Posts Tagged ‘natural gas drilling’

Both the Senate and the House have passed a budget that fails to tax or charge any type of fee on Natural Gas extraction from the Marcellus Shale.

The issue of taxing of Marcellus Shale has been a major topic of discussion, especially in Northeastern Pennsylvania.  The impact of the extraction of Natural Gas from the Marcellus Shale has made some people very wealthy and others very upset.

Pennsylvania is the only major natural gas producing state that currently has no tax or extraction fee on natural gas.  Governor Tom Corbett campaigned on a platform of no taxes on Marcellus shale and has stuck to that campaign promise in his proposed budget, and the legislature follows suit.

A Quinnipiac poll in June 2011, showed that those polled support, 69 percent to 24 percent, a new tax on companies drilling for natural gas. Even 69 percent of Republicans polled support such a tax.

State Senator John Yudichak (D-14th) says the issue is not dead, and that the legislature will address the issue of Marcellus tax or fees this Fall.

Yudichak, a strong voice for a Marcellus Shale Impact Fee or Severance Tax, also stated that he is disappointed the legislature failed to enact a fair and responsible fee on natural gas drilling, which would have significantly helped address adverse environmental issues associated will drilling.

This is only the third time in more than 40 years that a Pennsylvania State Budget spends less than the previous years.  A major factor in the reduction in spending is the loss of federal stimulus money, which allowed Pennsylvania and many other states to save programs and jobs over the past two years.  That money is no longer available.

Yudichak, who joined his Democratic colleagues in solidarity in voting against the budget, was not pleased with the budget.  Yudichak says the plan falls short of preserving programs and services vital to Pennsylvania’s economic recovery.

On the $27.15 billion spending plan, Yudichak stated that the spending plan cuts too deeply into education and job creation programs, weakens the hospital system and fails to enact a responsible fee on Marcellus Shale drilling.

“For months, I have called for guiding this budget by two principles – job creation and making government more accountable to taxpayers,” Yudichak said.  “Unfortunately this budget falls severely short of these principles.”

Yudichak said school districts in the region will face a severe cut of $23,687,669 in this budget.  On average that is a 13.3 percent cut from 2010-2011.   He added that these districts will now have to cut vital educational programs and layoff teachers, students will be crowded into classrooms and households will inevitably see a spike in property taxes.

Northeastern Pennsylvania school districts will see significant reductions in state revenues.  The decrease in funding  from 2010 to 2011 is as follows:

·         Nanticoke – $1,580,628 less  – 13% cut

·         Hanover Area- $1,048,569 less – 13% cut

·         Hazleton Area – $4,516,132 less – 12% cut

·         Pittston Area – $1,260,312 less – 12% cut

·         Wilkes-Barre Area – $3,904,811 – less 14% cut

·         Wyoming Area – $986,676 less – 12% cut

·         Wyoming Valley West – $2,922,455 less – 14% cut

·         Pocono Mountain – $4,182,942 less – 17% cut

·         Jim Thorpe – $503,404 less – 16% cut

·         Lehighton – $1,196,384 less – 13% cut

·         Panther Valley – $1,234,349 less – 14% cut

·         Weatherly – $351,007 less – 10% cut

Yudichak added that colleges and universities throughout the state will receive significantly less funding in this year’s budget.

“We have some very worthy institutions in our region.  Unfortunately, our community colleges, our private colleges and universities, our state system schools and our state- related colleges will see their funding decrease, their tuition increase and the dream of higher education for many students will remain just a dream,” Yudichak said.

He added that cuts to job creation and business support programs in the state Department of Economic Development will harm efforts to rebuild Pennsylvania’s economy.

“It seems awfully misguided to cut proven job creation initiatives during a time of fiscal distress, yet these initiatives have also been zeroed out in this budget plan,” Yudichak said.  “True economic growth comes from solid programs that help businesses get off the ground and maintain their workforce.”

Yudichak added that despite modest restorations made to uncompensated care, in the amount of $16.5 million, hospitals are still negatively affected by budget cuts.

“These restorations are a good start, but hospitals really need more funding,” Yudichak said.  “And, with adultBasic not being funded in this budget, more and more individuals will turn to hospitals for care.”

“Here and now we have bipartisan support on a fair impact fee that would protect the environment as well as continue to grow the tremendous economic impact of the Marcellus Shale industry, yet it remains unfinished business,” Yudichak said.  “The people of Pennsylvania, by an overwhelming majority, have called for a fair and responsible tax or fee on natural gas drilling in the Marcellus Shale region.”

