Posts Tagged ‘Senate’

Bill would have rollback taxes assessed only on land impacted by wellhead permanently.

By Steve Mocarskysmocarsky@timesleader.com
Staff Writer

Luzerne County Assessor’s Office Director Tony Alu still doesn’t know how Marcellus Shale development on land with “Clean and Green” designation will affect the land’s tax status.

“We don’t have a clear-cut plan yet. … I’m turning over every stone to get as much information as possible. We won’t be doing anything until I’m sure what our options are,” Alu said Monday.

Clean and Green is a program authorized by state law that allows land devoted to agricultural or forest use to be assessed at a value for that use rather than at fair market value.

The intent of the program, which is administered through county government, is to encourage property owners to retain their land in agricultural, open-space or forest-land use by providing real estate tax relief.

Property owners benefit through lower taxes as long as their land isn’t used for housing developments or other uses inconsistent with agricultural production, open-space or forest-land use.

If a property owner decided to use the land for a purpose inconsistent with the program, the landowner would have to pay “rollback taxes” – the difference between fair market value and use value of the land – for as many years as the property had been designated Clean and Green, up to a maximum of seven years.

Although it’s a state-authorized program, with maximum use values set annually for each county by the Department of Agriculture’s Bureau of Farmland Preservation, the bureau offers no guidance on how drilling for natural gas on a Clean and Green parcel would affect the tax status.

“The (state Farmland and Forest Land Assessment) Act is silent in that regard, so it’s left up to each individual county how to address it,” said bureau director Doug Wolfgang.

However, Wolfgang said, in March 2009, state Sen. Gene Yaw, R-Loyalsock Township, introduced a bill that would amend the act, allowing for natural gas drilling on Clean and Green land, with rollback taxes being assessed only on the portion of land that would be permanently impacted by a wellhead. State Sen. Lisa Baker, R-Lehman Township, was a co-sponsor of that bill.

Yaw represents Union and Sullivan counties and parts of Susquehanna, Bradford and Lycoming counties, which together boasted a total of about 200 natural gas wells by the end of last year.

The bill won Senate approval in February and is before the House for consideration.

Yaw has said the bill would provide counties across the state with “a consistent interpretation” to follow and would “help to prevent differing opinions on how many acres of roll-back taxes should be levied on landowners who have leased for natural gas development.”

He has said farmers and landowners need the bill to become law “so that there isn’t any confusion on how the Clean and Green Program operates.”

The bill also would exempt land with underground transmission or gathering lines from roll-back taxes and would allow for one lease for temporary pipe storage facilities for two years. Each property would have to be restored to its original use.

Regardless of whether the bill becomes law, Lake Township Supervisor Amy Salansky said neither she nor her husband, Paul, will have to pay rollback taxes on their Clean and Green land, on which EnCana Oil and Gas USA intends to drill a natural gas well in August. If county officials decide to assess rollback taxes, the lease with EnCana makes the energy company responsible for paying them.

Salansky noted neither she nor her husband own the mineral or gas rights to the land.

The couple bought the land after the owner died so they could farm it, but the owner had willed the mineral and gas rights to his nephew, who retained them in the sale.

The Salanskys are crop farmers, growing oats, corn and hay. They own and work more farmland nearby, Amy Salansky said.

Even if the entire 50-acre parcel is kicked out of the Clean and Green program, Salansky said she would reapply to have the parcel accepted back into the program, minus the 6 acres that would be used for the gas-drilling operations.

Steve Mocarsky, a Times Leader staff writer, may be reached at 970-7311.

Copyright: Times Leader

HARRISBURG – As a bill calling for a moratorium on leasing state forest land for natural gas exploration languishes in the Senate, Gov. Ed Rendell announced today that the state Department of Conservation and Natural Resources finalized a lease agreement with Anadarko Petroleum Corp. for 32,896 acres of forest land in Centre, Wyoming and Bradford counties.

In a press release, Rendell said the “responsible natural gas lease agreement” will allow Pennsylvania to meet its need for revenue while fulfilling its obligation to protect Pennsylvania’s natural resources.

