Oil & Gas Industry Issues Statement on Proposed Local Property Tax

Below is a joint press release issued by the Independent Oil & Gas Association of Pennsylvania and the Pennsylvania Oil & Gas Association about the ridiculous legislation proposed by PA Democrats.

PITTSBURGH, March 9 — The Independent Oil & Gas Association of Pennsylvania and The Pennsylvania Oil & Gas Association today released the following joint statement in response to Rep. Bill DeWeese’s proposed legislation to impose an oil and gas property tax at the local level. A more thorough evaluation of this proposal will be conducted in the coming days.

“The natural gas and crude oil industry has sustained the economic base of many rural Western Pennsylvania communities for more than 100 years, and with the prospect of the Marcellus Shale, it is the brightest spot in the Commonwealth for job growth and economic development. Yet before we even begin to develop the Marcellus Shale, state and local governments are anxious to tax it, potentially jeopardizing its growth in the process and hundreds if not thousands of Pennsylvania jobs. Tens of thousands of Pennsylvanians are currently employed by the oil and gas industry and contribute significant revenues to local taxing authorities. The potential for many new jobs as drilling activity increases will only add to these benefits.

“We strongly believe the legislature wants Pennsylvania to be a leader in the development of this important energy source. The Marcellus Shale could provide an economic boost for the Commonwealth for many generations, but not if it is prohibited from developing through a hastily imposed property tax.

“There is never a good time to slap unnecessary taxes on job-creating industries, but with the current state of the global economy any new taxes will certainly stunt economic growth and send a bad signal to the business community. The price of natural gas sold for $13.105 per Mcf just last July and is now selling at $3.87 per Mcf. At the same time, the number of national onshore natural gas drilling rigs stood at 1,306 last September and has since fallen to 917 with more rigs expected to drop in the coming weeks and months.

“History has shown that crude oil and natural gas drilling does not place a burden on local services that needs to be made up with new taxes. Even still, companies investing in Pennsylvania Marcellus Shale development have and will continue to work with local officials to minimize impacts and address and/or provide compensation for any impacts caused by operations. For instance, the industry has invested millions of dollars across the Commonwealth in constructing new roads — at no cost to taxpayers or local governments.

“Repairs to roads are made at the expense of the drilling company and insured through bonding arrangements; frequently resulting in better roads than what existed prior to drilling. Drilling places no burden on counties, which would collect a large share of an imposed property tax.

“Pennsylvania is blessed with rich natural resources, including a potentially large natural gas field in the Marcellus Shale. Although the associations strongly oppose new forms of taxation, especially while the development of the Marcellus Shale is in its infancy, the industry remains willing to work with the legislature on issues to promote the development of the resource.”

About IOGA-PA

The Independent Oil and Gas Association of Pennsylvania (IOGA) is the principal non-profit trade association representing Pennsylvania’s Independent oil and natural gas producers, marketers, service companies and related businesses.

About POGAM

The Pennsylvania Oil & Gas Association is the non-profit trade association of the Commonwealth’s independent oil and gas producers. The association promotes the general welfare of Pennsylvania’s crude oil and natural gas exploration and production industry. The association and its members are committed to the economical and environmentally responsible development, production and use of the Commonwealth’s crude oil and natural gas resources.

About MSC

Formed in 2008, the Marcellus Shale committee represents the oil and gas industry in Pennsylvania on matters pertaining to the acquisition, exploration, drilling, and development of the Marcellus Shale natural gas resource and provides a unified voice before all state, county, and local government or regulatory bodies. The committee, sponsored jointly by the Pennsylvania Oil and Gas Association and the Independent Oil and Gas Association of Pennsylvania, includes independent producers with historical expertise in the Pennsylvania oil and gas fields and national companies dedicated to bringing their industry experience and resources to achieve common goals.

PA Democrats Trying to Tax Natural Gas Still in the Ground

The tax-you-to-death Democrats in Pennsylvania are like big spending Democrats everywhere: They lie about who new taxes will affect, and their appetite to get their hands on YOUR money is insatiable. Case in point from the Pittsburgh Tribune-Review:

HARRISBURG — Natural gas from the vast Marcellus Shale reserve will be taxed under the ground and when it is extracted, if Democratic lawmakers and the governor have their way.