Yudichak finished by saying that while he understands the seriousness of Pennsylvania fragile economy, there were other option available to stem the harsh cuts made in this spending plan.

“I truly understand that with fiscal distress comes the need for a bit of belt tightening, but what I do not understand is why we are selling short the future of Pennsylvania with a budget that weakens job growth and fails to enact a responsible Marcellus Shale severance tax.”

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There is no end to the debate on hydrofracking. Opponents are as enraged about the idea in New York as are supporters determined. Both sides regularly devolve in arguements to emotional bouts of illogic, thrusting feelings about other issues into the fray. Worst is when facts are subsititued for partisan political positions.

DLP was recently retained by a clint working in the natural gas drilling industry who was involved in a serious automobile accident in Susquehanna County.  DLP is currently investigating the matter on behalf of its new client.  The twelve lawyers at DLP handle serious truck accident and automobile accident cases throughout Nortest  and Central Pennsylvania.

Canonsburg, Pa. – The myth that those developing Marcellus Shale natural gas resources are not paying taxes just became even more difficult to peddle by those opposed to responsible, job-creating energy production in the Commonwealth. In fact, according to the Pennsylvania Department of Revenue, the Marcellus Shale has been, and continues to be, a major tax windfall for Pennsylvania – one that is becoming even more lucrative every year. Following are a few highlights of the department’s latest report:

• Pa. Dept. of Revenue: “Drilling Industry Paid More Than $1 Billion in State Taxes Since 2006, Tax Payments in First Quarter of 2011 Already Surpass 2010 Totals”: At the direction of Governor Tom Corbett, the Department of Revenue today released an analysis showing that companies engaged in and related to natural gas drilling activities in Pennsylvania have paid more than $1.1 billion in state taxes since 2006. Those taxes came on top of the billions of dollars of infrastructure investments, royalty payments and permit fees paid by the industry. The Revenue Department’s analysis, which breaks out tax payments from oil and gas companies and their affiliates through April 2011, indicates that 857 of these companies have already paid $238.4 million in capital stock/foreign franchise tax, corporate net income tax, sales/use tax and employer withholding to the state in 2011. These figures from the first quarter of this year already exceed by nearly $20 million the total tax payments made in all of 2010. (Dept. of Revenue Release, 5/211)

• “Pa. Revenue Department offers view of Marcellus Shale tax payments”: It has become the billion-dollar question in the Capitol: How much, exactly, do the big natural-gas drilling companies pay in taxes? The state Department of Revenue on Monday weighed in with its official version: $1.1 billion since 2006. That figure includes an array of taxes, from corporate taxes and sales tax the companies paid on goods to the taxes they withheld from employees. … Revenue Secretary Dan Meuser [said] “it provides the full level of data that can be offered. … And it tells us that the Marcellus gas industry is paying taxes, they are paying their fair share.” (Philadelphia Inquirer,5/3/11)

• “Natural gas drilling helping state’s economy”: The [Revenue] department’s analysis also identified $214.2 million in personal income taxes paid since 2006 attributable to Marcellus Shale lease payments to individuals, royalty income and sales of assets. (CBS 21, 5/2/11)

• “Pennsylvania revenue official says drillers pay big taxes”: That [Department of Revenue] data, dating to 2006, credits the drilling industry with sending more than $219 million to state coffers last year. The total includes two key business taxes — the corporate net income tax and the capital stock and franchise tax — as well as sales and employee withholdings that companies submit. An early look at this year’s taxes already shows more than $238 million in payments from companies extracting natural gas and their direct suppliers, said Acting Revenue Secretary Daniel Meuser. In an interview, he said the data showed that gas drillers “pay the same level of taxes as any business in the state.” … Kathryn Klaber, president of the Marcellus Shale Coalition. She said that while it didn’t include millions of dollars spent in permit fees and road repairs, the analysis “sets the record straight” on tax payments. (Post-Gazette, 5/3/11)

• “Revenue Department: $1.1B in taxes from natural gas firms since ‘06”: The state Department of Revenue has waded into the controversy over how much the Marcellus Shale industry contributes to state tax revenue. “[C]ompanies engaged in and related to natural gas drilling activities in Pennsylvania have paid more than $1.1 billion in state taxes since 2006,” the department said in a statement Monday afternoon. “Those taxes came on top of the billions of dollars of infrastructure investments, royalty payments and permit fees paid by the industry,” the department said. (Central Penn Business Journal, 5/3/11)

READ MORE

• Pa. Chamber of Business and Industry: Shoddy reporting underscores group’s ‘say anything’ campaign for higher taxes