Under the agreement, Anadarko has paid the commonwealth $120 million to access 32,896 acres that are surrounded by tracts of land for which drilling companies already hold lease agreements. Because these newly leased tracts can largely be accessed by gas operations on the adjacent tracts, the amount of new state forest surface area that must be disturbed is minimized, according to the press release.

Other than the agreement, the commonwealth will not have to make any additional state forest land available to reach its revenue goals for natural gas drilling in the 2010-11 fiscal year.

“This is a responsible approach that meets our revenue targets and limits the impact of additional natural gas exploration in our state forests,” Rendell said.

“We do not need to expand our drilling footprint in state forest lands to meet our revenue goals, because these parcels are already surrounded by other leased acres,” Governor Rendell said. “They also are within areas leased in the 1970s and 1980s by DCNR, but not all the acreage was drilled because technology wasn’t available to exploit Marcellus Shale deposits.

“In order to develop the acreage, DCNR and Anadarko have agreed to certain provisions to make certain there is minimal impact on the surface. Horizontal drilling technologies allow Anadarko access to most of this acreage from already disturbed areas on their adjoining leased lands.”

The newly leased acres cover 11 tracts in the Moshannon, Sproul and Tiadaghton state forests where Centre, Clinton and Lycoming counties meet.

For 27,185 acres on 10 tracts, Anadarko agreed to pay $4,000 per acre, consistent with the average price paid during DCNR’s January 2010 competitive lease sale. For the remaining 5,711 acres on one tract, the commonwealth will receive $2,000 per acre because the geology underneath is not as promising for gas production.

The lease of the 11 tracts totals about $120 million. DCNR’s January 2010 lease sale generated $128 million-$60 million of that went toward this year’s General Fund budget and the additional $68 million will be applied to a target of $180 million to help balance state budget for the fiscal year that begins July 1, 2010.

“With this agreement negotiated and the money in the bank, we can safely be on board with the moratorium which passed the House and is now in the Senate. If the Senate passes the legislation and it comes to my desk, I will sign it,” Rendell said.

Read more in The Times Leader on Wednesday.

Copyright: Times Leader

The Associated Press

HARRISBURG — A bill to temporarily stop the leasing of state forest land for natural gas drilling has state House approval and is headed to the Senate.

The House of Representatives approved the bill 157-33 on Tuesday. It would immediately enact a three-year moratorium.

Proponents want a thorough environmental assessment of the impact of drilling on the land before more can be leased.

A spokesman for the Senate’s Republican majority says there’s no plan to act and the state already has strong regulatory authority.

The Rendell administration has leased more than 100,000 acres to companies hungry to explore the Marcellus Shale natural gas formation.

Copyright: Times Leader

Jurisdiction over drilling for natural gas in the Marcellus Shale is subject of hearing.

By Steve Mocarskysmocarsky@timesleader.com
Staff Writer

HARRISBURG – The chairman of the state Public Utility Commission is confident that Marcellus Shale development will stabilize prices not only of natural gas, but electricity prices as well, and is thrilled the natural gas industry supports the PUC’s oversight of pipeline safety in Pennsylvania.

Commission members on Thursday heard testimony from representatives of the natural gas industry, a federal pipeline safety official, the state consumer advocate and the director of the Pennsylvania Association of Township Supervisors on the commission’s jurisdiction as related to Marcellus Shale development.

“I think everybody is in agreement that this increased gas supply, whether the gas is sold in Pennsylvania or not, is going to have a depressing effect on the wholesale price of gas,” PUC Chairman James H. Cawley said after the hearing.

Irwin “Sonny” Popowsky, of the state Office of Consumer Advocate, testified that the retail and wholesale price level of natural gas “has been on a roller coaster ride for years.”

He said an abundance of natural gas should stabilize and ultimately lower the price of gas and electricity so that it is affected by supply and demand rather than politics in the Middle East.

Commissioner Wayne Gardner said he’s heard that many roads were severely damaged under Chesapeake Energy traffic.
David J. Spigelmyer, vice president of government relations for Chesapeake, said a harsh freeze-thaw season and the fact that many roads were never constructed with proper foundations resulted in the need significant road repairs. But the company is bonded to repair those roads and has hired 23 road contractors in Bradford County to repair them.

