscoalition.org

Centre Daily Times
Promising results from exploratory gas wells in Centre County have focused the interest of some energy companies on the area, making it likely the county will see increased drilling in coming years.

The Patriot-News
The Marcellus Shale Coalition has been trumpeting the fact that the drilling industry is one of the few adding jobs in a sour economy in Pennsylvania. It’s right up there with casino gambling establishments. The economic impact of the drilling industry — particularly in rural areas of the state — is indisputable.

Submitted by Readers
September 18, 2010

In a recent column (“Gas drilling’s threat to our water,” Sept. 12), Edward Smith makes claims about Marcellus Shale natural gas production that aren’t supported by facts.

Hydraulic fracturing, a 60-year-old technology that’s been used more than 1.1 million times since its inception in the 1940s, has never contaminated groundwater. A top Department of Environmental Protection official confirmed that “no one’s ever documented drinking water wells that have actually been shown to be impacted by fracking.” And a top Environmental Protection Agency official recently testified that “he hadn’t seen any documented cases that hydro-fracking was contaminating water supplies.”

Smith writes that “government needs to know the chemicals used in fracking.” But DEP already lists these additives on its website. Truth is, more than 99.5 percent of these fluids are made up of water and playground sand.

Readers should also know that advancements in technology have allowed Marcellus producers to recycle more than 60 percent of the water used in the process; many companies are recycling 100 percent.

It’s difficult to reconcile Smith’s call for a moratorium, and the need to deliver clean-burning Marcellus gas to Pennsylvanians – which is already helping to lower energy costs for Pennsylvanians and creating tens of thousands of jobs during one of the most difficult economic periods in our lifetime.

We do agree with Smith’s statement, “It must be done with every care and protection for our water and citizens.”

That’s not only our goal, it’s our expectation.

Kathryn Klaber

President and Executive Director, Marcellus Shale Coalition

Canonsburg, Washington County

Copyright: http://tribune-democrat.com

WILK-FM
Kathryn Klaber, President of Marcellus Shale Coalition, talks to Corbett about a PA Homeland Security intelligence bulletin warning of an increasing threat to the energy sector.

September 10, 2010

While many regions across the nation, and the Commonwealth, continue to face sluggish economic times and continued job loss, the responsible development of the Marcellus Shale’s clean-burning natural gas resources are driving commerce, and genuine and lasting economic activity, opportunity and job growth.

The benefits of the Marcellus are impacting our local workforce, helping to create tens of thousands of good-paying jobs, and delivering more affordable and stable supplies of homegrown energy to Pennsylvania consumers.

By now, you’ve surely seen, or experienced, this work and its benefits firsthand. On travels to work, church, or to the Weis Market on West Bald Eagle Street, it’s hard not to recognize the increase in truck traffic, and construction on the roads, in and around Clinton County.

In many cases, Marcellus development is responsible for both the traffic and road construction – the two go hand-in-hand.

We understand and recognize the concerns regarding the uptick in truck traffic and its impact on our roads. And we also understand, as good neighbors, that we must do everything to ensure that roads are left in better condition than when our operations began.

So what actions are our industry taking to ensure that this commitment is kept?

This year alone, the Marcellus Shale industry will invest more than $100 million to repair and repave roads in the communities we operate in – and in virtually every case, we’re rebuilding these roads to higher standards, ensuring their ability to handle the increased traffic and weight. These upgrades and repairs are done overwhelmingly by local contractors, another example of our industry’s robust and growing supply chain – the “Marcellus Multiplier'” – helping to give a much-needed shot in the arm to local businesses and to our workforce.

But not only are these commonsense infrastructure investments the responsible thing to do, and are in most cases required by PennDOT, but it’s also in our companies’ interests to ensure that roads remain intact, passable and safe so that our trucks can access sites.

In fact, each Marcellus operator must submit, and subsequently have approved, an exhaustive road management plan to PennDOT, making certain that road management and reconstruction plans are in place.

And as part of this comprehensive plan, operators are required to “bond” each section of a given road where their trucks may travel. Trucks are only permitted to travel on roads that are bonded, and are part of an approved PennDOT road management plan. This brings forth increased, and needed, oversight and transparency.

It’s also important to understand that, according to PennDOT, “no additional tax dollars are needed for necessary road repairs due to increased” Marcellus development.

A good example of this system at work is the recently completed Route 664/Coudersport Pike project. Late last month, the road cones disappeared and the construction signs came down along that five-mile stretch. With a price tag of $1.2 million, this upgrade project was funded by two natural gas companies. Our industry will continue to make similar multi-million dollar infrastructure investments across the Commonwealth, as Marcellus development expands.

And as we work to repair, repave and rebuild our roads, we are also taking commonsense steps – driven by advancements in technology – to reduce the volume of overall truck traffic.

Approximately 1,500 truck-trips are required to develop a single Marcellus well. Of those 1,500 trips, nearly 1,000 are water tankers. The development of alternative water transportation systems to our sites is just one of several technologies that would reduce truck traffic.

At the same time, our industry is now recycling more than 60 percent of the water used throughout this process – some companies are recycling 100 percent of their water. These proven technologies, which continue to advance by the day, are dramatically reducing our overall water usage, and therefore allowing our industry to markedly reduce our overall truck traffic and road use.

But there’s much more to do, and we recognize this.

Mitigating and restoring the wear and tear on roads associated with Marcellus development is a responsibility we take very seriously; we’re committed to addressing this issue, and others, directly and straightforwardly. And in addition to our ongoing road restoration efforts, the Marcellus Shale Coalition is working with local officials and state regulators to craft solutions aimed at ensuring Pennsylvania’s roads are properly maintained and safe for everyone.

That’s one reason why the MSC is partnering with the PennDOT, the state police, the Pennsylvania Public Utility Commission, the Pennsylvania Department of Environmental Protection, and other key transportation officials, for a Marcellus Transportation symposium on Oct. 12 in State College. The event, open to drivers, company safety coordinators or anyone with direct involvement with the transportation component of drilling operations, is focused on better educating “carriers and truck drivers supporting the natural gas industry of Pennsylvania’s regulations to improve their safe operating practices.”

Our commitment to each and every Pennsylvanian from the outset has been simple, and it’s something that our industry reinforced in a recent Express column, as part of our ongoing dialogue: “We are committed to working tirelessly each day to be good stewards of our land and waterways. We are also taking steps to ensure our operations minimize disruptions and risks in and near energy-producing communities. After all, our families live in these areas too.”

—

Kathryn Klaber is the president and executive director of the Marcellus Shale Coalition (MSC), an industry group that represents shale gas producers and can be found on the web atwww.marcelluscoalition.org.

Copyright: The Express , Lock Haven, PA