• Commonwealth Foundation: Fact-Checking on Natural Gas Taxes in PA

• Wilkes Barre Times-Leader: Tax paid by drillers disputed‎

• Washington Observer-Reporter: Report on gas industry’s taxes flawed

• Pittsburgh Tribune-Review: Group admits errors in energy tax report

• Williamsport Sun-Gazette: “The natural gas industry pumped an estimated $2 billion into the state funding till last year”

• Penn State Study: State, Local Tax Revenues Soar in PA’s Marcellus Shale Counties

Copyright: Marcellus Shale Coalition.org

PA Dept. of Revenue released the following press release on May 2, 2011

Tax Payments in First Quarter of 2011 Already Surpass 2010 Totals

Harrisburg, May 2 – At the direction of Governor Tom Corbett, the Department of Revenue today released an analysis showing that companies engaged in andrelated to natural gas drilling activities in Pennsylvania have paid more than $1.1 billion in state taxes since 2006.

Those taxes came on top of the billions of dollars of infrastructure investments,royalty payments and permit fees paid by the industry.

The Revenue Department’s analysis, which breaks out tax payments from oil andgas companies and their affiliates through April 2011, indicates that 857 of these companies have already paid $238.4 million in capital stock/foreign franchise tax, corporate net income tax, sales/use tax and employer withholding to the state in 2011.

These figures from the first quarter of this year already exceed by nearly $20 million the total tax payments made in all of 2010.

The department’s analysis also identified $214.2 million in personal income taxes paid since 2006 attributable to Marcellus Shale lease payments to individuals, royalty income and sales of assets.

A comprehensive analysis of personal income tax paid on Marcellus Shale business profits is not feasible because the department cannot conclusively determine what profits from Marcellus Shale partnerships, S corporations and LLCs were passed through to individuals as opposed to C corporations, which are taxed at 3.07 percent and 9.99 percent, respectively.

However, the department can determine that these oil and gas companies, and their affiliates, include 1,096 pass-through businesses. These businesses reported $675.4 million in 2008 income.

These numbers will be updated monthly. For more information, visit www.revenue.state.pa.us

Posted At: Pioga.org

University Park, Pa. — The ongoing utilization of Pennsylvania’s Marcellus Shale natural gas deposits has the state weighing the pros and cons of taxing the drilling activity. A study recently released by faculty in Penn State’s College of Agricultural Sciences used state tax information in an effort to begin an objective analysis of the drilling’s impact on local economies and state tax collection.

The research, summarized in a four-page booklet titled “State Tax Implications of Marcellus Shale: What the Pennsylvania Data Say in 2010,” compared counties where there is Marcellus Shale drilling and production activity with non-Marcellus counties. The study was authored by Timothy Kelsey, professor of agricultural economics and Penn State Extension state program leader for economic and community development, and Charles Costanzo, an undergraduate student majoring in community, environment and development.

Data are drawn from the Pennsylvania Department of Environmental Protection’s report, “2010 Wells Drilled by County as of 02/11/2011,” as well as from the Pennsylvania Department of Revenue’s “Personal Income Statistics for 2007 and 2008″ and its “Tax Compendium (2007-08 through 2009-10) with Statistical Supplements.”

Kelsey said while it’s still early in the natural gas drilling process, the analysis indicates that Marcellus Shale development brings some positive economic activity for communities.

The study found that state sales tax collections were up by an average of 11 percent in counties with major Marcellus activity, while collections dropped an average of more than 6 percent in counties without any Marcellus. Sales tax collections are an indicator that retail sales are booming in Marcellus counties.

“Tax revenues are only one side of finances, however, so this analysis only considers half of the issue,” Kelsey said. “The impact of Marcellus drilling on state and local government costs is yet unclear, so it is too early to understand the overall impact of Marcellus on the state government. This state tax analysis does not indicate the impact of Marcellus development on local government and school district tax collections, since royalty and leasing income is exempt from the local earned income tax, and local jurisdictions cannot levy sales taxes.”

Kelsey said researchers wanted to find out if state tax records could yield objective financial data on how local economies are being affected by Marcellus Shale development.

“The state tax information provides a glimpse at how sales activity and personal income are changing,” he said. “The state collects objective tax collection information every year, and that can provide a good snapshot of how residents’ income is changing and the amount of retail activity going on.”

Kelsey explained that the booklet can help the average citizen to understand that Marcellus Shale development is having a discernible economic impact on residents and in communities.

“We’re early enough in the development of the shale that much of what we ‘know’ is based on anecdotes and personal stories,” he said. “This analysis provides some real numbers behind those anecdotes. The data show clearly that there are economic benefits that are accruing because of the gas activity — higher personal tax collections, higher sales tax collections. Realty tax incomes in drilling counties are decreasing, but less than in non-drilling counties.