David M. Sanko, executive director of the Pennsylvania Association of Township Supervisors, said his concern is that state law requires bonds for roadwork in the amount of $12,500, but it could cost up to $100,000.

Commissioner Robert Powelson asked how the commission can be confident that the “self-policing system (of the gas industry) will work and that safety will be maintained?”

Spigelmyer said the industry has worked closely with the state Department of Environmental Protection to ensure the industry meets state requirements and noted that permit fees that fund inspections climbed from $100 to about $4,000.

Alex Dankanich, general engineer with the U.S. Department of Transportation’s Office of Pipeline Safety, testified that of the 31 states that produce natural gas, only Pennsylvania and Alaska lack the statutory authority to regulate gas gathering pipelines.

Cawley noted that the administration had been pushing for the PUC to obtain inspection authority because the administration doesn’t have the manpower.

Dankanich said the PUC would be reimbursed 80 percent of the cost for inspecting non-Class I pipelines – those surrounded by 10 or fewer homes within 220 yards of a pipeline in a 1-mile stretch. Those lines are exempt from federal inspection.

PUC Vice Chairman Tyrone Christy asked if Pennsylvania should also exempt Class I pipelines from inspection.

Lindsay Sander, a consultant for the Marcellus Shale Coalition, said she was comfortable with the exemption given the low number of Class I problems.

Cawley said the natural gas industry “seems to be bending over backwards to be responsible. But you’ve got to have the rules in place for everybody, including the potential bad apples who are going to try and take shortcuts.”

He said the commission is not trying to economically regulate the gas production industry.

“We’re not going to try and set the rates. We just want safety jurisdiction, whether they’re a public utility or not. And … the industry coalition, which has 170 members, support us adopting the federal standards. … They’ve said that’s fine and they’ve said they’re willing to help pay for it on a per-mile basis,” he said.

Cawley said the commission has submitted proposed statutory language to House and Senate oversight committees related to PUC safety regulation.

“One part of it has already been passed by the House almost unanimously. It would increase fines for violations to the federal level. It would go from $10,000 per day to $100,000 per day and up to $1 million overall. House Bill 1128, that could be the vehicle for getting it done. The Senate could amend it and send it back over or the House could give us this additional legislation, but this is our top legislative priority – pipeline safety,” Cawley said.

He said he also asked the industry for a commitment to use PUC’s certificated trucks for hauling equipment and supplies, “and they’ve committed to that, which is good. We’ve increased carrier enforcement in that area because we discovered that in their haste to get supplies in, they weren’t using PUC certificated carriers.”

“We’ve increased our enforcement, … and now that they know we’re watching, they’ll be more careful about the carriers they use,” Cawley said.

Steve Mocarsky, a Times Leader staff writer, may be reached at 970-7311.

Copyright: Times Leader

DAVID WETHE Bloomberg News

HOUSTON — Halliburton Co. and Schlumberger Ltd., trying to forestall a regulatory crackdown that would cut natural-gas drilling, are developing ways to eliminate the need for chemicals that may taint water supplies near wells.

At risk is hydraulic fracturing, or fracking, a process that unlocked gas deposits in shale formations and drove gains in U.S. production of the fuel. Proposed regulations might slow drilling and add $3 billion a year in costs, a government study found. As one solution, energy companies are researching ways to kill bacteria in fracturing fluids without using harmful biocides.

“The most dangerous part in the shale frack is the biocide,” said Steve Mueller, chief executive officer at Southwestern Energy Co., the biggest producer in the Fayetteville Shale of Arkansas. “That’s the number-one thing the industry is trying to find a way around.”

House and Senate bills introduced in 2009 would force producers to get permits for each well. That and other proposed environmental measures would cut drilling by as much as half and add compliance costs of $75 billion over 25 years, according to the U.S. Energy Department.

Biocides are employed because the watery fluids used to fracture rocks heat up when they’re pumped into the ground at high speed, causing bacteria and mold to multiply, Mueller said. The bacteria grow, inhibiting the flow of gas.