Fifty-four of 67 counties would be able to levy real estate taxes on the underground value of natural gas and oil under a bill proposed Monday by House Majority Whip Bill DeWeese, D-Greene County.

Of course, taxing natural gas deposits in the ground is not enough (never mind how you can even come close to calculating the size of a deposit before you pump it out), let’s tax it when it comes out too:

Gov. Ed Rendell last month proposed a state severance tax on extracted natural gas. Rep. Bud George, D-Clearfield County, is expected to propose the severance tax in legislation.

Here comes lie Number One: “It’s for the children.”

Forty-five of the poorest school districts would benefit from levying a real estate tax on natural gas, said Timothy Allwein, an official with the Pennsylvania School Boards Association, one of several groups that joined DeWeese at a news conference.

And lie Number Two: “It won’t affect the landowner.”

DeWeese said the real estate tax on natural gas would hit developers and drillers, not landowners and farmers.

And lie Number Three: “It’ll keep your taxes low.”

David Coder, chairman of the County Commissioners Association of Pennsylvania, said the revenue would be used to lower property taxes or prevent the rise of property taxes.

Really? You think energy companies will not adjust their lease terms and royalties to account for this rape of their profits? Do you really think any single locality in PA will either hold the line, or reduce your property taxes, if this legislation is passed? Come on. Don’t fall for the same, tired old lies trotted out by the Democrats!

Here’s what will happen: If the Democrats in PA pass this legislation, energy companies will stop expanding and drilling in PA and instead go to New York, Ohio, West Virginia and other Marcellus locations. If you’re a landowner living in PA, make some noise with your state representatives about this issue before it’s too late.

Read the full article: Bill revives tax on gas, oil underground (Pittsburgh Times-Review)

Cabot Oil & Gas Served with “Notice of Violation” in Dimock, PA

The latest development in the unfolding story of several local water wells contaminated by very deep Devonian natural gas in Dimock, PA, is that the local drilling company, Cabot Oil & Gas, has been served by the PA Department of Environmental Protection with a “Notice of Violation.” What does that mean? According to an article in the Binghamton Press & Sun-Bulletin:

While tapping gas from the Marcellus Shale formation, the company has violated the state’s Oil and Gas Act and Clean Stream Laws, the notice states. Both of those regulations protect drinking water supplies from natural gas hazards.

Gas from Cabot drilling operations has migrated into an aquifer providing water for local residents, the DEP has determined. More than a dozen wells proving water to homes along and near Carter Road have been affected. Four have been taken offline and others have been vented.

Not only that, but the Notice also says Cabot has not provided “timely” records of drilling to the DEP. It seems the paper-pushers are in a snit at the DEP. This is not to make light of the serious issue that a dozen homes have been affected, with four of them requiring water to be trucked in. The truth is, neither the DEP nor Cabot still understands how this has happened. Yes, you drill down into the earth for natural gas and it’s no surprise you find it, especially in the Marcellus! However, the kind of natural gas that is “contaminating” the water aquifer in Dimock is from the very very deep Devonian layer, far below where Cabot is drilling. Makes sense that Cabot somehow caused this, but let’s figure how and why, shall we? Before the finger pointing starts in earnest?

As Cabot points out, the DEP’s assessment that Cabot is 100% to blame is premature at this stage. Cabot has been completely above board and transparent throughout the process.

Read the full article: Pa. finds gas-drilling firm in violation (Binghamton Press & Sun-Bulletin)


Download the Notice of Violation (112 KB)

Range Resources Hands Out $1.2M in Royalty Checks in PA

Breaking news, this just in from the Wilkes Barre Times-Leader:

A leading company drilling on the Marcellus Shale natural gas formation in Pennsylvania says it handed out nearly $1.2 million in royalty checks last week.

Range Resources Corp. spokesman Matt Pitzarella said Monday the distribution is the first significant royalty the company has paid from its 120-plus Marcellus shale wells.

People in the exploration industry say they haven’t yet heard of such a large distribution of royalties from Marcellus shale gas wells in Pennsylvania.

The money went to 31 landowners who have wells on or near their land and live near Range’s gas-processing plant about 20 miles south of Pittsburgh.

Read the article: Marcellus shale wells royalty checks go out (Wilkes Barre Times-Leader)