“The booklet will not tell you how those benefits relate to costs, because we weren’t able to look at that,” he added. “So, it is only a partial picture of what’s going on. You know there are dollars coming in but you don’t know if it’s a net gain or a net loss to the community.”

Kelsey cited increased highway repair and maintenance, greater administrative demands, changing human service needs, and law enforcement and courts among the costs that determine whether the drilling activity is adding to or subtracting from a county’s bottom line.

Kelsey stressed that, because the study focuses only on state tax collection, it doesn’t support assumptions about local tax changes. He points out that local governments don’t have the option of a sales tax, and that the personal income tax increases seen in the study are largely the result of leasing and royalty income, which are both exempted from earned-income tax.

“So we know from this analysis that state revenues are going up, but we don’t know if local tax revenues are increasing or decreasing as a result of the activity,” he said. “That’s a huge caveat.”

Single copies of “State Tax Implications of Marcellus Shale” can be obtained free of charge by Pennsylvania residents through county Penn State Extension offices or by contacting the College of Agricultural Sciences Publications Distribution Center at 814-865-6713 or by email at [email protected]. For cost information on out-of-state or bulk orders, contact the Publications Distribution Center. The publication also is available on the Web athttp://pubs.cas.psu.edu/FreePubs/pdfs/ua468.pdf.

Copyright: PSU.edu

By Jeremy Boren, PITTSBURGH TRIBUNE-REVIEW
Sunday, April 17, 2011

Rolling hills and wide-open meadows attracted JoAnne Wagner to Mt. Pleasant, a Washington County community about 25 miles from Pittsburgh. That was in 2005.

Today, the Marcellus shale gas boom has swept in more than 100 wells, pipelines, waste water ponds, trucks and bitter debates between those who profit from drilling leases and those who don’t.

The 35-square-mile township founded in 1788 is a study in the growing debate over whether state officials should empower municipalities to impose an “impact fee” on energy companies to compensate for tax money spent on attorney fees, police salaries, road work, inspections and other costs associated with hosting the drillers.

“There are so many impacts, and it’s so far-reaching,” said Wagner, 45, who does not oppose natural gas drilling.

“What’s going on and the way industry is behaving here is pitting neighbor against neighbor,” she said. “This community used to be tight-knit and not willing to grow. For years people didn’t have public water because people didn’t want development to come in.”

A car dealership, volunteer fire company, tavern and a few small shops break up the line of two-story homes along much of Route 50 in Hickory, Mt. Pleasant’s main drag. On a tree-lined drive near Fort Cherry School District’s campus, Wagner said her biggest concern is that natural gas extraction operations near the school that her two children attend could pollute the air. She said the township can’t afford air-monitoring equipment.

State law gives most municipalities two options to tax natural gas drilling companies as well as other businesses: property taxes if the firm owns the land, and earned-income taxes from workers if they live where they work.

Calculating the direct costs is difficult, said Timothy Kelsey, a professor of agricultural economics at Penn State University, who has studied shale-related costs and the industry’s tax revenue impact.

“In the long run, costs will become clear, but before that, how do you set (a fee) fairly?” Kelsey said.

The question could ultimately affect a municipality’s financial stability, say bond industry watchers.

It would be harmful if they can’t “keep up with needed infrastructure repairs or upgrades or cannot adequately fund other public services,” said Tom Kozlik, an analyst with financial services firm Janney Montgomery Scott of Philadelphia.

Many rural roads weren’t intended to accommodate heavy truck use, Kozlik noted in a March report.

Mt. Pleasant Police Chief Lou McQuillan said he received training to inspect and cite overweight trucks but there isn’t room in the township’s budget of roughly $1 million to buy a $10,000 scale.

He leaves the truck monitoring to state police. Three state officers spent nine-hour shifts Wednesday to Friday patrolling I-70 East and I-79 South in Washington County for overweight trucks. Police said the “predominant” source of inspections on I-79 were trucks from drilling sites.

During a crackdown March 14-15 known as “Operation FracNET,” state police focused on trucks carrying waste water from natural gas drilling sites.

In Allegheny, Fayette, Greene and Washington counties, state police conducted 194 truck inspections, placed 26 vehicles and one driver out of service and issued 72 traffic citations.

Statewide, police inspected 731 commercial trucks, took 131 of them out of service for violations and issued 421 citations. Faulty brakes and improper exterior lighting were the most common violations.