“You basically get a black slime in your lines,” he said. “It just becomes a black ooze of this bacteria that grew very quickly.”

Halliburton said March 9 that it’s testing a process using ultraviolet light to kill bacteria in fracking fluid.

About 80 percent of gas wells drilled in North America, including virtually all of those in the Marcellus Shale in Pennsylvania, are stimulated or fractured in some way, Tim Probert, corporate development chief at Halliburton, said.

“It’s incumbent on the industry to continue to develop tools and technologies that are compatible with minimizing the environmental impact of the stimulation process,” Probert said.

Copyright: Times Leader

Pa. is biggest natural gas producer that does not impose some type of tax.

MARC LEVY Associated Press Writer

HARRISBURG — The natural gas industry in one of the nation’s hottest exploration spots is bracing for a political tussle over whether and how Pennsylvania will tax methane from the potentially lucrative Marcellus Shale formation.

An industry trade association, the Marcellus Shale Coalition, said Thursday it wants any discussion of a tax to involve the high cost to drill a shale well and cumbersome state laws that make it costly to operate.

A tax enacted without addressing issues that hamper exploration companies could encourage some to move resources to shale formations in other states, said coalition president Kathryn Klaber.

“What is important is to look at the broad issues, not just a tax, as to how we make this climate best for growth,” Klaber said. “There are a lot of modernization policies that need to be put in place to develop this massive natural resource.”

On Tuesday, Gov. Ed Rendell issued his annual spending plan for the state and renewed his call to enact a tax identical to West Virginia’s: 5 percent on the value of sale, plus 4.7 cents per thousand cubic feet produced.

Rendell projects the tax would produce $180 million in the fiscal year beginning July 1 and increase to nearly $530 million after five years, including 10 percent set aside for local governments.

Rendell wants money to shore up a state treasury that faces a projected $5.6 billion gap in 2011 and 2012 resulting from spiraling public pension costs and the expiration of federal stimulus budget aid.

Pennsylvania is the biggest natural gas producer that does not impose some type of tax on it.

However, the coalition wants to steer talk of a tax to reflect those imposed by shale states, such as Texas, Arkansas and Louisiana. In those states, the tax is discounted initially to allow the exploration companies to recoup a multimillion-dollar investment in each well.

For instance, Texas imposes a 7.5 percent tax but discounts it for 10 years or until the operator recovers 50 percent of the drilling and completion costs. In Arkansas, the state imposes a 5 percent tax on natural gas production but discounts it to 1.5 percent for at least three years.

Last year, Rendell called for the same tax rate on gas. After months of Republican-led opposition, he relented, saying he did not want to hurt an industry in its infancy.

In recent weeks, Rendell has said he believes the industry can afford to pay a tax, and pointed to the heavy influx of cash into Marcellus Shale exploration ventures.

For now, production from the Marcellus Shale is still in the early stages. Fewer than half of the approximately 1,100 wells drilled in Pennsylvania are connected to pipelines that can bring the gas to customers.

Environmental groups and the Pennsylvania State Association of Township Supervisors support a tax. The Senate’s Republican majority has not ruled out the eventual imposition of a tax, although Senate Appropriations Committee Chairman Jake Corman, R-Centre, called it “premature.”

Copyright: Times Leader

Industry reps cite permitting delays; DEP head says issues to be resolved.

DALLAS TWP. – Representatives from every aspect of the state’s burgeoning natural-gas drilling industry met on Tuesday and, though differing on specifics, emphasized that Pennsylvanians stand upon a multibillion-dollar windfall, but only if the state streamlines its permitting process.

The hearing at Misericordia University was organized by the state Senate Republicans’ policy committee to identify potential problems with drilling the Marcellus Shale about a mile underground, but the senators instead were told that many of the problems lie with the state itself.

“Fundamentally, what the industry has said to us is, ‘We need to know what the rules are,’” said Tom Beauduy, the deputy director of the Susquehanna River Basin Commission. The commission oversees water removal from the river basin.

Industry representatives were dire with their characterizations. The industry is experiencing “permitting delays unlike we have ever seen in any other state,” said Wendy Straatmann, president of Ohio-based Exco-North Coast Energy Inc. “Why would I spend so much of our company’s time and resources when I can go to some other state and use the gas and oil manual and follow the regulations?”

Ray Walker, a vice president with Texas-based Range Resources Corp., agreed that an inclusive regulations manual would help companies “put our money into protecting the environment and not paperwork.” He noted that smaller companies are considering drilling here, but won’t if the permitting process remains slow and taxes increase. That could keep development slow, he said.

That’s a prospect that few at the hearing wanted. John Hanger, the acting secretary of the state Department of Environmental Protection, assured that his agency was “working to make sure that gas can be produced and water protected.” Part of the lag has come from a dearth of disposal options for the fluids used to hydraulically fracture the rock, and Hanger said his favored alternative was to find ways for the companies to simply inject them underground.

DEP would need to increase its regulatory force to keep up with the permitting and inspections demand predicted based on industry desires, he said, noting the department has recently requested substantially increasing its well-permitting fees.

Still the Republican senators felt DEP is clamping down too tightly. “When I ran for Senate, I was mad at the state for over-regulating my industry,” said Sen. Mary Jo White, R-Venango County, who had worked for an oil corporation. “I think we’re heading down that road again.”

William Brackett, the managing editor of a newsletter that reports on the Barnett Shale, said gas drilling there “is a prime reason the north Texas economy has only caught a cold and not the flu.”

John Hanger, acting DEP secretary, said part of the lag has come from a dearth of disposal options for the fluids used to hydraulically fracture the rock.

Copyright: Times Leader

Industry reps cite permitting delays; DEP head says issues to be resolved.

DALLAS TWP. – Representatives from every aspect of the state’s burgeoning natural-gas drilling industry met on Tuesday and, though differing on specifics, emphasized that Pennsylvanians stand upon a multibillion-dollar windfall, but only if the state streamlines its permitting process.

The hearing at Misericordia University was organized by the state Senate Republicans’ policy committee to identify potential problems with drilling the Marcellus Shale about a mile underground, but the senators instead were told that many of the problems lie with the state itself.

“Fundamentally, what the industry has said to us is, ‘We need to know what the rules are,’” said Tom Beauduy, the deputy director of the Susquehanna River Basin Commission. The commission oversees water removal from the river basin.

Industry representatives were dire with their characterizations. The industry is experiencing “permitting delays unlike we have ever seen in any other state,” said Wendy Straatmann, president of Ohio-based Exco-North Coast Energy Inc. “Why would I spend so much of our company’s time and resources when I can go to some other state and use the gas and oil manual and follow the regulations?”

Ray Walker, a vice president with Texas-based Range Resources Corp., agreed that an inclusive regulations manual would help companies “put our money into protecting the environment and not paperwork.” He noted that smaller companies are considering drilling here, but won’t if the permitting process remains slow and taxes increase. That could keep development slow, he said.

That’s a prospect that few at the hearing wanted. John Hanger, the acting secretary of the state Department of Environmental Protection, assured that his agency was “working to make sure that gas can be produced and water protected.” Part of the lag has come from a dearth of disposal options for the fluids used to hydraulically fracture the rock, and Hanger said his favored alternative was to find ways for the companies to simply inject them underground.

DEP would need to increase its regulatory force to keep up with the permitting and inspections demand predicted based on industry desires, he said, noting the department has recently requested substantially increasing its well-permitting fees.

Still the Republican senators felt DEP is clamping down too tightly. “When I ran for Senate, I was mad at the state for over-regulating my industry,” said Sen. Mary Jo White, R-Venango County, who had worked for an oil corporation. “I think we’re heading down that road again.”

William Brackett, the managing editor of a newsletter that reports on the Barnett Shale, said gas drilling there “is a prime reason the north Texas economy has only caught a cold and not the flu.”

John Hanger, acting DEP secretary, said part of the lag has come from a dearth of disposal options for the fluids used to hydraulically fracture the rock.

Copyright: Times Leader



Senate hearing set for today at Misericordia, symposium Wednesday at Woodlands.