There are other concerns, McQuillan said. When fire erupted at 5:15 a.m. March 1 from a tank at a MarkWest Liberty Midstream Resources compressor station, McQuillan spent eight hours on scene.

He was the only one of the township’s three officers on duty.

“I can see what a burden this is, and we’re just one municipality,” Wagner said. “Now multiply that by all the municipalities in the state (with drilling).”

Newly elected Republican Gov. Tom Corbett said he recognizes the higher costs and is seeking a way to address them, though he has provided no specifics. He doesn’t want an “impact fee” to be routed through the Legislature where “it goes from one fund to the other,” he said.

Corbett opposes a statewide severance tax on gas extraction, but his openness to an impact fee prompted Democrats to criticize him for flip-flopping on a campaign promise not to raise taxes. Corbett’s staff has said the fee wouldn’t violate the governor’s pledge because municipalities, not the state, would impose the fee.

It could pay for more than just road repair, Corbett said.

“The impact can be schools — schools that are growing in that area. The impact can be to the social services network,” he said.

There are signs Marcellus shale drilling is benefiting portions of Pennsylvania’s economy.

Sales tax collections in Pennsylvania counties with 150 or more gas wells increased 11 percent from July 2007 to July 2010, according to the report from Kelsey, the professor. Counties with fewer than 150 wells saw a 3.1 percent decline; those with none had a 6.5 percent drop. The state average was a 3.7 percent decrease.

Matt Pitzarella, a spokesman for Range Resources in Cecil, said that’s an example of the “unprecedented economic impacts of shale gas development” in the state.

He noted an uptick this year in weekly wages in Washington County and an almost 50 percent increase in the number of Pennsylvania mining and logging industry jobs from 2007 to 2011, according to the Bureau of Labor Statistics.

The Marcellus Shale Coalition, an industry group, has warned that if a tax or fee is too high, it could drive energy companies away and hurt job growth. It’s open to the concept of compensating municipalities.

“If there are incurred costs of local governments from the development of this industry, we certainly want to make those municipalities whole that are hosting this industry,” said Kathryn Klaber, president of the coalition.

Mary Dalbo, 87, of Cecil said she was eager to lease 370 acres in Cecil, Chartiers and Findlay to Range Resources. Her profits will pay for her four great-grandchildren to attend college.

“(Range) put better roads in than the ones that they destroyed,” said Dalbo, who opposes an impact fee and rules that limit landowners’ rights.

Donald Gennuso, manager of Cecil, said municipalities that host drilling operations bring some costs on themselves when they go beyond what the state requires to satisfy nervous residents who want more scrutiny of gas extraction plans.

Since 2009, Cecil has spent $60,000 on lawyer fees related to oil and gas issues.

“Lawyers are making all the trouble,” Dalbo said. “… Why can’t the township supervisors think for themselves?”

Dencil Backus, 64, of Mt. Pleasant keeps close watch on a drilling site 200 feet from the edge of his rolling fields. A wild-game camera he set up in 2009 snaps photos every hour; he has saved thousands.

If a severance tax isn’t possible, a local fee on drillers might suffice, he said. He’s mainly concerned that shale fracturing will contaminate a spring that supplies water to the home he shares with his wife, Patricia.

“It doesn’t matter how it gets there, if it gets into the aquifer and the water, we’re dead,” he said.

Read more: Drilling economics divides struggling communities – Pittsburgh Tribune-Review http://www.pittsburghlive.com/x/pittsburghtrib/s_732702.html#ixzz1OSrEvEgL

Read more: Drilling economics divides struggling communities – Pittsburgh Tribune-Reviewhttp://www.pittsburghlive.com/x/pittsburghtrib/s_732702.html#ixzz1OSrC2mw2

MARC LEVY, Associated Press

HARRISBURG, Pa. (AP) — Prodded by the federal Environmental Protection Agency, Pennsylvania says it’s expanding the scope of water tests for radium and other pollutants from the state’s booming natural gas drilling industry.

The Department of Environmental Protection‘s acting secretary, Michael Krancer, tells EPA that he’s requiring additional tests by some drinking-water suppliers and wastewater treatment facilities.

Radium, which exists naturally underground, is sometimes found in drilling wastewater that gushes from drilled wells. Krancer also says he wants to add testing stations on affected rivers.

Krancer says some testing was happening before EPA made its request last month. Officials say earlier tests from seven waterways showed no harmful levels of radium.

Unlike most big gas states, Pennsylvania allows partially treated drilling wastewater to be discharged into rivers from which communities draw drinking water.

Posted at TimesLeader.com

Congressman says federal agency can’t wait to regulate

By CASEY JUNKINS Staff Writer

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