While landowners are imagining the gobs of cash they stand to make from natural-gas drilling in the Marcellus Shale rock layer underlying much of the region, Don Young hopes there’s room to imagine a few other images, such as gas pipelines crisscrossing once-pristine farmland, benzene contaminating groundwater supplies and an industrywide press to tap every inch of lucrative ground.

And that doesn’t include the Fort Worth, Texas, resident’s concerns about the psychological effects of celebrity-fronted publicity campaigns linking the drilling to patriotism and national security. “It’s Orwellian to see it happening here,” he said. “You’ve got American flags on each well.”

But the leader of Fort Worth Citizens Against Neighborhood Drilling Ordinance hopes the travails that now plague his home above the Barnett Shale are averted in the similar Marcellus Shale. “What you have here in Fort Worth on a grand scale is apathy. People felt, ‘We can’t stop it. It’s too big. It’s big oil,’ ” he explained. “The average busy person, they don’t have time to worry about gas drilling. … They have families, they have lives, they’re struggling, and if you have a few companies handing out money saying, ‘Here’s some money, just forget about it,’ ” they’ll do just that, he said.

Local regulators and educators are already taking steps to avoid those effects, and they’ll take a few more this week. This afternoon, the state Senate Republican’s Policy Committee will meet at Misericordia University to hear testimony from people familiar with dealings in the Barnett Shale on the potential effects awaiting Pennsylvania.

Several of the same speakers will be featured in discussions Wednesday morning at the Woodlands Inn & Resort in Plains Township, as the Joint Urban Studies Center holds a Marcellus Shale Symposium. The public is invited to either presentation, but the symposium has a registration fee.

“We are front and center to the development of this new industry,” said state Sen. Lisa Baker, R-Lehman Township, who requested the hearing. “I think having the hearing here demonstrates, in my judgment, that we’re doing all we can to ensure that our laws and regulations are appropriate and that if we need to make changes,” the legislature is ready to do so.

She said she hopes to get answers to questions she often hears from constituents, including potential downsides to drilling and whether current regulations are enough to curtail them.

According to several of the speakers, Pennsylvania might have a lot of ground to make up before it’s running even with the industry. “I just don’t understand the state’s set-up. Why wouldn’t that be a requirement to disclose how well the wells (are performing)?” asked John Baen, a University of North Texas professor and real-estate expert who has 250 wells on his property in the Barnett Shale. “If it’s all proprietary, then how do we know what the true wealth is?”

Rory Sweeney, a Times Leader staff writer, may be reached at 970-7418.

Copyright: Times Leader

Revenue from tax on underground resources seen as windfall, but bill would need more support to pass.

Local municipalities could tap into the potential natural gas drilling windfall if state lawmakers are able to push through legislation that’s been stalled for more than a year.

House Bill 1373 would amend the state General County Assessment Law to explicitly make underground resources such as natural gas and oil subject to real estate assessment and taxation. The bill would require gas companies to pay taxes on the resources they extract, but wouldn’t add any tax burden to landowners.

“We’re concerned about these companies coming in and sucking up huge profits at the expense of citizens of Pennsylvania,” said state Rep. Eddie Pashinski, D-Wilkes-Barre, who is a co-sponsor of the bill.

Introduced in May 2007 by House Majority Leader Bill DeWeese, the bill was drafted in reaction to a state Supreme Court decision that ruled taxing those resources wasn’t specifically enumerated in the law. The amendment would preempt that ruling by making taxation of those resources part of the law.

Tom Andrews, DeWeese’s press secretary, said the push for the bill came from DeWeese’s constituent municipalities in western Pennsylvania, which had been relying on revenue from the resource taxes for years before it was shut off by the court decision.

However, the bill has been stalled in the House Finance Committee since May 2007, and sentiment among supporters is that state Senate Republicans, on principle, won’t support a tax bill.

“At this point, I don’t think it has the support to pass in the House, pass in the Senate and be signed by the governor, so that’s why we’ve held off on pushing it out of the House,” Andrews said.

Rory Sweeney, a Times Leader staff writer, may be reached at 970-7418.

Copyright: Times Leader